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Weapons of Mass Destruction (WMD)

Russian Missile Technology and Nuclear Reactor Transfers to Iran

98-299 F  Russian Missile Technology
          CONGRESSIONAL RESEARCH SERVICE
              LIBRARY OF CONGRESS
NUMBER:   98-299 F
TITLE:    Russian Missile Technology and
          Nuclear Reactor Transfers to Iran
AUTHOR:   Stuart D. Goldman, Kenneth Katzman, Robert D. Shuey,   
          Carl E. Behrens
DIVISION: Environmnt and Natural Resources Policy Division
DATE:     Updated July 1, 1998
TEXT:
          Russian Missile Technology and
          Nuclear Reactor Transfers to Iran
CONTENTS:
The Issues
Russian Missile Technology Transfer to Iran
   Details of the Russian Transfers
   Role of the Russian Government
   Significance
      Threat to U.S. Interests in the Middle East
      Russia as a Proliferator
Russian-Iranian Nuclear Cooperation
   Iran's Nuclear Power Program
      The Bushehr Project
   U.S. Concerns about Proliferation
      Iran's Nuclear Weapons Activities
      Iran and the NPT
Iranian Issues
   Israeli Security Concerns about Iran
Russian Issues
U.S. Policy
   Dual Containment
   Missile Technology Transfers to Iran
   Russian Nuclear Cooperation with Iran
Pending Legislation (See Endnote 44.)
    Russian Missile Technology and Nuclear Reactor
                  Transfers to Iran
                       The Issues 
   Many in Congress and the Clinton Administration charge that 
the Russian Government is directly or indirectly involved in assisting 
Iran to develop medium- range ballistic missiles.  At the same time, 
Russia is building a nuclear power station in Iran and has agreed
to furnish Iran with a wide range of other nuclear services.  
   The current issue is whether Russian entities should
be sanctioned for transferring missile technology to Iran
(as would be required by H.R. 2709), or whether such
sanctions would be detrimental to U.S. efforts to
dissuade Russians from transferring missile technology to
Iran (as President Clinton contended in his veto of H.R.
2709).  Congress may soon face this issue on a vote to
override the President's veto.
   Congress has expressed strong opposition to, and
passed legislation requiring the president to impose
sanctions for missile technology transfers, arms sales,
nuclear technology transfers, and large-scale investments
in Iran.  On November 12, 1997, the House passed H.R.
2709 (Title I of which is the "Iran Missile Proliferation
Sanctions Act"), sponsored by Representative Gilman, that
would require the Administration to impose additional
unilateral economic sanctions on foreign entities that
contribute to Iran's efforts to develop ballistic
missiles.  The Administration failed to persuade the
Senate to reject the bill (See Endnote 1.). which was
approved by that body with an amendment on May 22, 1998
by a vote of 90-4.  On June 9, the House passed the
Senate version of the bill by a vote of 392-22.  Despite
these apparently "veto-proof" majorities, President
Clinton vetoed the bill on June 23 and said he would work
to sustain the veto.  His veto message said that the bill
would make it harder to achieve the nonproliferation
goals it is intended to serve.  A veto-override attempt
is expected after the July 4th recess and the president's
return from China.  Russian officials and news media
reacted sharply to congressional passage of the bill,
with newspapers warning that new economic sanctions
reduce the likelihood of Duma ratification of START II.
(See Endnote 2.)  The bill's supporters question whether
Moscow can or will stop the missile technology transfers.
   The supplemental appropriation bill (H.R. 3579/P.L.
105-174) provides funds to enhance theater missile
defense systems largely in response to Russian
cooperation with Iran on missile development.  The FY1998
foreign aid bill (H.R. 2159/P.L. 105-118) provides for
cuts in aid to the Russian Government if it does not
terminate its nuclear projects and missile technology
transfers to Iran.  Sanctions for improper missile
technology transfers under the Arms Export Control Act,
Export Administration Act, and Iran-Iraq Arms
Nonproliferation Act of 1992 may also applicable to the
Russia-Iran transfers.  Russia's giant gas monopoly,
Gazprom, was threatened with economic sanctions under the
Iran and Libya Sanctions Act (ILSA, P.L. 104-172), which
penalizes foreign firms that invest in Iran's energy
sector. (See Endnote 3.)  The Administration, however,
after a long assessment, decided in May 1998 not to
impose ILSA sanctions against participants in the Iranian
South Pars development project.
   The Administration says it has made the missile
technology transfer issue a very high priority in
official and unofficial dealings with  Russian officials,
including the recent talks between Vice President Al Gore
and former Premier Viktor Chernomyrdin (See Endnote 4.)
in Washington (March 10-11,  1998).
   Although there are recent signs of change in Iran and
in U.S. policy toward Iran, there has been a strong
consensus in Congress and the executive branch, shared by
many foreign governments,  that Iran is still "the
world's leading sponsor of state terrorism," and a
potential threat to U.S. and western interests.  Hence,
the United States has sought to keep military and weapons
of mass destruction technology from Iran as part of a
policy of "dual containment" of Iran and Iraq.  Russia's
military, political, and economic cooperation with Iran
may undermine this policy and is a major source of
tension in U.S.-Russian relations.
   The Clinton Administration has made repeated high-
level representations to the  Russian Government to
persuade it to end missile technology and nuclear reactor
transfers to Iran   with mixed success.  The
Administration considers cooperation with post-Communist
Russia, sometimes expressed in terms of "partnership,"
and assistance in Russia's transition toward democracy
and a market economy to be very important U.S. goals,
despite the fact that U.S.-Russian relations have soured
lately, not only over Iranian issues but also because of
Russian opposition to U.S. policy toward Iraq, Serbia,
and NATO enlargement.  Thus, the U.S. objectives of
containing Iran and cooperating with Russia appear to be
in conflict.
   The Clinton Administration takes the general position
that while it strongly opposes some of Russia's dealings
with Iran, unilateral U.S. sanctions will not change
Russian policy and, furthermore, U.S.-Russian relations
are too important to be put at risk over disagreements on
Iran.  Sanctions have rarely been imposed against post-
Soviet Russia, in part because of President Clinton's
exercise of national security waiver authority included
in the FY1996 and FY1997 foreign aid appropriations
bills' sanctions focused on the nuclear reactor deal. 
