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Reference ID Created Released Classification Origin
06MOSCOW13171 2006-12-29 12:42 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

DE RUEHMO #3171/01 3631242
O 291242Z DEC 06

C O N F I D E N T I A L SECTION 01 OF 05 MOSCOW 013171 
E.O. 12958: DECL: 12/29/2016 
REF: A. MOSCOW 12914 
     B. MOSCOW 10956 
Classified By: Ambassador William J. Burns.  Reasons:  1.4(B/D). 
1.  (C)  Summary:  Russia has repeatedly told us that when it 
comes to preventing Iran from developing nuclear weapons, it 
shares our strategic goal but differs with us over tactics. 
Moscow's reluctance to agree to coercive measures was on full 
display during consideration of UNSCR 1737, but in the end 
Russia accepted a sanctions regime that it perceived as 
protecting its national, as well as commercial interests. 
Russia's efforts to insulate the Bushehr reactor contract and 
previously concluded arms sales from sanctions were aimed at 
demonstrating to other potential customers that Moscow is a 
reliable supplier.  While politically significant elites have 
a stake in arms sales and energy cooperation with Iran, for 
now, Russia's commercial interests in Iran are more 
prospective than real. 
2.  (C)  Russia sees no immediate threat to its interests 
from Iran's increasingly assertive role in the Middle East 
and, in fact, some view this as a positive development that 
introduces another, "independent" actor in a region that had 
been dominated by the United States.  Nor is Moscow 
particularly concerned about Iran's more ideological politics 
at home, which have yet to be translated into support for 
radical Islamist force in Moscow's neighborhood or Russia 
itself.  While Russian officials see a nuclear-armed Iran as 
a threat to Russian interests, they do not believe it is 
imminent.  However, the prospect of U.S. military 
intervention is seen as immediately destabilizing.  While 
Russia has now accepted the logic of a sanctions regime after 
much resistance, we can expect continued efforts to delay the 
imposition of more coercive measures.  Russia hopes Tehran 
will be willing to negotiate, but in the meantime it will 
maneuver to always remain closer to Tehran than its other 
EU-3 Plus 3 partners.  End Summary. 
3.  (SBU)  FM Lavrov's public statements immediately 
following the adoption of UNSCR 1737 encapsulated Russia's 
dilemma regarding Iran's nuclear program.  In comments made 
to a meeting of ministers chaired by President Putin, Lavrov 
said that Russia had to balance three "targets" in the 
Security Council -- preventing WMD proliferation, leaving 
room for further negotiations with Tehran, and avoiding 
damage to Russia's "legitimate ties" with Iran.  The Foreign 
Minister was satisfied that the resolution met all three 
goals, but underlined in a response to a question from Putin 
that Russian economic interests in the Bushehr plant and arms 
sales to Tehran had specifically been protected.  Left unsaid 
by Lavrov was how Russia could continue to maintain this 
tenuous balance in the event Iran did not comply with the 
resolution.  We asked government officials and think tankers 
during the time UNSCR 1737 was being considered how Russia 
weighed these interests, whether changes in Iran's domestic 
politics and regional role affected this calculus, and how 
difficult Moscow will prove in achieving our shared goal of a 
non-nuclear Iran. 
4.  (C)  Lavrov's emphasis on protecting the Bushehr contract 
reflects the importance Moscow attaches to being viewed as a 
reliable nuclear supplier.  The head of the Russian Federal 
Agency for Nuclear Energy (Rosatom) Sergey Kiriyenko told the 
Ambassador in mid-December after returning from Tehran (ref 
A) that Russia was still planning to deliver fuel for Bushehr 
in March 2007.  Kiriyenko commented that he is fully aware of 
the "serious question" posed by Tehran's noncompliance with 
IAEA requirements.  Still, he said, Russia does not want the 
reputation of a country that fulfills or does not fulfill its 
contracts based on political issues.  Under the supplemental 
agreement agreed to September, the physical launch of Bushehr 
will take place in September 2007, with generation of 
electrical power commencing in November (ref B). 
5.  (C)  While Kiriyenko reiterated publicly the day before 
passage of the resolution that plant completion was on track, 
he added that this schedule was dependent on Iran supplying 
"proper financing" and the timely delivery of required 
equipment from third countries.  A Japanese diplomat told us 
that his contacts in the Foreign Ministry had suggested that 
Iran was balking at providing further financing because of 
cost overruns and that this might lead to further 
time-consuming negotiations.  Technical problems might also 
lead to delays.  MFA Second Asia Director Aleksandr Maryasov 
MOSCOW 00013171  002 OF 005 
noted that the Iranians continued to make few allowances for 
the difficulties faced by Russian contractors, who we
trying to mesh German equipment already in place with Russian 
6.  (C)  Russian concerns about exempting Bushehr from the 
effects of UNSCR 1737 aside, Security Council Secretary 
Ivanov has repeatedly underscored to the Ambassador that 
commercial factors do not determine Russia's policy towards 
Iran.  Other experts also discounted the weight that nuclear 
cooperation with Iran had in Russia's policy toward Tehran. 
