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Reference ID Created Released Classification Origin
07MOSCOW3434 2007-07-13 11:06 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

DE RUEHMO #3434/01 1941106
O 131106Z JUL 07

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 003434 
E.O. 12958: DECL: 07/11/2017 
REF: A. MOSCOW 1877 
     B. MOSCOW 1634 
     C. MOSCOW 1342 
     D. MOSCOW 1133 
     E. 06 MOSCOW 13171 
Classified By: Ambassador William J. Burns.  Reasons:  1.4(B/D). 
1.  (C)  Summary:  Iran's nuclear program has posed an 
increasing challenge to Russia's foreign policy as Moscow 
tries to balance its strong interest in preventing a nuclear 
armed Iran against the political and economic considerations 
that have traditionally driven relations with Tehran. 
However, over the last several months, Russian attitudes 
toward Tehran have hardened.  In discussions with Russian 
experts, we detect several strains of thinking -- that Iran's 
continued intransigence has led to sharp frustration in the 
Kremlin, that Moscow remains concerned about U.S. military 
action against Tehran as Iran moves forward in developing a 
nuclear capability, and that the relative importance of 
Russia's economic interests in Iran is declining, especially 
given the risks posed to Russia's overall security interests 
by Tehran's current hard line policy.  While Russia will seek 
to limit further coercive steps against Iran, continued close 
coordination with Moscow on the third round of sanctions 
should bear dividends in maintaining pressure on Iran.  End 
Chill in the Air 
2.  (C)  We have heard from multiple high-level sources 
within the Russian government that Moscow has become 
increasingly exasperated with Tehran's refusal to engage on 
the negotiations track.  Trips to Tehran by former Security 
Council Secretary Igor Ivanov in January and by Federation 
Council International Affairs Committee Chair Mikhail 
Margelov in mid-February were unsuccessful.  In March, Russia 
decided to delay fuel delivery to Iran's Bushehr reactor, 
ostensibly because of financial issues.  (Refs A and C).  At 
the same time, Moscow welcomed the early consultations that 
led to the second UN Security Council sanctions resolution in 
late March.  In April, Presidential Foreign Policy Advisor 
Prikhodko told the Ambassador that Putin was "quite 
frustrated" with the Iranian government for failing to 
respond to Russian and other overtures on the nuclear issue, 
which Putin underscored in his July 2 meeting with the 
3.  (C)  Some Russian experts see Putin's offer of 
cooperation on missile defense, albeit on Russia's terms, as 
the most concrete example yet that Russia recognizes that a 
nuclear-armed Iran poses a threat to Moscow's security 
interests.  In his June 7 press appearance with the 
President, Putin stressed that "(w)e have the same 
understanding of common threats."  One of the more thoughtful 
analysts of Russian foreign policy, Fedor Lukyanov, who is 
editor of Russia in Global Politics, told us that Putin's 
offer to share information from the Qabala radar reflected 
Russia's slow but steady pulling away from Tehran, which had 
begun when Russia agreed to the first round of sanctions last 
year.  Iran had disappointed Russia too frequently and the 
GOR had now made a strategic decision to side with the U.S. 
and Europe in the dispute about Iran's nuclear intentions and 
regional ambitions.  Aleksandr Shumilin, editor of an on-line 
site focused on Russia's relations with the Middle East, 
noted that Igor Ivanov had summoned Russia's expert community 
in late-April to discuss challenges posed by Iran to Russia's 
interests.  Shumilin, who participated in the meeting, 
concluded that Moscow had decided to reassess its Iran policy. 