      Russian Missile Technology Transfer to Iran
   In 1987, at U.S. urging, the G-7 countries
established the  Missile Technology Control Regime
(MTCR), aimed at limiting the proliferation of missiles
and missile technology.  The MTCR is an informal
arrangement consisting of guidelines for transfers of
missiles and related technology, and an annex listing
items to be controlled.  Nations that join the regime
adopt the guidelines as national policy and undertake to
restrain missile transfers through their export control
systems.  Twenty-nine countries have become partners in
the MTCR, including Russia (1995). 
   In January 1997, an Israeli delegation told White
House officials and Members of Congress that Russian
firms and institutes were providing critical assistance
to Iran's missile development program.  Within a short
time, they said, Russian equipment and technology would
help Iran overcome obstacles it had encountered in
developing medium-range ballistic missiles that could
deliver chemical weapons throughout the Middle East. 
U.S. intelligence reportedly confirmed the Israeli
conclusions.  The government of Israel raised the alarm
in strong terms to the United States and Russia because
it would be threatened by these new missiles.  The
transfers became a central issue of U.S.-Russian
relations and have been discussed at numerous high-level
bilateral meetings. (See Endnote 5.)  The Russian
transfers apparently were in violation of the MTCR
guidelines and the U.S.-Russian agreement to ban new arms
sales to Iran.  Under certain circumstances, such
transfers would trigger statutory U.S. economic
sanctions.  But as months passed and more details of the
transfers appeared in the press, many Members of Congress
questioned Russia's denials and lack of effective U.S. or
Russian action to stop the flow of missile technology to
Iran.  
   For the past few years, some Members of Congress have
been frustrated by the Administration's decisions not to
impose sanctions against Russian and Chinese firms that
exported sensitive missile or nuclear technology.  The
Administration has often been able to avoid implementing
the missile sanctions provisions of the Arms Export
Control Act (AECA, P.L. 90-629), the Export
Administration Act of 1979 (EAA, P.L. 96-72), the Iran-
Iraq Arms Nonproliferation Act of 1992 (IIANA), the
Foreign Assistance Act of 1961 (FAA, P.L. 87-195), and
the annual Foreign Operations Appropriations Act because
of exclusions, waivers, definitions that allow for broad
interpretation, and the lack of certain binding
requirements in the laws.  These sanctions had been
legislated largely during previous Administrations to put
teeth into U.S. nonproliferation policy and the
multilateral nonproliferation regimes, but some Members
concluded they were not sufficiently rigorous and
introduced bills to tighten the requirements for
sanctions.
   Mr. Gilman introduced The Iran Missile Proliferation
Sanctions Act of 1997 (H.R. 2709; see also H.R. 2930, and
S.1311) which would require the President to identify to
Congress "every foreign person with respect to whom there
is credible information indicating that that person" has
transferred missile technology to Iran and to impose
economic sanctions against that person unless the
President can rebut the information or justify a waiver
on grounds of national security.  (See the last section
of this report for a summary and status of pending
legislation.)  This language would close two loopholes of
the AECA (sec. 73(a) and (b)) and EAA (sec. 11B(b)(1) and
(2)): the first of these ties statutory sanctions to a
presidential determination that the President is not
required to make; the second  makes sanctions
inapplicable against most exporters in a country, such as
Russia, that is an "adherent" to the MTCR.  The proposed
bill would also apply sanctions to all persons who have
exported missile technology to Iran, unlike the IIANA,
which ties statutory sanctions to a presidential
determination that transfers are of  "destabilizing
numbers and types of advanced conventional weapons," and
that does not explicitly include ballistic missiles in
the law's definition of advanced conventional weapons. 
The bill might also block foreign assistance to any
proliferating entity, whereas sections 498A, 620G and
620H of the FAA and Title II of the annual Foreign
Operations Appropriations Acts have not been successful
in blocking such assistance.  The bill does, however,
include authority for a presidential waiver on national
security grounds.
   When President Clinton vetoed H.R. 2709 on June 23,
1998, he wrote that his Administration is committed to
"an unceasing effort to halt the transfer of missile
technology to nations that conduct or condone terrorism
and otherwise violate international norms.  The stated
purpose of H.R. 2709 ... is to further this effort.  To
the contrary, if enacted, it would damage the U.S.
national interest, making it harder to achieve goals it
is intended to serve."  He further wrote that, "The
battle against proliferation is most effective as a
cooperative enterprise," implying that unilateral
economic sanctions are less effective.  He also said that
the standard of evidence in H.R. 2709 for establishing
that  a person or entity had wrongly transferred missile
technology is "unworkably low" and that the sanctions
"are also disproportionate."  He argued that the
imposition of unilateral American sanctions would make it
more difficult to win Russian government cooperation on
the important missile proliferation issue and perhaps on
other issues such as "arms control, law enforcement,
counter-narcotics and combating  transnational crime."
   There appears to be support in various departments of
government and in the Congress for the view that
sanctions have contributed to U.S. nonproliferation
policies in some other situations.  There is also a view
(as expressed in S. 1413 and H.R. 2708, Enhancement of
Trade, Security, and Human Rights through Sanctions
Reform Act) that the government and Congress have, at
least in some cases, used sanctions inconsistently and
ineffectively.  If Congress votes to override the
President's veto of H.R. 2709, it would apparently
indicate that Congress holds the view that sanctions
would make a contribution to the U.S. effort of
discouraging Russian transfers of missile technology to
Iran.
   Mr. Weldon introduced a bill (H.R. 2786) "to authorize
additional appropriations for the Department of Defense
for ballistic missile defenses and other measures to
counter the emerging threat posed to the United States
and its allies in the Middle East and Persian Gulf region
by the development and deployment of ballistic missiles
by Iran."  This bill, as passed by the House, would
authorize $147 million for theater missile defense
programs, including $10 million to improve
interoperability of the Israeli Arrow missile defense
system with U.S. systems.  Senator Kyl sponsored a
similar bill (S. 1387), then proposed an amendment that
was included in the Senate emergency supplemental
appropriation bill (amendment 2079 to S. 1768) as it was
passed by the Senate.  This bill would appropriate $151
million to support theater missile defense, including $10
million for interoperability of the Israeli Arrow with
U.S. missile defenses and $45 million to purchase radar
for a third Israeli Arrow battery.  (See p. 20-21,
below.)
Details of the Russian Transfers
   During the Iran-Iraq War (1980-1988), Iran reportedly
acquired Soviet-made Scud-B missiles from Libya and
manufactured variants of the Scud-B acquired from North
Korea.  In the meantime, the Soviet Union sold over 800
Scud-Bs directly to Iraq. These missiles gave Iraq a big
advantage in the deadly missile exchange known as the War
of the Cities (March-April 1988) and helped force Iran to
end the war before achieving its goals.  Neither side
used chemical warheads on their missiles during the war,
but since then both reportedly have developed such
warheads. (See Endnote 6.)
