Russia, Iran tighten trade ties after nuclear deal | Business| Economy and finance news from a German perspective | DW | 13.04.2015
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Russia, Iran tighten trade ties after nuclear deal

Moscow has said it would deliver a long overdue weapons system to Tehran - an indication that Russia is well positioned to be one of the first world powers to benefit from lifting sanctions over Iran's nuclear program.

Russia can begin delivering anti-aircraft missile systems to Iran after President Vladimir Putin signed a decree on Monday lifting a ban on the transfer of the sophisticated weapons technology, the Kremlin said.

It was an indication that Russia intends to be one of the first countries to capitalize on the thaw in relations between Iran and world powers after the Islamic republic agreed to a framework deal earlier this month that would prevent it from developing nuclear weapons.

Moscow had originally agreed to sell Tehran the S-300 missile system for $800 million (755 million euros) in 2007, but it cancelled the deal in 2010 under pressure from the West and after the United Nations imposed fresh sanctions over Iran's nuclear program that banned the sale of high-tech military systems.

Although the Iranians sought $4 billion in damages in a Geneva court from the Russian government for reneging on the missile deal, bilateral relations have not soured. Russia has agreed to help Iran build new nuclear reactors once a final deal over Tehran's nuclear program is formalized, and both countries have backed President Bashar al-Assad in the Syrian civil war.

Goods for oil

While Putin's decree paved the way for the long overdue missile deal, the Reuters news agency quoted a high-ranking official in the Russian government as telling members of parliament in Moscow that Russia had begun supplying grain, equipment and construction materials to Iran in exchange for crude oil.

The official, Russian Deputy Foreign Minister Sergei Ryabkov, said the trade-off was being rolled out "on a very significant scale."

"In exchange for Iranian crude oil supplies, we are delivering certain products," Reuters quoted Ryabkov as saying. "This is not banned or limited under the current sanctions regime."

No binding agreement has been reached over when and how to lift the international sanctions crippling Iran's economy. Both sides are jockeying to finalize a deal by June 30.

US states may not lift sanctions on Iran

But even if Iran and major world powers are able to come to a final agreement that would see sanctions related to Iran's nuclear program be gradually suspended, a number of US states could continue to punish companies operating in certain sectors of Iran's economy.

Around two dozen states currently have measures in place to discourage investment in Iran. They include ordering public pension funds to divest their wealth from certain companies and denying public contracts to some firms.

These states often coordinated their divestment campaigns with the federal government - in 2010 they received Washington's stamp of approval - but they are not bound by the outcome of the ongoing negotiations with Tehran.

The continuation of state sanctions while the federal government loosens its own could complicate any prospective detente between Iran and global powers that are working to finalize a deal.

cjc/uhe (Reuters, AP, AFP, dpa)

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