Putin Struggles to Quell Protest in Defense, Military Industrial Establishments

For two weeks, the Russian defense ministry and arms industry have been up in arms against the Kremlin's decision to freeze the sale of S-300 anti-missile missiles to Iran for which a contract was signed in 2005. Wednesday, Oct. 28, DEBKA-Net-Weekly sources in Moscow report, Russian prime minister Vladimir Putin decided to put down the near uprising.

It broke out after DEBKA-Net-Weekly 416 disclosed in an item titled: Obama Opens Middle East Door Wide to Russian Arms, that Putin had accepted a US proposal to suspend the delivery to Iran of five S-300PMU1 missiles – 40-60 launchers each with four tubes, along with radar and fire-control units – in return for opening the Saudi market to Russian arms. A Saudi order for the more advanced S-400 intercept missiles and other sophisticated systems promised a windfall of 7-10 billion dollars for the Russian arms export giant Rosoboronexport – the sole state intermediary agency for Russia's exports/imports of defense.

Riyadh's only proviso was that Moscow withhold the S-300 batteries from Tehran, which Putin accepted, although the consignment was already on giant containers ready for loading on special trains bound for Iran.

Keeping the weapons out of Iran's hands at the last moment elicited a sigh of relief in Washington, Jerusalem and Riyadh. But the decision was not well received at the Russian defense ministry and at Rosoboronexport.

On Oct. 21, Russia's Interfax news agency, citing a Russian government source, reported Tehran has not yet paid the estimated $800 million for the sale contracted in 2005 because Moscow had not finally okayed the transaction. “The contract … was frozen indefinitely due to an array of circumstances … right after it was signed,” the source said. “Much depends on an array of political circumstances since this contract has ceased to be simply a commercial deal.”

This was an attempt to reassure the other clients of Russia's huge arms industry that the deal was not cancelled but would eventually go through.

The deal is off – though not quite

But two days later, Putin's decision came under big guns at home:

On Oct. 23, Russia's Federal Service for Military and Technical Cooperation issued a rare statement saying: “The Russian Federation plans to further implement the military-technical cooperation with the Islamic Republic of Iran in strict accordance with existing legislation and its international obligations.” If the sale does get final approval from the Kremlin, delivery could begin immediately since the missiles have been fully readied for shipment in Defense Ministry depots. All the missiles earmarked for Iran have been drawn from Defense Ministry inventories.

A few hours later RIA-Novosti quoted an unidentified Defense Ministry official as saying that, since the S-300s are “defensive weapons” Moscow was under no international obligation [under UN Security Council arms sanctions against Iran] to scrap the contract.

He said Russia would suffer severe financial loss if it tore up the S-300 contract.

Russian military analyst Konstantin Makiyenko said that reneging on the contact had cost Moscow around $1 billion in lost profits plus $300 million to $400 million in fines and penalties.

By Wednesday, Oct. 28, a brusque comment from Russian deputy prime minister Sergei Ivanov suggested that Putin had managed to silence the revolt in the defense establishment and arms industry without giving ground.

“Russian has so far not supplied S-300 air defense missiles to Iran,” he said. Asked when Russian would deliver them, Ivanov said only: “There have been no such deliveries to date.”

“Iran can't be punished on all fronts”

Russian foreign minister Sergei Lavrov chose this moment to step into the dispute. He did not question the prime minister's decision, only sent his spokesmen to strongly urge Putin and president Dmitry Medvedev to call off their endorsement of Washington's drive for a fresh round of harsh sanctions against Tehran.

Lavrov was quoted as saying that it was inadvisable to punish Iran on all fronts; the ayatollahs must be left some room to maneuver else Moscow's entire policy toward Iran and the Muslim world would crash.

The foreign minister's advice produced a statement this week by the Kremlin's top foreign policy aide, Sergei Prikhodko, who said to Russian reporters: “Sanctions in relation to Iran are hardly possible in the near future.” Foreign correspondents were not invited to the special briefing, at which Moscow signaled it was not prepared at this time to turn the heat up on Iran.

Asked if Russia would support further sanctions against Iran, Prikhodko quoted Medvedev's answer to US. President Barack Obama last month: “Sanctions seldom lead to the required result but in some cases the use of sanctions is inevitable.” That formulation remains in force, said the Kremlin official.

But Moscow's last word on both the S-300 shipments and sanctions has yet to be heard.