   After the war, Iran bought additional missiles and
missile production technology from North Korea and
reportedly subsidized North Korean development of the
Nodong missile (1,300 km range) and perhaps longer-range
missiles.  Although the Nodong could reach all of Iraq
from Iran, it is unclear whether it could reach Israel. 
Pyongyang reportedly agreed in 1993 to supply Iran up to
150 Nodong missiles, but the United States persuaded
North Korea not to deliver them. (See Endnote 7.)  Iran
has apparently not acquired a significant number of
Nodong missiles.  Tehran then broadened its search for
missile technology in support of its own missile
development programs.
   Iran reportedly encountered numerous technical
problems with its ambitious missile  programs and sought
Russian help with guidance systems, engines, advanced
materials, electronics, testing equipment, and other
systems that it could not develop indigenously.   Despite pledges 
by Soviet leaders in 1990 and by various
Russian leaders since then to ban missile exports,
President Yeltsin's 1994 agreement to refrain from new
arms sales to Iran, and Russia's entry into the MTCR in
October 1995, there are recurring reports that Russian
companies are selling missile technology to Iran and
other countries.  
   On February 6, 1997, Vice President Gore issued a
diplomatic warning to then- Premier Chernomyrdin
regarding Russian transfers to Iran of parts and
technology associated with SS-4 medium-range ballistic
missiles. (See Endnote 8.)  Over the next several months,
press reports indicated that Russian enterprises provided
Iran specialty steels and alloys, tungsten coated
graphite, wind tunnel facilities, gyroscopes and other
guidance technology, rocket engine and fuel technology,
laser equipment, machine tools, and maintenance manuals. 
U.S. and Israeli concerns have focused on Russian help in
the development of two liquid-fuel, medium range missiles
  the Shahab 3 and the Shahab 4.  (See table below.) 
Israeli and U.S. officials believe the Shahab missiles
are further improvements on the North Korean Nodong, and,
according to press reports, U.S. officials estimate Iran
could deploy the Shahab 3 within a year or two, and could
deploy the Shahab 4 within 3 years.  One article cited a
"classified U.S. intelligence report" as predicting Iran
would field prototypes of both missiles within 18 months. 
Analysts believe that the integration of a nuclear,
biological, or chemical warhead, development of a
sophisticated guidance system, and a system to separate
the warhead from the missile body will take Iran more
than several months.  Israeli intelligence also reported
the development of two other unnamed Iranian missiles
with ranges of 5,500 km and 10,000 km (the latter is the
distance from Iran to Alaska or to the northeastern
portion of the United States). (See Endnote 9.)
   Russian assistance has apparently helped Iran
overcome a number of obstacles and advance its missile
development program faster than expected.  Many analysts
believe continued Russian technical assistance would
enable Iran to make further strides that would otherwise
require years of research, development, testing, and
evaluation.
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   Various Russian entities are alleged to have been
assisting Iran's missile programs.  In March 1998, the
State Department listed (but did not make public) 20
Russian entities suspected of transferring missile
technology to Iran.  U.S. aid and exports to these
entities are not banned, but they are reportedly being
given close scrutiny.  According to earlier press
reports: (See Endnote 10.) 
--  Kuznetzov   said to be formerly known as NPO  (Scientific 
    Production Association) Trud  has helped  Iran build 
    rocket motors; 
--  Polyus (North Star) Research has supplied guidance systems;
--  NPO Inor agreed to provide $48,000 worth of four specialty 
    metal alloys;
--  Central Aerohydrodynamic Institute (TSAGI) conducted wind 
    tunnel tests; 
--  Russian Space Agency, Bauman Institute, Baltic
    State Technical University, NPO Energmash, and
    Rosvoorouzhenie (the Government arms exporting agency)
    also reportedly helped Iranian missile development.
   Iran has an extensive network of research institutes
and factories engaged in the development of missiles,
many of which reportedly have received assistance from
Russia.  These are dispersed about the country and some
are probably hardened against aerial bombardment. (See
Endnote 11.)
Role of the Russian Government
   It is not clear whether the Russian government has
allowed or encouraged this assistance or merely been
unable to detect or prevent it.   Initially, Moscow
denied that its missiles or missile technology had been
transferred to Iran, but in September 1997, Russian
officials reportedly stated that such transfers were
being made without the consent of the government. In
January 1998, after repeated detailed complaints by
numerous U.S. officials, Yuri Koptev, head of the Russian
space agency, said of 13 cases raised by the U.S.
Government, 11 had no connection to technology transfers
related to weapons of mass destruction (nuclear,
biological, or chemical) that were banned under a 1996
agreement.  Two cases "which could be interpreted as an
attempt to transfer dual-purpose technology," were
stopped and the government was investigating one of them.
(See Endnote 12.)  Koptev reportedly was irate that an
Israeli intelligence report said he was involved in the
transfers. (See Endnote 13.)
   The Russian government has taken some steps to stop
the flow of missile technology and resolve the issue with
the United States.  In November 1997, nine months after
Vice President Gore first raised the issue, Russia
expelled an Iranian diplomat for trying to buy missile
engine blueprints.  He was reportedly the lead figure in
Iran's quest for Russian nuclear, chemical, biological,
and missile technology. (See Endnote 14.)  On January 22,
1998, Premier Chernomyrdin issued a decree prohibiting
any Russian entity from exporting materials or services
that it knows will be used to develop weapons of mass
destruction or their delivery systems, and requiring
government approval for exports that might be used for
such purposes, whether or not they are included on
Russia's export control list, "... if the Russian foreign
trade participants have grounds to believe that the
products and services might be used..." for such
purposes. (See Endnote 15.)  The decree, which authorizes
the Russian government to block exports and to penalize
companies that make unapproved exports, reportedly was
prompted by a telephone call from Gore to Chernomyrdin.
(See Endnote 16.)  Since then, there have been
conflicting reports about the implementation of the
decree and new allegations have arisen.
