Cablegate: Moscow's Increasing Frustration with Tehran

DE RUEHMO #3010/01 3481520
P 141520Z DEC 09

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 003010


E.O. 12958: DECL: 12/14/2019

Classified By: Acting Political M/C David Kostelancik for reasons 1.4 (
b) and (d).

1. (C) Summary: Official GOR reports and media have
pronounced the Russian-Iranian relationship healthy and
Minister of Energy's Shmatko's recent visit to Tehran as a
success. Privately, GOR officials and Russian analysts agree
that there are serious tensions in the bilateral relationship
such as the S-300s issue, the Bushehr project and the
possibility of Russia's support of sanctions. They downplay
Moscow's ability to influence Iran, noting competing
interests within Russia that complicate Russian policy
decisions. Iran policy remains a sensitive domestic
question. End Summary

Signaling Iran on Sanctions

2. (C) Italian Embassy interlocutors in Moscow reported
that, during his recent visit to Rome, President Medvedev
confided to PM Berlusconi that dealing with Iran lately had
been "frustrating." Medvedev said he was bothered by Iran's
refusal to accept the Tehran Research Reactor (TRR) proposal
and that Iran's reaction showed a lack of trust for Russia.
While Russia did not necessarily agree that sanctions would
be effective, he said, the threat of sanctions could signal
Iran that it was time to change course. Medvedev admitted
that he did not know who was making decisions in Tehran now,
but he was nevertheless optimistic that there was still some
room for negotiation on the TRR proposal.

3. (C) Ali Mustafabeily, Deputy for Iran and Afghanistan in
the MFA's Second Asia Department who accompanied Shmatko to
Iran, told us that it was time to pressure Iran. The TRR
proposal was a fair offer, but there was also a deadline that
Iran had missed. Commenting that the Iranians were "sly" and
knew how to negotiate, he said that just last week Saeed
Jalili, Secretary of the Islamic Republic of Iran's Supreme
National Security Council, had informed the Russian
Ambassador in Tehran of Iran's new thinking on the TRR
proposal. If the West, including Russia, did not agree to a
plan in which the IAEA would take "possession" of the low
enriched uranium (LEU) while it remained on Iranian soil, it
meant the West did not trust the IAEA. Mustafabeily seemed
exasperated by this thinking. He also reported that Iran had
conferred with (unnamed) other countries and determined that
the enrichment proposed in the TRR proposal could be
completed in five months rather than one year. Mustafabeily
said that Russia could not accomplish this process in five
months, but said it was possible that others could.

4. (C) Mustafabeily also remarked that he had met many
members of the Iranian diaspora living in France. Most were
involved in business and kept one foot in France and the
other in Iran. While uniformly critical of the current
Iranian regime, they also unanimously opposed sanctions as a
way to influence Iran. They believed sanctions would only
harm average Iranians, not the elites. Mustafabeily reported
his own private conversations with businessmen in Tehran that
confirmed this opinion.

S-300s: Still Yellow Light on Transfer

5. (C) On the issue of the S-300s, Mustafabeily reported
that the Iranians had strongly criticized delays in the sale.
Specifically, the Iranian Ministers of Trade and Economic
Development summoned Shmatko to discuss the S-300s and
threatened legal action against the GOR to resolve the issue.
According to Mustafabeily, the Iranians reminded Shmatko
that they had already paid a considerable amount towards
delivery of the system and they expected fulfillment of the
contract. While Moscow was not considering a refund, GOR
officials recognized the gravity of the issue and that Tehran
was likely waiting for Russia's decision on sanctions before
carrying out its threat of legal action. Baranov said the
decision on the Russian side would be made at the
Presidential level, implying that the MFA was not involved in
the discussions. He did note that some in the GOR believed
transferring the S-300s to Iran would increase stability in
the region because Iran would feel more secure without
developing nuclear weapons.

Anti-Russian Mood Grows

MOSCOW 00003010 002 OF 003

6. (C) Interestingly, Mustafabeily noticed an anti-Russian
feeling in Iran, even to include unorchestrated
demonstrations in front of their embassy in Tehran. He
commented that Russia was being criticized by the government
and the elites for being too close to the West and for voting
with Western countries in the IAEA. Simultaneously, the
Iranian opposition was also condemning Russia for working
with the Iranian government. Mustafabeily complained that
the propaganda machine was working at full-speed in Iran.

7. (C) Maxim Baranov, Director of the MFA's Iran Desk, said
that Minister of Energy Shmatko's visit to Tehran was a
chance to calm Iran's concerns about delays at the Bushehr
facility and reduce rising tensions in the relationship. He
said that Russia planned to open the Bushehr reactor as soon
as technical tests were completed and that confusion over
dates had led to misstatements in the press. Baranov claimed
that Russia was continuing with technical testing and did not
truly have an expected opening date. Baranov acknowledged
that Shmatko's visit came at a difficult time in the
bilateral relationship, given Russia's recent vote at the
IAEA. He noted that, although Iran was upset about Russia's
decision, Iranians would not directly "criticize a guest in
their home." As could be expected, Iranian officials instead
expressed their disappointment through the media. Baranov
explained Russia's IAEA vote as an effort to signal Iran that
Russia would no longer remain its unconditional supporter.
He indicated that Moscow felt deceived by the Qom site.
Baranov also took the opportunity to call for the U.S. to
consult more closely with Russia on Iran and not limit
discussions to like-minded countries.