4.  (SBU)  Russia's pundits have been following suit.  Gleb 
Pavlovskiy, who faithfully mirrors the Kremlin's line, has 
been quoted recently as arguing that Iran has never been 
Russia's friend and that Moscow's primary objective should be 
to prevent any military action by the U.S. against Iran, but 
if it were to happen, to stay uninvolved.  Aleksey Pushkov of 
the Council for Foreign and Defense Policy has also argued 
that Russia was dumping its nuclear cooperation with Iran 
because of Moscow's calculations that the U.S. was preparing 
for more forceful steps against Tehran and Russia saw no 
benefit from getting in the middle of the dispute.  He noted 
Moscow's reinforced emphasis on its commitment to nuclear 
Growing Political Concerns? 
5.  (C)  What accounts for these shifting views?  Tehran's 
growing assertiveness in the Middle East is drawing Russia's 
attention, but views are mixed about whether this is 
necessarily negative for Moscow's interests.  We understand 
MOSCOW 00003434  002 OF 003 
from discussions with experts that there are those in the 
Kremlin who welcome Iran's role as an independent force in 
the Middle East that can challenge U.S. interests.
At the 
same time, there are increasing signs of concern about 
Ahmadinejad's larger intentions and the risks posed by the 
Iranian leadership's lack of experience in the broader world. 
 Margelov warned publicly at the end of June that Iran might 
be able to field a nuclear weapon in less than five years and 
that this would likely lead to Iran's neighbors pursuing 
nuclear weapons as well, causing further regional 
destabilization.  Russian Institute for Strategic Studies 
Director Yevgeniy Kozhokin, whose institute provides analysis 
to Russia's security services, argued that Ahmadinejad's 
experience was limited and that this could lead to dangerous 
miscalculations because the Iranian leadership saw the world 
through a regional prism in which the U.S. was on the 
defensive in Iraq.  He said Ahmadinejad had little 
understanding of the depth of U.S. economic, political and 
military strength. 
6.  (C)  Many of the experts we talked to expressed concern 
that the U.S. would pursue military action against Iran, 
which would destabilize the region even further and have 
direct effects on Russia's security as well as its economic 
interests.  Given Russia's priority in pursuing commercial 
opportunities in the Middle East, the turmoil in Iran was 
already having a negative effect, according to Yevgeniy 
Satanovskiy, who in addition to heading the Israel and Middle 
East Studies Institute is also involved in manufacturing 
energy-related equipment.  He claimed that the Kremlin 
essentially followed a "market based approach" to the Middle 
East and that instability harmed Russia's economic interests. 
 Ahmadinejad's obstinacy was seen as the primary reason for 
increasing tensions.  Several experts we spoke to believed 
firmly that the U.S. would follow the same course it did in 
Iraq, with steadily more stringent UN sanctions laying the 
groundwork for eventual U.S. military action.  Such action 
would harm Russian interests while making Moscow look 
ineffectual.  Unlike Iraq, according to these experts, 
military action in Iran would have a direct effect on Russia 
because of refugee flows that would likely destabilize 
Azerbaijan and the rest of the Caucasus. 
Economic Prospects:  Disappointing 
7.  (C)  Moscow's economic interests in its relationship with 
Iran, particularly in energy and arms sales, are often seen 
as a driver of Russian policy, but it too presents a mixed 
picture.  Actual trade with Iran is fairly modest and in 
fact, trade levels have actually been declining for the past 
two years.  Russia's exports to Iran peaked in 2005 at USD 
1.8 billion and fell in 2006 to USD 1.5 billion.  Iranian 
experts have been quoted as suggesting that imports from 
Russia will sharply decline in 2007, while Iranian exports 
will tick up only slightly.  The MFA's Deputy Director for 
Iran and Afghanistan, Alim Mustafabeliy, discounted the role 
that trade played in the relationship, pointing out that Iran 
had never been a particularly robust economic partner for 
Russia.  He thought that Russia's trade with Iran would 
eventually stabilize but that Tehran was more interested in 
building trade ties to Europe (and eventually the U.S.). 