   In February 1998, the Washington Times reported that
Russia's Federal Security Service (FSB, a successor to
the KGB) was still working with Iran's intelligence
service to pass technology through a joint research
center, Persepolis, with facilities in St. Petersburg and
Tehran.  In March, The Washington Post and a Moscow
newspaper ran stories detailing years of FSB complicity
in recruiting and transporting Russian missile scientists
to work in Iran, although neither claimed the practice
was ongoing. (See Endnote 17.)  According to the Russian
Space Agency, the following steps have recently been
taken: the Ministry of Education has instructed all
universities and institutes to stop training Iranian
students in missile technology and related subjects; the
Central Aerohydrodynamic Institute has terminated
cooperation with Iran on wind tunnel tests; NPO Energmash
has stopped delivering special fire-fighting equipment to
Iran; all activities of the Iranian firm SANAM in Russia
have been terminated; and all contracts of the Ramensky
aviation design bureau and of NPO Lavochkin with Iran
have been terminated.  Nevertheless, according to U.S.
press reports, Russian firms continue to supply missile
technology to Iran.  A truckload of Russian stainless
steel that would be particularly useful in constructing
missile fuel tanks was intercepted as it was about to
cross the border from Azerbaijan into Iran.  Another
shipment of Russian missile-related material on its way
to Iran was seized in Austria.  And the Moscow Aviation
Institute is reportedly still training Iranian missile
technicians. (See Endnote 18.)   In addition, Yeltsin's
March 23 dismissal of Chernomyrdin raises questions about
the future efficacy of the Gore-Chernomyrdin Commission
mechanism, which, according to the White House, relied in
large part on the personal rapport and trust built up
between Gore and Chernomyrdin over five years.  The
government shake-up also raises concerns about the new
government's ability to enforce export controls. (See
Endnote 19.)  U.S. and Russian officials indicate that a
Gore-Kirienko Commission will succeed its predecessor and
continue the same work.  
   On May 14, 1998, a few days before the G-8 meeting in
Birmingham, England, Yeltsin's spokesman announced
additional measures to tighten control over the export of
missile and nuclear  technology.  He declared that:
supervisory bodies will established at all enterprises
dealing with those technologies; the Russian Space Agency
will play a greater role in overseeing exports of missile
technologies; and stricter licensing requirements will be
implemented. (See Endnote 20.)  After the G-8 meeting,
President Clinton said that he and Yeltsin had discussed
the issue "in some significant detail" and that they had
reached understandings that "will bear fruit."  Yeltsin
reportedly said that Moscow is creating a new government
entity to improve control over high-tech exports,
including those to Iran.  U.S. Deputy Secretary of State
Strobe Talbott, present during the Yeltsin-Clinton talks,
said that Yeltsin had "reaffirmed in the clearest and
most unambiguous terms" his commitment to ending the flow
of missile technology to Iran. (See Endnote 21.) 
Officials on both sides caution, however, that it might
be difficult to halt all unauthorized or illegal missile
technology transfers, especially by individual scientists
and small private enterprises.  Russia also argues that
some allegedly illicit transfers are not related to
missiles.  
Significance
   Threat to U.S. Interests in the Middle East.  The
Russian transfers of missile technology are of importance
because it is believed they will accelerate Iran's
ability to produce missiles that could reach U.S. troops
and friendly countries throughout the Middle East   as
well as southern Russia and perhaps Greece   and deliver
weapons of mass destruction.  Iran produces chemical
weapons for delivery of blister, blood, and choking
agents and might have the ability to fit chemical
warheads to ballistic missiles. Iran is also conducting
research on biological and nuclear weapons but it is not
known when the country might have weapons that could be
delivered by a ballistic missile.  Israeli intelligence
estimates that Iran could produce an atomic bomb  
though perhaps not a nuclear missile warhead   as soon
as 2002. (See Endnote 22.)  
   Russia as a Proliferator.  The Russian missile
technology transfers are also important as an indicator
of Russia's willingness and ability to control exports of
dangerous technology to countries that are trying to
acquire weapons of mass destruction and have a history of
belligerence.  The United States has taken great efforts
to establish and win Russian participation in
nonproliferation regimes for nuclear, biological, and
chemical weapons and missile delivery systems.  The
United States has given Russia technical assistance on
operating an effective export control system and, 
through the Nunn-Lugar Comprehensive Threat Reduction
initiative, has also helped Russia with the safe and
secure transportation, storage, and dismantlement of its
weapons of mass destruction.  Because Russia has large
inventories of weapons of mass destruction, large
quantities of equipment and material to produce such
weapons, and large numbers of underemployed scientists
and technicians, it is critical to U.S. nonproliferation
goals that Russia maintain strict control of these
resources. 
          Russian-Iranian Nuclear Cooperation
Iran's Nuclear Power Program
   Iran's efforts to add nuclear power generation to its
electric power grid began in 1974, when it contracted
with the West German nuclear firm Kraftwerk Union (KWU)
to build two large pressurized water reactors (PWRs) at
Bushehr, near Kharg Island.  At one point 10,000 workers
were reported at the construction site. (See Endnote 23.) 
 Following the 1979 revolution, the Islamic government
canceled the project, but a few years later changed its
mind and asked KWU to finish the plants.  However, the
West German government prohibited KWU from sending
nuclear components and personnel to Bushehr because of
Iran's war with Iraq.  In fact, Iraqi air raids and
missile attacks damaged the project.  Although at the
time it was canceled in 1979 the two plants were said to
be 70% and 50% complete, essentially no components of the
nuclear steam supply system had been shipped to Iran.
   Even after the Iraq-Iran war ended, Germany and Iran
could not agree on a plan to finish the project, and Iran
turned to Russia for help.  In January, 1995, the Russian
nuclear agency MINATOM signed a contract to finish one
unit of the Bushehr project for $800 million, with a
projected 55-month construction schedule. (See Endnote
24.)    The Russian agency later decided not to try to
finish the German plant, but to build a Russian-designed
PWR on the site instead.
   Why Is Oil-Rich Iran Building Nuclear Power Plants? 
At the time the Shah's government first started a nuclear
power program, questions were raised about the economic
role nuclear power could play in a nation with vast oil
and gas resources.  In the 1970s, however, there was
widespread belief that world oil supplies were limited
and prices would continue to rise as they had during the
1973 Arab oil embargo.  At the same time, nuclear power
was viewed as a technology already cost-competitive with
oil and gas and sure to become more so as it matured and
as fossil fuel prices increased.  In such a situation,
oil and gas deposits were looked on by many as resources
that would increase in value in the future, worth
preserving by substituting cheap nuclear power.
   Since the 1970s, however, the world energy picture
has changed radically.  World proved oil reserves,
instead of declining, have increased by about 50% over
what they were in 1973, and real prices have declined
below what they were before the oil crisis.  Iran's
petroleum resources are thus declining in value, and
exports are limited by world demand rather than supply. 