Aleksandr Pikayev, head of the disarmament department of the 
Institute of World Economics and International Relations 
(IMEMO) said that Bushehr no longer had the same significance 
to Russian interests that it did in the Yelstin years. 
Bushehr itself was almost completed, and while there were 
hopes of building other reactors in Iran, Rosatom was now 
more interested in the expansion of nuclear energy plants in 
Russia and in other countries which did not pose the same 
challenges to work in that Iran did.  Ivan Safranchuk of the 
World Security Institute noted that Russia's concerns about 
civil nuclear sales worldwide meant it was likely Russia 
would try to fulfill the Bushehr contract, but that Moscow 
would think twice before pushing further contracts in a 
country that was increasingly becoming a nuclear pariah. 
Still, there are others in the GOR who are keen to compete 
for lucrative nuclear power plant contracts in Iran -- at 
almost USD 1 billion each. 
7.  (C)  Next to nuclear energy cooperation, arms sales to 
Tehran constitute one of the largest elements in the 
relatively modest USD 1.8 billion in bilateral trade in 2005. 
 Pikayev argued that the "minuscule" level of trade between 
Russia and Iran argued against economic interests being a 
driver of policy, but acknowledged that the healthy trade in 
arms created a strong lobby for Iran in the Kremlin, among 
whom he included DPM/Defense Minister Sergey Ivanov.  Ivanov, 
who is a leading contender to succeed Putin in 2008, argued 
publicly in late-August that Iran's nuclear program did not 
constitute the type of threat to international peace and 
security that should be subject to UN Security Council 
sanction.  While Ivanov has been quiet since then, Nina 
Mamedova, Head of the Iran Section in the Oriental Institute, 
cautioned against underestimating the importance of arms 
sales to Iran for the Russian military-industrial complex 
because it was a "protected" market due to restrictions on 
Western sales. 
8.  (C)  Few experts placed much importance on the gas factor 
in weighing Russia's interests.  Mamedova highlighted 
Gazprom's interest not only in developing the Pars field, but 
in working with Iran to encourage the construction of the 
Iran-Pakistan-India pipeline.  However, Pikayev argued that 
Iran and Russia were competitors more than collaborators in 
the energy field, because Russia wanted to wall off its 
European markets from any potential Iranian gas sales; in 
addition, the two countries would eventually compete for 
sales to South Asia.  While Gazprom was interested in 
developing the gigantic Pars field in Iran, Pikayev doubted 
that Iran would let the Russian company in because of fears 
that this would provide Moscow unwanted leverage. 
9.  (C)  While Russian interests in nuclear cooperation, arms 
sales, and energy are longstanding fixtures in bilateral 
relations, the reconsolidation of conservative Islamic forces 
in Iran has led some to publicly question Russia's close 
ties.  However, the MFA does not view on-going political 
change in Iran as requiring a rethink of the relationship. 
Maryasov, who has served 18 years in Iran, the last several 
as Ambassador, explained Ahmadinejad's success as a reaction 
to the failure of reformists, unable to implement the 
promises they made.  Russia should not be concerned by the 
changes in Iran, according to Russian Institute for Strategic 
Studies Director Yevgeniy Kozhokin, since it could count on a 
slow process of internal transformation that would eventually 
lead to liberalization by elites interested in integration 
with the rest of the world. 
10.  (C)  Maryasov saw the nuclear question as one of few 
where there was full consensus among Iranian elites.  He 
judged there were some tactical differences between 
pragmatists who favor a path of negotiations and more radical 
elements who believed that two years of negotiations with the 
EU-3 had produced no concrete results.  The radicals argued 
that Iran's nuclear program provided Tehran with leverage 
MOSCOW 00013171  003 OF 005 
against the West and bolstered aspirations to regional 
hegemony.  Maryasov said that in the end, the Iranian 
leadership approached the nuclear issue with a mix of 
ideological and religious values and a healthy sense of 
realpolitik that took note of the differing outcomes for Iraq 
and the DPRK once they tried to acquire WMD.  Local elections 
in Iran that were widely viewed as a setback to conservatives 
were unlikely to change either Iran's nuclear policies or its 
relations with the outside world, according to Rajab Safarov, 
General Director of the Iran Studies Center. 
