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Cablegate: Medvedev, Putin, and Russia's Iran Policy

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C O N F I D E N T I A L MOSCOW 002531

SIPDIS

E.O. 12958: DECL: 10/06/2019
TAGS: PGOV PREL RS IR
SUBJECT: MEDVEDEV, PUTIN, AND RUSSIA'S IRAN POLICY

Classified By: Ambassador John Beyrle for reasons 1.4 (b)
and (d).

1. (C) SUMMARY: Despite Russian President Medvedev's
September 24 remarks that sanctions against Iran might be
necessary, other government officials and experts here
caution that Russia will remain, for the time being,
reluctant to pursue a tougher line against Tehran. The
consensus among the Russian political elite is that
maintaining a dialogue with the Iranians and exhausting
diplomatic avenues is preferable to imposing sanctions in the
near term. While Medvedev as president is responsible for
controlling arms and nuclear technology transfers, Prime
Minister Putin remains closely identified with decisions on
Iran policy, including the sale of civilian nuclear
technology and weapons, which provides a boost to powerful
state enterprises. According to Deputy FM Ryabkov, Putin's
relative silence on Iran since Medvedev's statements does not
signal any difference between them on sanctions. End
Summary.

Medvedev on Sanctions: Few Official Echoes
------------------------------------------

2. (C) Russian Government officials, including Prime Minister
Putin, have not yet echoed President Medvedev's public
statement that Russia would consider the imposition of
sanctions on Iran if the world community ran out of other
options. Asked about Russian views on the Qom revelation in
New York September 25, FM Lavrov adopted a strikingly softer
tone than in the just released Kremlin statement. He noted
that Iran had acted positively by notifying the IAEA about
its plans to construct a new nuclear facility, and complained
that some of Russia's "partner countries" in the P5-plus-1
had not shared information about the Qom facility earlier.
Lavrov stressed that Iran's cooperation with the world
community as a member of the NPT with non-nuclear status
could prove the peaceful nature of its nuclear program.

3. (C) Before the most recent P5-plus-1 meeting in Geneva, PM
Putin said that Russia would not support "significant"
changes to its approach on Iran. Ariel Cohen, a senior
fellow at the Heritage Foundation, said Putin and Lavrov told
him in early September that they are opposed to tougher
sanctions and the use of force against Iran. Russian Deputy
Foreign Minster Sergei Ryabkov said September 29 that Iran's
recent proposals presented a "broad field for dialogue."
Ryabkov added that whether sanctions against Iran might
become inevitable was a "completely separate issue, one that
we are not yet ready to address." He stressed Russia's
position was to do everything possible to find a "diplomatic,
political solution to the Iranian nuclear problem."

4. (SBU) While expressing concern over Iran's missile
program, Russian Ambassador to NATO Dmitriy Rogozin stressed
September 29 that Russia preferred political dialogue over
tough measures that could trigger an "arms race in the
region." Russian Ambassador to the United States Sergey
Kislyak said September 24 that sanctions were not the way to
resolve the problem; rather, the point was how to find a
"political solution that would eliminate this problem." The
priority was to "start a serious dialogue with our Iranian
partners in seeking a way out of the situation."

5. (C) Russia's message to domestic audiences also remains
unchanged. Despite Medvedev's carefully worded comments on
sanctions in New York (called by one analyst here "a jewel of
diplomatic casuistry"), even prominent Russians with ties to
the Kremlin's domestic propaganda machine believe Russian
support for Western sanctions is highly unlikely. Medvedev
advisor Gleb Pavlovskiy, President of the Effective Policy
Foundation, and Maksim Shevchenko, President of the Russian
World Foundation, even spoke in favor of completing Russia's
frozen S-300 surface-to-air missile deal with Iran.

Interpreting Putin's Silence
----------------------------

6. (C) PM Putin's lack of public comment on the possibility
of Iran sanctions after President Medvedev's public statement
does not indicate disagreement between them on Iran, DFM
Ryabkov told Ambassador Beyrle October 3. Ryabkov repeated
his comments, made in Geneva during P5-plus-1 talks, that
Russia had not ruled out the possibility of sanctions, but
would begin to contemplate them only as an absolute last
resort.