While this trend has been taking place, nuclear power has
turned out to be more costly than anticipated.  Nuclear
plants  may make economic sense for countries without
domestic energy resources, like Japan, France, South
Korea, and Taiwan, where they can contribute to energy
security and save the cost of importing fuels for power
generation.  But it is difficult to argue that oil-rich
countries like Iran will soon recover the high capital
costs of building nuclear power plants through the
increased sale of oil and gas in the current world
petroleum market. 
   The Bushehr Project.  In one respect, Bushehr is a
bargain for Iran.  The  Russian offer to build a 1,000-
megawatt plant at Bushehr for $800 million is far below
the typical cost of such a facility.
   However, progress on the project has been slowed by
technical and financial difficulties.  Some 750 Russian
technical personnel are reported to be on site. In
February 1998, Viktor Mikhailov, then head of MINATOM,
complained that the Iranian participants in the project,
who had been responsible for preparing the site for the
installation of the nuclear components, had not done so,
and that this task would have to be done by the Russians
also.  Yevgeny Adamov, who was appointed Atomic Energy
Minister in March after Mikhailov unexpectedly resigned,
is cited in the press as confirming that the Russian
agency would take over construction of the entire plant,
adding that the 1995 contract would have to be
renegotiated to reflect the additional work. (See Endnote
25.)
   Adamov reportedly also said that the recent decision
by the Ukraine government not to sell electric generating
turbines for the Bushehr project would not delay its
completion.  Ukraine's decision to cancel the $45 million
sale came at the urging of the United States.  Adamov
said the turbines could be built in a plant in St.
Petersburg.  However, the Ukraine has been the primary
supplier of turbines for Russian-designed nuclear power
plants.
U.S. Concerns about Proliferation
   The United States has opposed the Bushehr project
since the Islamic revolution, both during Iran's
negotiations with KWU to finish the plant, and since the
Russians took over the project.  However, U.S. concerns
are not focused primarily on the power plant itself.  It
is not expected that Iran would divert weapons material
from the Bushehr PWR.  If Iran has a program to produce
nuclear weapons, as the United States believes, then it
is aimed at producing or obtaining highly enriched
uranium, or at clandestine construction of a small
reactor specifically designed to produce bomb-quality
plutonium.  
   The Bushehr plant itself is therefore not considered
a source of weapons material.   Rather, the project is
viewed as a proliferation risk because it entails massive
involvement of Iranian personnel in nuclear technology,
and extensive training and technological support from
Russian nuclear experts.   This involvement and training
may well provide a cover for those Iranians who are
pursuing development of nuclear weapons.  It would be
much more difficult for Iran to conceal its weapons
activities if the Bushehr project were canceled.  As long
as it continues, regardless of delays or difficulties, it
can shelter the clandestine activities of the weapons
program.
   Iran's Nuclear Weapons Activities.  The Shah's
government reportedly had a small nuclear weapons
research program.  The present Iranian government denies
having any interest in nuclear weapons, although Iranian
officials have on occasion made statements supporting
acquisition of nuclear weapons. (See Endnote 26.) 
However, senior U.S. officials   including the Secretary
of State, the Secretary of Defense, and past directors of
the CIA,  have stated repeatedly that Iran has a  program
to develop nuclear weapons. (See Endnote 27.)   
   This U.S. assessment is reportedly based partly on
intelligence reports, but it is reinforced by Iran's
continued efforts to procure equipment and technologies
unnecessary for power production but needed for weapons
development.  Despite insisting that its interest in
nuclear energy is only for civilian power production,
Iran reportedly has attempted to obtain facilities such
as uranium enrichment plants, which are necessary to
produce highly enriched uranium for weapons, and heavy
water, used in plutonium production reactors.  Recently, 
an Iranian attempt to obtain from China large amounts of
a chemical necessary to prepare natural uranium for
enrichment elicited a protest from the United States and
a denial from China. (See Endnote 28.) Similarly, news
reports that Russia had agreed to sell Iran tritium,
which is used in nuclear explosives, and was considering
selling centrifuge technology for uranium enrichment,
were denied by Adamov. Iran had had talks 18 months
earlier with Mikhailov about obtaining a research
reactor, Adamov said, but the Russian government has not
yet approved the project. (See Endnote 29.)  A research
reactor,  although much smaller than the Bushehr PWR,
might be technically easier to convert to weapons
material production.
   Other governments concur with the U.S. assessment. 
Although Russian officials now say they have no evidence
of such a program, a 1993 Russian intelligence service
report concluded that Iran "has a program of military-
applied research in the nuclear sphere."  The report
predicted that "without outside scientific and technical
assistance, the appearance of nuclear weapons in Iran in
this millennium is unlikely." (See Endnote 30.)  A more
recent Russian intelligence report   released after the
controversy over Russian nuclear sales to Iran   backed
away from the earlier assessment. (See Endnote 31.) 
Russia, eager for income from the sales of nuclear plants
abroad, insists that it is doing nothing more than
fulfilling its obligation as a nuclear weapons state to
provide peaceful nuclear technology to non-nuclear
signatories of the Nuclear Nonproliferation Treaty (NPT). 
   The Russians also argue that the PWR reactors they
are building in Iran cannot be used for bomb-making and
will be closely monitored by Russian and IAEA safeguards,
and that the Russian reactors are the same type that the
United States is helping provide for North Korea   a
state that is not in full compliance with IAEA
safeguards.  Nevertheless, Adamov was quoted in the press
as acknowledging Iran's weapons ambitions.  "I am sure
that Iran is trying to create a nuclear arsenal.  It
would be foolish to suppose that they do not want to
create one," he is quoted as saying after he was
confirmed in his new job as MINATOM head by President
Boris Yeltsin. (See Endnote 32.)
   Iran and the NPT.  Iran is a signatory of the NPT,
and accepts International Atomic Energy Agency (IAEA)
safeguards on its nuclear program.  That program consists
mostly of a small research reactor in Teheran.  The
uncompleted Bushehr project has not received any nuclear
fuel and hence is not yet subject to IAEA inspection.  In
response to charges that it has a secret nuclear weapons
program, in 1992 and 1993 Iran invited the IAEA to visit
various facilities suspected of housing secret weapons
work.  The visits produced no new information about
undeclared nuclear activities.
