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22 Oct, 2009 10:07

S-300 contract with Iran frozen – report

The standing contract between Moscow and Tehran on delivery of the long-range air defense system “S-300” has been frozen, according to a source in the Russian arms trade. Experts are split over the damage this may cause.

Implementation of the S-300 deal was frozen for an unspecified period of time, over a number of political issues, right after it was signed, the source told Interfax news agency. At the moment the delivery is on hold, although Moscow does not intend to cancel it altogether.

“A lot depends on the political environment, since the contract has long ceased to be a merely commercial deal,” the source is cited as saying.

No official comments on the news from either the S-300’s producer Almaz-Antey or Russian arms exporter Rosoboronexport followed.

The deal to deliver several S-300 divisions to Iran was signed several years ago, but was not executed. It came under the spotlight in December 2008, when Iranian media reported on the upcoming delivery of the advanced system. The news came amid tension between Iran and several other countries, including Israel and the United States, over Tehran’s nuclear advances. Iran’s opponents voiced their concerns over the deal, since deployment of S-300 would have greatly impeded their ability to deliver air strikes on Iranian territory.

According to Interfax’s insider, the contract is subject to approval by the two governments before actual delivery can happen. Neither has Teheran started paying for the systems. The source concludes that the freezing of the deal will not harm Moscow’s interests.

Meanwhile, Vedomosti business newspaper says Iran delivered advance payment for the weapons, citing its own sources in defense circles. They’ve confirmed that the initial delivery scheduled on this year has been frozen.

If the deal is broken in the end, this may close the Iranian market for Russian arms suppliers, warned Konstantin Makienko from the Center for Analysis of Strategies and Technology. In addition to losing an estimated $1 billion from the deal itself, and paying $300-400 million for canceling the contract, Russia may lose customers in the Iranian Republic to Chinese competitors, he told RIA Novosti news agency.

S-300 is a long-range air defense system capable of shooting down aircraft and missiles at a range of up to 150 kilometers. It’s meant to be used with a closer-range system like the Tor-M1. Russia has earlier sold it to Iran in a separate deal.