paid Russia almost $200 million as a down payment for the S-300 air defense missile system, a payment Russia says it will refund—but without interest—now that it has refused to deliver the missiles.
All military cooperation between Russia and Iran was not terminated by the decree issued by President Dmitry Medvedev September 22. “We did not add anything to the list [of UN banned items], but on every point there we will have no further military cooperation with Iran. However, there are other forms [of military cooperation still allowed],” Russian Deputy Foreign Minister Sergey Ryabkov was quoted as saying by Russia’s RIA Novosti news agency.
What does not make sense is why the S-300 has been included in Medvedev’s decree. The wording of the June UN sanctions was specifically crafted at Russia’s insistence to allow the S-300 sale, a point American negotiators reluctantly admitted. But when Medvedev issued his decree to enforce the UN sanctions, he quoted the wording of the UN resolution—and then added the S-300 as a banned item.
The S-300 is an air defense system that can down aircraft and cruise missiles. Algeria is the only other foreign buyer of the S-300. It bought one battery in 2006. The contract to sell the S-300 to Iran was signed in 2007.
Iranian Ambassador to Russia Reza Sajjadi told Azerbaijan’s Salam News Channel, “Naturally we are not satisfied with Russia’s refusal to supply Iran with the S-300 missile system, particularly because it is a defense system and represents no threat.”
He said, “Moscow’s argument for the decision is unclear to us.”
Russia says it is only doing what it must under the UN resolution. “We canceled the contract,” Russian Technologies Corp. Chief Executive Officer Sergey Chemezov told reporters. Although Iran is not pleased with the decision, “We do not have a choice.” He insisted the cancellation was under the law of force majeure.
Force majeure (French for “superior force”), is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, flooding, earthquake or a UN resolution prevents one or both parties from fulfilling their obligations under the contract.
A number of Iranian officials are now contemplating suing Russia for non-fulfillment of the contract. And they would seem to have a good case.
Formerly, Russia had said Iran had not made any payments for the S-300. But, according to Chemezov, Iran paid a $166.8 million advance on the contract. He said Russia would refund that sum. “We’re not obliged to return a penny more,” he said, signaling a refusal to pay interest or a penalty for cancellation.
He said an agreement between the two sides will be signed on the refund. “We are now preparing all the necessary documents,” but added that it was unlikely the money would be returned before the end of the year.
Russia’s reversal on the S-300 coincides with its improving relations with the United States, and may be intended as an earnest of good intentions to Washington.
With President Medvedev decree adding the S-300 to the UN sanctions, Russia is following suit with other nations that have imposed additional sanctions on Iran above and beyond those in the UN resolution. This is despite the fact that Russia continues to publicly criticize others for going beyond the UN resolution.