   In the absence of IAEA evidence, the U.S. claim that
Bushehr is a proliferation threat is difficult to openly
demonstrate.  Nevertheless, the United States maintains
that Russia's nuclear cooperation with Iran will provide
Teheran with the knowledge and technological foundation
needed to operate a clandestine nuclear weapons program. 
                     Iranian Issues
   Iran's relations with Russia are based on strategic
interests, but tempered by lingering fear of Russian
power and intentions.  In 1907 Russia concluded a treaty
with Britain dividing Iran into spheres of control  
Russia's in the north, Britain's in the south, and a
neutral center for Iran.   Russian troops occupied
northern Iran during World War I.  Soviet troops invaded
again in 1941, in concert with Britain, when Iran was
becoming sympathetic to Germany.  The then Shah, Reza
Shah Pahlavi, was forced to abdicate in favor of his son,
Mohammad Reza Pahlavi, the last Shah of Iran.  The Soviet
Union refused to withdraw completely from Iran in 1945
and set up two autonomous republics in the north   one
in Iranian Azerbaijan (inhabited by Azeris, a Turkic
people) dominated by the pro-Moscow Tudeh Party and
another in the Kurdish areas of northern Iran.  These
autonomous zones threatened to break up Iran and
emboldened pro-Communist elements throughout the country. 
A combination of U.S. threats and Iranian oil concessions
persuaded the Soviets to withdraw in 1946, and the
Soviet-sponsored autonomous republics collapsed and were
occupied by Iranian government forces. 
   Throughout most of the first decade of Iran's Islamic
Republic, formed in 1979 after the fall of the Shah, the
Soviet Union loomed as a potential threat.  The Soviet
invasion of Afghanistan (on Iran's eastern flank) in
December 1979 revived Iranian fears that Moscow might
have territorial designs on Iran.  The Soviets also
backed  Iraq through the 1980-88 Iran-Iraq war.  Iraq and
the U.S.S.R. had close ties dating to a 1972 Treaty of
Friendship, and Moscow was Iraq's most important arms
supplier during that war.   The United States and its
allies also tilted toward Iraq, leaving Iran virtually
isolated and with few outside sources of arms supply. 
Partly as a result of its isolation, Iran suffered a
series of major battlefield defeats in 1988 that forced
Ayatollah Khomeini to accept a U.N.-brokered end to the
war.   
   Its armed forces devastated after the war, Iran
looked to rebuild.  It found a willing collaborator in
the Soviet Union.   A February 1989 visit to Tehran by
Soviet Foreign Minister Edouard Shevardnadze, and his
meeting with the ailing Ayatollah Khomeini, signaled a
thaw in Iran's relations with the Soviet Union.   Iran
established an arms and technology transfer relationship
in a key visit to Moscow by then parliament speaker Ali
Akbar Hashemi-Rafsanjani, June 19-23, 1989.  (The visit
began two weeks after Ayatollah Khomeini died, and two
months before Rafsanjani was elected president of Iran.) 
   The Rafsanjani visit represented a strategic
breakthrough that set the tone for current Russian-
Iranian relations.  The joint communique issued at the
conclusion of the Rafsanjani visit said that the two
countries would collaborate in the "peaceful use of
nuclear energy" and that the U.S.S.R. "agreed to bolster
the military capacity of the Islamic Republic." (See
Endnote 33.)   The visit also resulted in agreements for
Iran to export natural gas to the Soviet Union and
participate in Central Asian railway construction. 
   Soon  after the Rafsanjani visit, Soviet/Russian
weaponry began flowing into Iran.  Since 1991, Iran has
taken delivery of 25 MiG-29 and about 12 Su-24 combat
aircraft.  Russia also has transferred to Iran 150 T-72
tanks, three Kilo-class diesel submarines, and SA-5 and
SA-6 anti-aircraft missiles. (See Endnote 34.)   This
weaponry has helped Iran rebuild its arsenal, which was
depleted in the eight-year war with Iraq.  Even with
these acquisitions, however, Iran is not as well equipped
as Iraq in ground armor.  It also lacks the logistical
capabilities to cross the Persian Gulf in force.  On the
other hand, the Kilo submarines are a new capability for
a Persian Gulf country.  U.S. military officials are
concerned that the submarines   coupled with other naval
equipment received from China   enhance Iran's ability
to threaten commercial or military shipping in the Gulf
and might enable it to lay mines undetected. (See Endnote
35.)    
   This strategic relationship with Russia might help
explain why Iran, contrary to widespread expectations,
has emphasized economic cooperation over religion and
ideology in its relations with the predominately Muslim
states of the former Soviet Union.  After the Soviet
Union broke up in 1991, Russia and the secular leaders of
the Soviet successor states in the south were concerned
that Iran might try to spread revolutionary Islam in
Central Asia and the Caucasus.  However, former President
Rafsanjani and other Iranian pragmatists saw these
regions as an export market and a means to thwart U.S.
efforts to isolate Iran.  Rafsanjani appears to have made
a case within Iran that political meddling in Central
Asia, which Russia considers its sphere of influence,
could jeopardize continued sales of advanced conventional
weapons and  equipment related to weapons of mass
destruction.  Iran also saw Russia as an ally in arguing
that all states bordering the Caspian Sea should share in
Caspian oil and gas development.
   The election in May 1997 of a relative moderate,
Mohammad Khatemi, as Iran's president produced
speculation that Iran might try to scale back its weapons
of mass destruction programs and, correspondingly, to
distance itself from Russia.   Since taking office in
August 1997, Khatemi has tried to improve relations with
the Arab Gulf states and the West, including the United
States.  At the same time, however, Iran's weapons of
mass destruction programs have reportedly continued apace
and relations with Russia have broadened.  In September
1997, the Russian gas company Gazprom announced it would
invest $600 million (a 30 percent share) in a tri-
national project to develop Iran's large South Pars
offshore gas field.  In February 1998, Iran's Foreign
Minister visited Moscow and stated, "the political will
exists between the leadership of our two countries to
increase mutual cooperation in the economic and political
fields and on the international stage." (See Endnote 36.)
Israeli Security Concerns about Iran
   Israel views Iran's ballistic missile program as a
threat to its security and national survival.  Iranian
leaders have called for Israel's destruction and do not
recognize its right to exist.  While much of the Arab
world has moved toward acceptance of Israel under various
conditions, Iran still formally rejects the idea of
coexistence, although there are signs that Khatemi might
be trying to reduce Iran's opposition to the Middle East
peace process.  Iran is loosely allied with Syria, with
which Israel is still technically in a state of war. 
