Russia Update: Moscow Begins Process to Transfer S-300 Anti-Aircraft Systems to Iran

November 23, 2015
Leaders of countries attending the Gas Exporting Countries Forum in Teheran on November 23, 2015

Russia has begun the process to transfer the S-300 anti-aircraft systems to Iran, the Iranian news agency Tasnim has reported citing the Iranian ambassador to Russia, Interfax reported.

Welcome to our column, Russia Update, where we will be closely following day-to-day developments in Russia, including the Russian government’s foreign and domestic policies.

The previous issue is here.

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Russia’s $5 Billion Loan to Iran Still Only in Draft Stage: Shuvalov

As expected from past announcements we reported, Russia has signed a draft regarding the granting of Iran a loan of $5 billion during the gas forum underway now in Tehran, RIA Novosti reported.

Translation: Shuvalov: Russia and Iran have signed a draft document for a loan of $5 billion dollars.

But the document only amounts to a statement of intent, and the figure is substantially less than what was discussed earlier this month.

At a news conference today following a meeting between Russian President Vladimir Putin and Iranian President Hassan Rouhani, Russian Vice Premier Igor Shuvalov said (translation by The Interpreter):

Of course it [the loan] was discussed. For now the document regarding the loan itself is not signed, but a draft has been signed.

He said the loan would go toward electrification of rail roads and building a thermal electrical stations in Iran.

Earlier, as we reported, Deputy Minister of Industry, Mines and Trade Mojtaba Khosrotaj cited a figure of “$7-8 billion.” Then Russian Energy Minister Aleksandr Novak in turn said that the agreement on the loan for Iran was already being prepared, and would amount to $2.1 billion from Vneshekonombank and another 5 billion from the Russian state budget for a total of $7.1 billion.

Now the figure has slipped down to $5 billion for reasons that are not known. RIA Novosti today reiterated that earlier in November during a Russian-Iranian commission meeting, a source had told them that Russia would find $5 billion out of the state budget for the loan to Iran, and another $2 billion would be supplied by Vneshekonbank.

Also earlier today, Iranian press announced that the delivery of the S-300s would begin soon, as Russia would use S-300s intended for Syria to sell to Iran — but still leaving open the question of how Iran would pay for them.

— Catherine A. Fitzpatrick 

UK Seeks French Assistance to Hunt Russian Sub Lurking off Coast of Scotland
A Russian submarine is reportedly lurking off the coast of a NATO country again — this time the UK, The Telegraph reports. Britain has called in the French to hunt the Russian sub believed to be off the coast of Scotland.

French patrol planes are scouring the seas off Scotland for a Russian submarine after Britain was forced to call on allies for help because it has scrapped its own sub-hunting aircraft.
A French Atlantique 2 maritime patrol plane has been searching for the submarine for at least 10 days, since the vessel was detected north of Scotland.
A Royal Navy frigate, HMS Sutherland, and a hunter killer submarine have also been sent on the search, amid fears the Russian boat could be trying to spy on a Trident nuclear deterrent sub.

Sweden, which is not a member but a close partner of NATO, spotted a foreign vessel off its cost last October, and confirmed that that it was “a foreign vessel” in November but stopped short of confronting Russia.

In May, Latvia complained along with Sweden that Russian warships were preventing the laying of underwater cable along the floor of the Baltic Sea. Latvia also reported a submarine and an An-22 military transport plane at that time.

Russia has increased its aggression against the West in the last year since the forcible annexation of the Crimea and invasion of the Donbass. This has caused Western powers to rethink some of their defense budget cost-cutting measures and re-orientation from Russia.

The UK scrapped a new generation of Nimrod maritime reconnaissance aircraft in 2010, the Telegraph reported and then the country’s only aircraft carrier and an entire fleet of Harrier jump jets, which were later purchased by the US.

The decisions were much criticized at the time, as the Telegraph notes. Recently Prime Minister David Cameron announced that the number of  new Type 26 Global Combat Ships was being reduced from 13 to 8 in defense budget cuts, but that a new fleet of nine Boeing P-8 Poseidon maritime patrol aircraft would be launched to fill the gap left by the decision to scrap the Nimrods, said BBC.

— Catherine A. Fitzpatrick 

Russian Begins Process to Transfer S-300 Anti-Aircraft Systems to Iran; Plans Increase in Natural Gas Production
Russia has begun the process to transfer the S-300 anti-aircraft systems to Iran, the Iranian news agency Tasnim has reported citing the Iranian ambassador to Russia, Interfax reported. Amb. Mehdi Sanai was quoted as saying (translation by The Interpreter):

“Iran and Russia have signed a new contract, the process for transferring the S-300 has begun.”

The report is also at the Tasnim news site in English.

Under its previous contract signed in 2007, Iran was to receive 5 S-300 systems, said Tasnim.

Then-President Dmitry Medvedev had suspended the sale in 2010 when the UN Security Council imposed sanctions against Iran; Tehran later launched a lawsuit against Russia for breech of contract.

This past April, President Vladimir Putin decided to lift the ban on the S-300s when a deal was reached between Western powers and Iran on the issue of its development of nuclear power. Then soon after he ordered the start of air strikes in Syria, Putin announced that the manufacture and sale of the S-300s would go forward.

The deal is worth $1 billion, according to Kommersant and the plan is to deliver S-300PMU-2 Favorit systems:

According to a report, a source told Kommersant November 10 (translation by The Interpreter)

The Iranians studied the more advanced systems that we offered for a long time, including the Antei-2500, but they kept insisting that they needed precisely the S-300s [from the S-300P anti-aircraft systems family–ed]. They did not take into account the arguments that they were removed from production. As a result, the remaining reserve of S-300PMU-2s for Syria turned out to be extremely relevant, and that proposal suited them.

(A number of Russian news outlets covered the Kommersant story at the time, but did not link to Kommersant and the original story has not been found.) 

Putin is in Tehran today attending the Third Gas Exporting Countries Forum with the heads of a number of states who control 79% of the world’s gas. 

He said natural gas is “the most accessible, economically profitable and environmentally clean form of fuel” and the demand for it is outstripped that for oil; by 2040 global consumption should increase by 32% to 5 trillion cubic meters, he said; last year the consumption was at 3.7 trillion cubic meters.
To tap that potential, countries will need to invest more in exploration and modernization of refining and transport infrastructure as well as the installation of more gas pipelines; Putin noted that Russia planned to increase its own natural gas production by 40%, from the current 578 billion cubic meters (bcm) to 885 bcm. Putin indicated that the growth of infrastructure was planned “with partners from the European Union”; currently the EU relies on Russia for one-third of its gas.

— Catherine A. Fitzpatrick