Russian arms sales worry US

By bne IntelliNews April 14, 2015

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Russia is set to expand its missile sales with a proposed deal to supply state-of the-art Iskander ballistic attack systems to an unspecified foreign client, it was reported on April 14, a day after President Vladimir Putin caused international alarm by lifting a five-year ban on missile sales to Iran.

Following completion of internal defence orders, Russia's main arms exporter Rosoboronexport is ready to sell the Iskander abroad, an official from the company designing the weapon's export modification told the TASS news agency.

Stepping up production of the ballistic missile system had "created conditions for advancing them to the global market", said a representative from Vysokotochnye Kompleksy Holding, which incorporates the KBM design bureau behind the export variant. Several countries are eyeing the Iskander for purchase and Rosoboronexport is now ready to sign a contract with one if it accepts terms already offered, he added.

Iran arms prospects rattle US 

On April 13, Putin issued a decree to allow the renewal of an $800mn contract to sell S-300 surface-to-air missile systems to Tehran. The deal was cancelled in 2010 in the wake of UN sanctions imposed on Iran over its disputed nuclear programme.

Delivery of the systems would significantly boost Iran's defences again possible air strikes, and Putin's decree drew an immediate anxious response from US officials.

"We don't believe it's constructive at this time for Russia to move forward with this," State Department spokeswoman Marie Harf told a news conference. Secretary of State John Kerry also raised the matter in a telephone call to his Russian counterpart Sergei Lavrov. 

The S-300 has a range of up to 200km and can locate and strike multiple targets simultaneously, making it one of the most potent air defence weapons in the world. But the Russian foreign minister played down the implications of selling them to Tehran. 

"The S-300 is exclusively a defensive weapon which can't serve offensive purposes and will not jeopardise the security of any country, including, of course, Israel," Lavrov said in a statement. He added that the sale was previously put on hold "entirely voluntarily" by Russia to aid international talks on Tehran's nuclear programme.

Russia now says the embargo is no longer necessary after an interim deal was reached on the programme. Iran and six world powers aim to reach a final deal by June 30. However, the US White House fears that Russia’s move may jeopardise the outcome of the agreement.

Shipment of the weapons system could begin at any moment after Putin gave his consent, according to the Kremlin.

"The decree stipulates ... no delays," the president's spokesman Dmitry Peskov said, adding that "it comes into force on the day it was signed".

Ballistic bogeyman?

Additional talk of Iskander missile exports to an anonymous client can compound tensions with the West and fears of a Cold War style arms build-up, fuelled by the stand-off over Ukraine. With a range of 400km, the attack missile can carry a 700kg warhead of several varieties.

Russia had already been preparing a contract to sell Iskander to the same foreign buyer earlier but the agreement was not signed for political reasons, the design bureau told TASS without giving details.

Concerns about the weapon grew in 2011 after reports that Russia would station some units in its Baltic enclave of Kaliningrad, which borders Nato members Poland and Lithuania, in response to the possible extension of a US missile shield in the region. As the Ukraine crisis deepened, some missiles were stationed there briefly in December during military exercises, and in March there were unconfirmed reports that Iskanders will again be sent to Kaliningrad.

Russian goods also Iran-bound  

Meanwhile, among the developments around Iran, a senior Russian official said an oil-for-goods swap deal was already in motion with Tehran, suggesting that Moscow wants to jump ahead of the pack in securing trade with the country once international sanctions are finally lifted.

Amid conflicting reports whether the swap has actually started, Deputy Foreign Minister Sergei Ryabkov said on April 13 that Russia had started supplying grain, equipment and construction materials to Iran in exchange for crude oil.

In 2014, sources told Reuters that a barter deal worth up to $20bn could involve Russia buying up to 500,000 barrels of Iranian oil a day. 

"I wanted to draw your attention to the rolling out of the oil-for-goods deal, which is on a very significant scale," Ryabkov told a briefing with members of the upper house of parliament on the talks with Iran. "In exchange for Iranian crude oil supplies, we are delivering certain products. This is not banned or limited under the current sanctions regime," he said.

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