According to annual State Department reports on
international terrorism, Iran gives financial and
material assistance to groups such as Hizballah, Hamas,
and Palestinian Islamic Jihad, that have committed acts
of terrorism in Israel and fight Israeli troops in south
Lebanon.  Israeli concerns may be heightened by memories
of Iraq's firing of 39 Scud missiles at Israel during the
1991 Persian Gulf.  Israel fears that Iran already has
chemical warheads and might develop the capability to
launch biological agents and eventually nuclear warheads
at Israel on the ballistic missiles it is developing.
(See Endnote 37.)  In view of Israel's small size and the
concentration of its population in a few urban centers,
Israelis are vulnerable to even a small number of weapons
of mass destruction.
                     Russian Issues
   Russia's multifaceted cooperation with Iran is
motivated by geopolitical, economic, and political
considerations.  It is not a new policy.  After Iran's
Islamic revolution in 1979, and especially after the
Soviet withdrawal from Afghanistan a decade later, Moscow
actively sought a rapprochement with Iran. (See Endnote
38.)  Rafsanjani's 1989 visit to Moscow started the flow
of  sophisticated Soviet weapons to Iran.  Through the
1990s, both Moscow and Tehran carefully broadened and
extended their cooperation into what has become a
mutually beneficial, though unofficial, alliance of
convenience.
   From a geopolitical perspective, no country is more
important to Russia in the Middle East/Persian
Gulf/Southwest Asia region than Iran.  Iran's location
also enables it to play a role in Central Asia and the
Caucasus.  These are all areas of strong Russian
interest.  It appears that Russia's top foreign policy
priority is to be the dominant force on the territory of
the former Soviet Union.  As noted above, Moscow values
Iran's restraint in the predominantly Muslim Soviet
successor states in Central Asia.  Russia and Iran also
share an interest in countering Azerbaijan (See Endnote
39.) and have cooperated against the puritanical Islamist
Taliban movement in Afghanistan.  
   As Russian foreign policy became more nationalistic
and resentful of American "global hegemonism" and
"unilateralism" under Foreign Minister Yevgeny Primakov,
Moscow turned further toward Tehran as a partner.  Iran's
low-keyed response to Russia's war in Chechnya and its
pro-Serb policies in Bosnia, despite the "anti-Islamic"
aspects of those Russian policies, also helped solidify
their relations.
      There is also an important economic dimension to
Russia's cooperation with Iran: Russian defense and
nuclear industries are in severe economic distress, and
Iran reportedly pays hard currency for nuclear reactors,
missile technology, and conventional weapons purchases. 
   In the Soviet period, the defense sector absorbed a
huge percentage of GDP.  In the space of just a few
years, however, this sector was displaced from its
position near the top of the pyramid to a relatively low
status in which many of its major elements are struggling
to survive.  MINATOM, which employs about one million
people, is in much the same economic condition as the
rest of the defense industrial sector.  Workers are being
paid subsistence and below-subsistence wages while many
enterprises and research institutes stand idle.  Salaries
often are months in arrears.  The director of a
prestigious nuclear institute committed suicide because
he could not pay his workers.  Against this background,
foreign reactor sales are viewed as a matter of survival
in MINATOM.  Nuclear reactor sales worldwide have been
slow since the accidents at Three Mile Island and
Chernobyl.  MINATOM reportedly is discussing reactor
sales with China, India, Egypt, and Cuba.  Those
governments, however, unlike Iran, seek Russian loans to
finance part or all of the sales.
   MINATOM's first completed foreign sales contract was
with Iran.  The contract for the first reactor at Bushehr
is valued at $800 million.  With recent contracts for two
additional reactors at Bushehr, MINATOM  spokesmen put
the total Iran package at $3-4 billion, over 15 years. 
U.S. estimates of the total Iran package are as high as
$8 billion.  The entire Russian state budget for 1998 is
about $80 billion.  A multi-billion dollar sale to Iran
would be a very significant input.  Despite U.S.
objections, Moscow appears determined to go ahead with
the reactor deal.  Missile technology transfers may also
be motivated by economic factors.  Russian advocates of
close cooperation with Iran argue that profits from the
reactor project and other deals far exceed the amount of
U.S. aid that might be jeopardized by sanctions.
   Although official U.S. foreign aid to Russia in
FY1998 is expected to be $120-$130 million, the United
States has much greater economic importance to Russia. 
The value of U.S. investments in Russia (where the United
States is the largest foreign investor), of the U.S.
market for Russian sales, and of indirect U.S. Government
assistance via multibillion dollar IMF loans (which have
strong U.S. political backing within the IMF and on which
Russia is highly dependent) and U.S. support of Russian
space activities far exceeds the value of Iranian
contracts with Russian enterprises.  U.S. economic
sanctions could be made to be very painful to Russia if
a decision were taken to pursue such a course, especially
in view of Russia's renewed financial crisis in May 1998.
(See Endnote 40.)  The Administration, however, clearly
wishes to avoid this approach because of concerns that
severe economic sanctions and pressure  might seriously
strain already tense U.S.-Russian relations and endanger
Russia's fragile progress toward democratization and
market reform.
   There are international and domestic political
calculations that seem to reinforce Moscow's cooperation
with Iran.  Many Russians argue that close collaboration
or alliance with Iran (and China) is an appropriate
response to NATO enlargement.  Also, as U.S.-Russian
relations become more contentious and Russian resentment
of U.S. global preeminence (and of Russia's dependence on
U.S.-backed IMF loans) grows, many analysts believe it is
politically expedient for Yeltsin to be seen as "standing
up to America" by rebuffing U.S. pressure on Iran.  This
helps assuage Yeltsin's communist and nationalist
opposition in the Duma.  It also strikes a resonant chord
in Russian public opinion.  These political
considerations, however, are probably not as important as
the geopolitical and economic factors noted above.
   The clearly articulated policy of the Russian
Government to treat Iran as a valued partner, if not an
ally, may undermine Russian officials' willingness to
effectively implement exports controls on sensitive
technology to Iran.  Furthermore, many Russian
commentators and officials argue that U.S. opposition to
Russia's cooperation with Iran is commercially motivated. 
There are two versions of this argument: a) the United
States wants to cripple Russian enterprises that are
powerful competitors to U.S. arms and nuclear reactor
exporters; and/or, b) U.S. firms dream of eventually
recapturing the Iranian market that they dominated until
1979.