7. (C) Most political commentators and analysts here have
been echoing the same statements. Tatyana Stanovaya of the
Center for Political Technologies thought that Medvedev's
seemingly more positive statement indicates no real
rapprochement with the U.S. on Iran. Rather, she said, his
words are carefully calibrated to indicate a welcoming of
U.S. willingness to use the P5-plus-1 format and engage in
actual discussions with Iranian officials.

8. (C) Nevertheless, Medvedev's New York comments and the
September 25 Kremlin statement mark a definite toughening of
Russian rhetoric on Iran. Pravoe Delo co-Chairman Georgiy
Bovt told us October 5 that Medvedev's use of the word
"sanctions" represents a policy change. Boyt cautioned that
Medvedev's words would probably resonate with only a distinct
minority of Russian society. He believes it will be hard for
Medvedev to sell Iran sanctions to the Russian bureaucracy
without the full support of Putin. At the Sochi Economic
Forum, Putin blasted the U.S. for not allowing the export of
certain high technology to Russia. Boyt thinks Russia might
ask for an easing of these restrictions in exchange for
supporting sanctions.

Sanctions: Economic Implications
--------------------------------

9. (C) Despite Medvedev's presidential authority over arms
transfers, Putin undoubtedly retains a critical, if not
decisive role over an issue with such significant domestic
economic implications as the transfer of nuclear technology
and armaments to Iran. Russia and Iran currently have
limited military cooperation, so the effect of any lost
revenue from arms sales to Iran would be small. While the
sale of S-300s to Iran, for example, would only net Russia
from USD 750 million to USD one billion, future military
sales could be considerably larger.

10. (C) Several years ago Iran was a stable source of hard
currency and this cash flow helped Russia preserve its
nuclear construction sector. The importance of Russia's
trade with Iran has decreased, but Russian exports to Iran
last year still exceeded USD 3 billion. In the currently
depressed Russian economy, that is not an insignificant
amount. In addition, great potential for future economic
gain to Russia exists via civilian nuclear technology sales
and increased military cooperation.

11. (C) As the world's largest exporter of oil and gas,
Russia also benefits significantly from the "instability
premium" embedded in world oil prices due to tensions with
Iran. Even a USD 5 per barrel instability premium would net
Russia almost USD 9 billion per year for oil and
approximately USD 2-4 billion from its gas exports. Finally,
given Iran's position as the second largest owner of gas
reserves, Russia's gas sector clearly benefits from the lack
of international investment in the development of Iran's
natural gas sector.

Life without Iran
-----------------

12. (C) Russia could profit from alternatives to its
continued support for Iran. For example, news reports
indicate that Saudi Arabia has offered to purchase the
Russian S-400 system for USD two billion in an effort to
force Moscow to back out of the S-300 deal with Iran.
Medvedev cited Arab League concerns about Russia's close
relationship with Iran when he stated that Russia's stance on
Iran might be changing.

13. (C) Israel also is clearly pushing Russia to take a
firmer stance towards Tehran, in light of recent press
reports that PM Netanyahu personally delivered a list of
Russian scientists who contributed to Iran's nuclear program.
Conversations with Israeli diplomats in Moscow indicate that
Israel believes there may be even more to Iran's program than
is now known to the GOR and Russian decision makers. They
hint that Israeli disclosures on Russian participation could
force Moscow into taking a harder line.

COMMENT
-------

14. (C) Success in moving Russia to support tougher actions
against Iran will require a coordinated strategy involving
our friends and allies, including Israel and Saudi Arabia.
The strategy may need to include the continuation of
diplomatic efforts like the P5-plus-1 process and perhaps
include new ways of engaging in dialogue with Iran. A
strategy created by a broad international consensus must
offer Moscow a series of options that will challenge the
stubborn mentality here that instinctively opposes common
cause with the West on Iran. Sanctions would have a major
impact on the Russian economy, and especially to the domestic
constituencies like RosOboronexport and RosAtom. The fact
that the economy and these key state-controlled enterprises
are part of Putin's portfolio only reinforces the certainty
that he will remain the key decision maker on any imposition
of sanctions. Key to the GOR's calculations would be any
politically salable alternatives that benefit them both
economically and politically. End comment.
Beyrle

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