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Weapons of Mass Destruction (WMD)

Russia may lose $13 bln to ban on arms exports to Iran - analyst

RIA Novosti

15:17 03/08/2010

MOSCOW, August 3 (RIA Novosti) - Russia could lose up to $13 billion due to an extensive arms embargo imposed on Iran over its controversial nuclear program, a Russian arms trade expert said on Tuesday.

"This amount includes deliveries under signed contracts and potential revenues from prospective projects," said Igor Korotchenko, head of a Moscow-based think tank on the international arms trade.

According to the Russian think tank, Iran has been implementing a 25-year rearmament program since 2001. The $25-bln program was mostly oriented toward arms purchases from Russia.

"The Russian defense industry could have received at least half of this amount in 2010-2025," Korotchenko said.

On June 9, the UN Security Council passed a new round of sanctions against Iran over its nuclear program, including tougher financial controls and an expanded arms embargo.

By folding an extensive military-technical cooperation program with Iran, Russia may lose up to $2.2 bln in sales of air defense systems, up to $3.2 bln in sales of naval equipment, up to $3.7 bln in sales of combat aircraft, up to $2.5 bln in sales of military equipment for Iranian ground forces, and up to $1.1 bln in sales of combat helicopters.

For instance, Moscow signed an $800-mln contract on supplying Iran with at least five S-300 systems in December 2005, but the contract's implementation has so far been delayed.

If Russia cancels the contract, it will have to return the value of the contract plus suffer a 10% penalty for breach of contract.

Additional losses of $200 million and $250 million are estimated from folded bilateral cooperation in space research and halted deliveries of spare parts for military equipment previously sold to Iran.

In the long-term perspective, Russia's refusal to sell armaments to Iran means Tehran could turn to China as its main arms supplier, depriving Moscow of a serious source of revenue.

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