8. (C) Baranov claimed there was no clear signal coming from
Tehran about if or when Iran would negotiate and who was in
charge. According to Baranov, Russia wanted Iran to
understand that, while IAEA Director El Baradei had always
tried to remain objective, there was no guarantee that the
incoming director would follow this path. El Baradei's
proposal was a favorable deal that might not be available
after he leaves his position. Therefore, Russia was urging
Iran to begin cooperation with the IAEA now on the TRR
proposal. When asked about Prime Minister Putin's recent
statement that Russia had no information about a military
dimension to Iran's nuclear program, Baranov seemed caught
off guard. He confided that backing up such a comment would
be "complicated work."

Iran's Goal--Capability or Production?

9. (C) Russian Academy of Sciences Vladimir Yevseyev claimed
that Russia's red line with Iran would be if/when Iran
withdrew from the IAEA because this would demonstrate that
Iran's intention was to build a nuclear weapon. He believed
that, because Iran was hoping to keep the LEU on its
territory and needed an excuse to back away from the IAEA,
its reaction to the vote was calculated and exaggerated.
Nina Mamedova of the Oriental Studies Institute and Zhigun
Yefim of the Middle East Institute agreed that Iran's
reaction was overly emotional. Mamedova claimed that Iran's
reaction and subsequent announcement of plans to build 10
enrichment sites was meant to leave room for bargaining in
the world community. Iran was well known, according to
Mamedova, for adopting harsh positions so there would be room
for retreat. She recalled that six years ago Iran reacted in
the same way to an unfavorable IAEA resolution and threatened
to build 20 nuclear power plants. Then, when Iran realized
that the isolation this decision produced was not helpful, it
renewed cooperation. She predicted that Iran would likely
return to negotiations by early next year but did not know
when exactly.

10. (C) Vladimir Sazhin of the Oriental Studies Institute
and commentator for the Voice of Russia claimed that Tehran's
overall goal was completion of the fuel cycle and
infrastructure to produce a nuclear weapon when they needed
it. He did not believe Tehran intended to assemble a weapon.
Merely having the capacity would be enough to satisfy its
need for security and self-aggrandizement. Conversely, both
Mamedova and Yefim believed Iran's goal was to build a
nuclear weapon rather than just develop the capability. They
believed Iran would not feel secure until it had a small
number of nuclear weapons to defend itself against the
"threat" from Israel.

Influencing Iran

MOSCOW 00003010 003 OF 003

11. (C) Although Russia had long considered Iran as a key
element of regional stability, most Russian officials and
analysts agreed that its ability to influence Iran was
minimal and quickly decreasing. Yevseyev pointed out that
Italy and Germany had far greater trade turnover with Iran
than Russia did. Similarly, Mamedova lamented that the
bilateral economic relationship was small, even speculating
that rumors circulating about Iran's readiness to start joint
new exploration efforts with Gazprom of possible gas fields
were more likely empty promises meant to convince Russia to
defend Iran's position in the international community.

12. (C) A carrot/stick approach was recommended by some
observers. Vladimir Sazhin said that any use of military
force against Iran would cause catastrophe in the region or
even globally. He advocated balanced measures which included
financial support to the oil and gas sector, a treaty between
the P5 1 and Iran on security guarantees, and recognition of
Iran's prominent role in the region. If these failed to
produce positive results, he believed sanctions against the
banking and oil and gas sectors might be effective. Yevseyev
said the international community should remain flexible and
strive for Iran's integration in to the global economic and
political system when Iran demonstrates behaviors that are
more positive. Mamedova said it was critical that sanctions
avoid inflicting suffering on average Iranians because this
would only increase support for Iran's current behavior.

13. (C) Comment: The varying perspectives within the Russian
foreign policy establishment reflect competing interests.
From a purely mercantilist standpoint, sanctions against
Iran, particularly its energy sector, would likely translate
into a bump in world oil prices, which would boost annual
revenues for Russia's state-connected energy companies and
the state budget by billions of dollars annually. If
sanctions harm Iran's burgeoning economic relationship with
China, some in Russia might also regard that as a plus. On
the other hand, sanctions could damage Russia's own trade
with Iran, which is modest (Russia currently has a bilateral
trade surplus of about USD 3 billion) but concentrated in the
politically-influential defense and atomic-energy sectors.
Since many high-ranking officials in these agencies also
favor a more adversarial policy towards the West, an
anti-sanctions posture serves them both economically and
ideologically. The status quo is preferable for Russia and
as the decision point approaches Moscow will probably search
for an outcome that changes as little as possible. Given the
stakes for Russia's economy and its relations with the U.S.,
Israel and the EU, this decision will be made by both
Medvedev and Putin, with implications for the domestic and
foreign influence each exerts. End Comment.


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