11.  (C)  Iran's increasingly assertive role in the Middle 
East was flagged by many Russian experts with whom we spoke 
as a significant change in the regional power balance.  The 
experts were almost unanimous in naming Iran as a "winner" 
and Israel as the loser following this past summer's fighting 
in Lebanon.  Israel and Middle East Studies Institute 
Director Yevgeniy Satanovskiy said that a newly emboldened 
Iran was posing an increasing challenge to the security 
interests of Saudi Arabia and the Gulf states, particularly 
given the size of the Shia populations in these neighboring 
countries.  In his view, Ahmadinejad could transcend the 
Sunni-Shia divide and differences between Arabs and Persians 
-- witness support for Iran during the war in Lebanon.  He 
said that Iran posed a different threat than Iraq or the 
Taliban in Afghanistan did because it had the veneer of 
democracy but had expansionist goals akin to the 
post-Stalinist USSR.  In this sense, Russia's interests as a 
status quo power could eventually be threatened. 
12.  (C)  Not all experts were as concerned about Iran's 
growing role.  Kozhokin, who is connected with the Russian 
security services and the military for whom his Institute 
provides consulting services, agreed that after the conflict 
in Lebanon, Iran would play an ever greater role in the 
Middle East and could pursue regional hegemony as the Shah 
did in the seventies.  He saw this as a natural result of 
Iran's large population and resources.  IMEMO's Pikayev and 
World Security Institute's Safranchuk argued that Russia 
accepted a greater role for Iran in the Middle East.  The 
n viewed Iran as the only "independent" state in the 
Gulf, which could make its own decisions and did not depend 
on the U.S.  Iran could eventually become Russia's ally in 
the Shanghai Cooperation Organization as part of an "energy 
13.  (C)  It has become a commonplace assumption among some 
analysts that Russia has been careful in dealing with Iran 
because Tehran could make trouble for Russia among Muslims 
inside Russia and in its neighborhood as well as in the 
broader Islamic world.  The think tankers we spoke to 
challenged at least the first half of that assertion. 
Khozhokin argued that Iran was simply not powerful enough to 
threaten Russia by stimulating radical Islam in Russia. 
Unlike Saudi Arabia, Pakistan or Turkey, Iran had not been 
involved in supporting Chechen rebels and had no 
infrastructure or networks that could be used for this 
purpose.  Satanovskiy, who has warned in the past about the 
potential for radicalization of Russia's Muslims, told us 
that if there were a threat, it did not come from Iran; he 
pointed the finger instead at students from Russia who were 
receiving "extremist indoctrination" when they studied in 
Egypt's Al Azhar University.  The Oriental Institute's 
Mamedova added that Iran, as a Shia state, would not gain 
much traction in the largely Sunni North Caucasus. 
14.  (C)  Iran has had a more significant role in Russia's 
neighborhood and with other Islamic states.  In general, 
Institute of Europe Director Sergey Karaganov told us, Moscow 
views Tehran as a status quo power in the Russian 
neighborhood.  Mamedova pointed out that Iran had been 
influential in helping Russia gain observer status in the 
Organization of the Islamic Conference over the objections of 
Pakistan and others and had insulated Russia from the most 
severe critics of its Chechnya policy.  Pikayev noted that 
Iran had been helpful to Russia during the civil war in 
Tajikistan and with the Taliban, but now there was less 
incentive to collaborate with Tehran.  The one concern 
Pikayev identified was a possible threat to Azerbaijan by 
Iran, which Russia would find unacceptable.  Mamedova argued 
that nationalist differences within Iran between the majority 
Persian population and sizable minorities like the Azeris and 
Kurds made playing the separatist card against Russia a 
dangerous ploy for Tehran. 
MOSCOW 00013171  004 OF 005 
15.  (C)  While personal financial interests of top level 
officials have affected Iran policy in the past -- witness 
the MINATOM of the nineties -- ROSATOM officials were now 
more interested in building scores of nuclear power plants in 
Russia.  At the same time, Pikayev argued to us, the personal 
interests of Russian officials in arms sales to Iran had an 
"unquantifiable" effect on Russia's Iran policy.  Satanovskiy 
was more blunt.  He saw Russia's Middle East policy, 
including toward Iran, as driven by the elite's "pragmatic" 
commercial interests.  "Russia had no friends (in the 
region), it had contracts."  In his view, military-industrial 
interests that had a piece of specific deals would have 
greater weight in the Kremlin than those who expressed 
concerns about the threat that a nuclear-armed Iran might 
eventually pose to Russian interests.  Even when the "top" 
had decided on a policy, such controls could be easily 
skirted, Satanovskiy argued, pointing to a shipment of arms 
to Syria even after Putin had decided to suspend such sales 
because of concerns about Syrian diversions to Hizbollah.  At 
the same time, he believed that Russia would never give the 
Iranians anything that could cause a real threat to the 
United States because in the end the relationship with the 
U.S. was more important. 
