Streetwise Professor

July 27, 2012

Contract Kabuki

Filed under: Military,Politics,Russia — The Professor @ 12:13 pm

Iran is planning to sue Russia for $4 billion for failure to deliver S-300 missile systems worth less than $1 billion.  Russia’s response?  The usual truculence?  Surely you jest!  Instead, the Russians look ready to roll over:

By threatening exuberant compensation, Tehran hopes to blackmail Moscow into reconsidering its ban on selling S-300 missiles. This tactic seems to have been at least partially successful. Last week, the Kommersant daily quoted an unnamed government source that the Russian legal position in the coming litigation is weak, “the situation is serious” and “we fear that Russia may face a gigantic fine.” According to the director of the Center for Modern Iranian Research (a pro-Iranian think tank in Moscow), Rajab Safarov, Tehran hopes to provide Moscow with an excuse to present to the West: “Russia must fulfill the S-300 contract, or money will be lost.” The president of the pro-Kremlin PIR-Center think tank, Vladimir Orlov, believes Moscow made a serious mistake in canceling the S-300 deal under the pretext of sanctions: “The possible resumption of the S-300 contract has been and is being discussed in Russia; but if it will be resumed, the Iranian litigation will not be a factor.” According to Orlov, supplying Iran with S-300 missiles could “improve the situation in the region” by deterring the foes of Tehran. UN Resolution 1929 bans the sale to Iran of any “guided or unguided missiles” with a range over 25 kilometers. The S-300 – a potent long-range antiaircraft missile system – is not specifically mentioned in the UN resolution, and this is reported to be Tehran’s main argument in asking the Court of Arbitration in Geneva to rule the cancellation of the S-300 contract illegal (Kommersant, July 18).

Ah yes, Russia.  The land where contracts are sacrosanct.  A virtual religious obligation.

This is partly about money, but more about politics, and geopolitics.  Putin et al weren’t keen on Medvedev’s decision to submit to the sanctions:

In Moscow, the decision to ban the S-300 deal has been connected to Medvedev, but after Vladimir Putin took over the Kremlin, many decisions of the former president are either being overturned or postponed (Vedomosti, July 19). As relations with Washington continue to deteriorate over a constantly growing number of issues, the powerful pro-Iranian lobby in Moscow may hope it is time to overturn Medvedev’s “mistake” with the S-300s earmarked for Iran. Completing the sale would be very profitable and at the same time snub Washington. But an open violation of a UN embargo would damage Russia’s international reputation, so it remains to be seen whether or not the pro-Tehran lobby will indeed get its way. Russian policies continue to be as double-dealing as the S-300 is double-use.

The Syrian situation has ramped up antagonism between Russia and the US, and this leak could be a message about how Russia would respond if the Americans and the Europeans escalate the pressure on Assad.

And this whole setup seems just too pat, and therefore suggests some collusion between Iranian and Russian officials.  Iran sues for big money (wink, wink).  Russia responds (wink, wink): “Oh, we have such a pitifully weak case.  We have to live up to our contract in order to avoid paying Iran big money.  After all, a contract is a contract.  You see, all the arms we are currently delivering to Syria now were contracted for years before.  So international pressures or no, we have to perform.”

Given the fraught situation in the Middle East, adherence to contracts is the least important aspect of the S-300 issue, especially for a country like Russia that is past master at fighting judgments in international forums.  This lawsuit and the Russian response to it is a Kabuki act intended to send a signal to the US and the Europeans to back off Syria and Iran.

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1 Comment »

  1. It’s logical that Russia would want to be sued by Iran, and would help them do it. This way, Iran gets a court judgment ordering Russia to provide weapons, and Russia can’t be blamed for doing so. The manner in which Russia has aggressively sought to bolster regimes like Iran, Syria and Venezuela only serves to emphasize how horrifically evil the Russian government really is.

    Comment by La Russophobe — August 1, 2012 @ 12:59 pm

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