Arms Sales 
8.  (C)  Moscow's arms sales remain an important factor in 
strengthening Russia's ties to Iran, but their relative 
importance to the Kremlin may be declining.  Aleksandr 
Pikayev, who heads the disarmament department at the 
Institute of World Economic and International Relations 
(IMEMO) acknowledged that arms sales to Iran created a strong 
lobby within the Kremlin to pursue a "balanced" policy toward 
Tehran, but he argued that the developing sanctions regime 
against Iran and shifts in interest in the Kremlin lessened 
the role the weapons trade played in setting Russia's Iran 
policy.  In Pikayev's view, when Putin entered office, he and 
his retinue had strong ties to the arms industry and broke 
Yeltsin's pledge not to sell arms to Iran for personal and 
political reasons.  Now, officials in the Kremlin were more 
focused on economic opportunities in energy.  While noting 
that the December 2005 contract for the TOR air defense 
system was being implemented, he said that in the current 
climate, it was hard to imagine Rosoboroneksport satisfying 
Iran's longstanding interest in acquiring the S-300 
long-range air defense system.  While no analysts believed 
Russia would defer to U.S. sanctions, most saw a shifting 
economic calculation that would eventually drive changes in 
arms exports. 
Pipe Dreams? 
MOSCOW 00003434  003 OF 003 
9.  (C)  Energy cooperation has also fallen short of 
expectations.  Ivan Safranchuk of the World Security 
Institute underlined that Rosatom's ambitious plans for 
building more nuclear power plants overseas were no longer 
dependent on work in Iran, given the challenges posed by 
sanctions.  (Note:  Atomenergoprom, the new Russian nuclear 
monopoly, was created in part to make Russian-built plants 
more competitive on the international market.  One press 
account recently cited a Roasatom source as declaring Bushehr 
a "loss leader."  End Note.)  Safranchuk and Sergey 
Oznobichev, who heads Moscow's Institute of Strategic 
Assessments, noted to us the importance to Russia of 
concluding a 123 Agreement with the U.S. to insure Russia's 
future as a leader in nuclear energy.  Oznobichev observed 
that this would have an obvious effect in dampening Moscow's 
interest in pursuing nuclear energy ties with Tehran.  On 
oil, despite interests by Lukoil in developing Iranian 
resources, there are concerns about the effects of bilateral 
U.S. sanctions.  Gazprom remains interested in the giant Pars 
gas field but there is skepticism about the ability to 
develop exportable gas, with Gennadiy Chufrin, IMEMO Deputy 
Director, dismissing the Iran-Pakistan-India pipeline as 
completely impractical for the foreseeable future. 
Diplomatic Repair Mission 
10.  (SBU)  Moscow's frustration with Tehran and the decline 
in the relative importance of political and economic 
interests supporting closer ties should not be overestimated. 
 FM Lavrov was quick to reassure the Iranians at the June 21 
Caspian Sea ministerial in Tehran that Russia did not see 
Iran as a threat.  He pledged that Russia would honor its 
commitments to complete Bushehr, but conditioned this on 
Iran's compliance with IAEA safeguards.  DFM Kislyak declared 
that it was premature to discuss another round of sanctions 
against Iran, but also urged that Iran seriously focus on the 
negotiating track.  Both encouraged patience while Iran and 
the IAEA discuss outstanding issues.  We have been urged by 
MFA sources to maintain P-5 Plus One unity, even at the costs 
of delay, because Iran's isolation is more important that the 
sanctions regime itself; in their view, Tehran will continue 
to seek cracks among Security Council members. 
11.  (C)  U.S.-Russian cooperation on Iran over the past few 
months is viewed in Moscow as one of the more positive 
features of the bilateral relationship, but there are limits 
to Russia's flexibility in seeking more coercive measures 
against Iran.  Russia will likely keep closest to Iran among 
the P-5 Plus One.  However, this still remains a moment of 
opportunity.  Although Russia has never officially closed the 
door on completion of Bushehr, the fact remains that Moscow 
continues to delay the start of fuel delivery.  We encourage 
continued close consultations with the Russians as we move 
forward to the third round of sanctions. 


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