16.  (C)  Russian officials often argue that they understand 
that a nuclear-armed Iran would pose a threat to Russian 
interests, but it is not clear how they evaluate the 
importance of that threat compared to others Moscow faces nor 
how immediate they judge that threat might be.  The Russian 
Strategic Studies Institute's Kozhokin mirrored conventional 
wisdom here in arguing that "no serious person" could want a 
nuclear-armed Iran and that Russia participated in 
nonproliferation activities related to Iran not only because 
of U.S. pressure, but because a nuclear Iran threatened its 
interests.  On the question of timing, the MFA's Maryasov 
asserted that there was no compelling proof yet of a military 
research program.  His estimate was that Iran's research and 
enrichment programs were aimed at providing Tehran the 
opportunity to make a decision on a military program sometime 
in the future as the political cycle developed.  Rosatom's 
Kiriyenko reflected longstanding views among GOR officials 
that the Iranians lacked the technical capacity to pursue a 
full-fledged program.  He told the Ambassador that Iran's 
claims of progress on enrichment were "comical" and that his 
staff had noticed a virtual collapse in the Iranian nuclear 
energy agency because of the loss of skilled professionals 
(ref A). 
17.  (C)  Reiterating views shared by other experts, Pikayev 
argued that it was "impossible" to imagine that a 
nuclear-armed Iran would act aggressively against Russia 
because of Moscow's ability to deter Iran.  At the same time, 
there was little likelihood that Russia would want to project 
power into areas of Iranian interest.  For Russia, the "worst 
had already happened" when Pakistan went nuclear, given 
Islamabad's ties to the Taliban and the safe haven and 
support it allegedly offered to Chechen separatists. 
However, there were continuing concerns about the leak of 
nuclear materials to non-state actors, which Iran might 
facilitate, and which merited careful attention.  The 
Carnegie Center's Aleksandr Arbatov was more direct:  in the 
short term, the biggest threat to Russia's interests was the 
prospect of U.S. military intervention in Iran. 
18.  (C)  FM Lavrov's "report" to Putin about the sanctions 
resolution was long on describing how Russian contracts would 
be protected, but short on next steps.  Lavrov stressed that 
the sanctions could be suspended if Iran met the demands of 
the international community, but offered no judgment on how 
likely this was or what would happen if it did not take 
place.  The MFA's Maryasov explained Russian hesitancy on the 
resolution as the result of Moscow's concerns about the 
consequences of imposing a sanctions regime; "these things 
can take on a life of their own" which could injure Russian 
interests more than the West, he said.  Pikayev suggested 
that Russia would likely follow France's position closely 
because Moscow judged that Paris shared Russian views t
hat a 
diplomatic solution was still possible that would protect 
European (and Russian) commercial interests.  However, 
following the EU-3 lead posed risks for Russia's freedom of 
maneuver and there were some in the Kremlin who rejected it 
for that reason.  He suggested that the Security Council also 
MOSCOW 00013171  005 OF 005 
saw a more "independent" line as bolstering Russia's 
interests, which explained why Igor Ivanov continued to take 
an "unusual level of interest" in the Iranian nuclear file. 
19.  (C)  In addition to Russia's specific strategic and 
commercial interests in Iran, other, more intangible factors 
are likely to come into play in Russia's Iran diplomacy. 
Pikayev suggested that we not discount the influence of 
personal relationships in examining Russia's policies toward 
Iran.  He suggested that the Russian elite had felt betrayed 
by what he termed the cynical use by Iran of the proposal for 
a uranium enrichment joint venture to shield Iran from 
international pressure as well as Ahmadinejad's failure to 
respond promptly and constructively to the EU-3 Plus 3 
proposal as the Iranian leader had promised to Putin in 
Shanghai last summer. 
20.  (C)  In some sense, Russia already made its choice to 
support a more coercive policy toward Iran when it agreed to 
the EU-3 Plus 3 strategy of negotiations with Iran coupled 
with deadlines for an Iranian response in UNSCR 1696.  Russia 
wanted above all to avoid the "Iraqi example" -- where a 
Russian partner was isolated and the U.S. was able to build a 
record of non-compliance which could be used to justify 
further coercive measures -- but it has now ended up with 
exactly that.  Continuing Iranian intransigence over 
negotiations gave Russian diplomats nothing to push back with 
in discussions with the West.  Moscow supported Iran's slow 
rolling the process in hopes that it would allow time for a 
deal to be reached, but Russia miscalculated Iran's 
willingness to deal. 
21.  (C)  Now that a sanctions regime has been adopted, we 
need to pay close attention to Moscow's implementation of the 
resolution, which will begin with a presidential decree, to 
be followed by implementing regulations.  If Iran does not 
meet the terms of UNSCR 1737, Russia will undoubtedly attempt 
to slow down the imposition of any further sanctions and will 
argue for only the most incremental of steps.  Russia is 
likely to watch the EU-3 closely to determine how far the 
Europeans are willing to go in pushing Iran and then adjust 
accordingly, always keeping closest to Tehran in order to 
protect its interests. 


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