                      U.S. Policy
Dual Containment
   Throughout its first term, the Clinton Administration
consistently characterized Iran as an "outlaw state" that
should be contained and isolated.  According to the
Administration, the key U.S. objections to Iran's
international behavior include its   support for
international terrorism, its active opposition to the
Arab-Israeli peace process, and its efforts to acquire
weapons of mass destruction.  In 1993, the Administration
placed the containment of Iran within a broader policy
framework of "dual containment" that casts both Iran and
Iraq as "rogue regimes" that it seeks to keep weak. (See
Endnote 41.)   
   One of the elements of dual containment has been to
cut off the supply of arms and technology to Iran.  U.S.
pressure on Russia, beginning in 1991,  did not persuade
Russia to cancel arms sales to Iran.  However, after two
years of talks on the issue, in May 1995 the United
States and Russia finalized an agreement under which
Russia pledged not to enter into any new arms agreements
with Iran.  On the basis of that understanding, the
United States dropped its objection to Russian entry into
a new, nonbinding export monitoring regime, the Wassenaar
Arrangement.   However, the U.S.-Russian agreement on
conventional sales to Iran has not contributed to a
resolution of bilateral differences on the  nuclear power
plant deal or on Russian entities' assistance to Iran's
ballistic missile programs.  
   U.S. efforts to cut off Iran's supply of strategic
weapons and conventional arms has continued despite the
election of Mohammad Khatemi as Iran's president.  His
election, and subsequent statements indicating a desire
for better relations with the United States, have
produced signs of a possible easing of hostility between
the United States and Iran.   In January 1998, Khatemi
publicly called for greater unofficial scholarly and
cultural exchanges between the United States and Iran. 
Under pressure from more conservative senior leaders,
including Supreme Leader Ali Khamenei, Khatemi stopped
short of calling for dialogue with the U.S. government. 
U.S. officials, from President Clinton down, have
responded that the United States would prefer a political
dialogue with the Iranian government, but would look to
facilitate the "people-to-people" exchanges mentioned by
Khatemi. 
   On June 17, the Administration appeared to shift
further toward conciliation in a speech by Secretary of
State Albright.  Secretary Albright said that the two
countries should work to develop a roadmap of confidence
building measures that could eventually lead to a
normalization of relations.  President Clinton echoed
those comments the following day, and in a message
broadcast in advance of the June 20 World Cup soccer
match between Iran and the United States.   Iran reacted
cautiously to the statements, saying they need to be met
with concrete deeds (such as easing of U.S. sanctions on
Iran) before relations could improve.   President Khatami
himself has not yet responded to the Albright speech
specifically.     
   Members of Congress, although increasingly open to
dialogue with Iran, oppose easing of sanctions in advance
of concrete changes in Iranian behavior. Some Members of
Congress opposed Administration consideration of removing
Iran from the list of states that do not cooperate with
U.S. anti-narcotics efforts.  Iran was re-designated as
non-cooperative in February 1998 (as it has been every
year since 1987), although the Administration noted
reports of  Iranian progress on anti-narcotics efforts. 
Several Members also opposed the Administration's May 18
waiver of sanctions on the foreign firms that invested in
Iran's South Pars gas field.
   In addition, some pro-Israel groups and Iranian
opposition groups want strict enforcement of all U.S.
sanctions against Iran.  Some of these groups oppose
easing pressure on Iran as long as it supports terrorism,
seeks weapons of mass destruction, and hinders the Arab-
Israeli peace process.   They also maintain that
Khatemi's grip on power is not firm, and he could quickly
be ousted or neutralized by hardline elements within the
regime.   Others believe that Khatemi himself has
undertaken a "charm offensive" in an effort to blunt U.S.
sanctions, with no real intention of improving relations
with the West.
Missile Technology Transfers to Iran
   The Arms Export Control Act (AECA, P.L. 90-629)
restricts exports of military items, including missiles
and related technology.  The Export Administration Act of
1979 (EAA, P.L. 96-72), until it expired on August 20,
1994, contained the legal authority for the government to
control exports of civilian goods and technology that are
also useful for missile production.  Congress has not
passed a revised version of the EAA.  President Clinton
reimposed export controls under the International
Emergency Economic Powers Act (IEEPA) on November 14,
1994.
   In November 1990, Congress amended the AECA and the
EAA to include export restrictions and penalties to be
imposed on U.S. and foreign persons and firms that
improperly transfer missile technology.  In many cases,
the sanctions provisions of these laws do not apply to
companies or individuals exporting from countries that
are adherents to the MTCR.  (See p. 3, above, for a more
detailed discussion.)   
   In addition to these general policies against missile
proliferation, Congress sharpened U.S. policy toward Iran
by passing and later amending the Iran-Iraq Arms
Nonproliferation Act of 1992 (P.L.102 -484).  This law
requires sanctions against those who provide weapons of
mass destruction or destabilizing types and numbers of
advanced conventional weapons to Iran or Iraq, although
it also gives the President waiver authority.
   Congress also amended the Foreign Assistance Act of
1961 (FAA) to prohibit aid to: 1) states of the former
Soviet Union that transfer technology that contributes to
the production of missiles or weapons of mass destruction
(sec. 498A), 2) countries that aid terrorist states (sec.
620G, 22 U.S.C. 2377), and countries that provide
military equipment to terrorist states (sec. 620H). 
Finally, in the current Foreign Operations Appropriations
Act (P.L. 105-118, Title II), Congress reduced aid to
Russia unless the President certifies it has terminated
its ballistic missile and nuclear technology assistance
to Iran.
   In addition to appealing to Russian national security
interests and threatening economic sanctions, the
Administration is using economic incentives to try to
deny Iran missile technology.  In March 1998, the
Administration announced it was offering to increase the
number of western commercial satellites Russia would be
allowed to launch.  Under a 1996 agreement, Russia was
limited to launching 20 western geostationary satellites
through the year 2000.  Since then, the demand for
commercial launches has increased.  American businesses
in joint ventures with Russians have urged the
Administration to increase Russia's quota, but it had
hesitated until now.  Each launch costs $60-$100 million. 
U.S. officials say publicly that the additional satellite
launches were not offered as a quid pro quo, nor merely
as an enticement for Russian cooperation on Iran.  But
both sides privately acknowledge linkage between
additional launches and more effective Russian control of
missile technology. (See Endnote 42.)
   Since early 1997, the Administration has considered
Russian missile technology transfers to Iran a high
priority.  The President appointed a special
representative for this issue, who met frequently with
Russian officials in Moscow and Washington.  In addition,
Vice President Gore has taken the issue up directly with
former Premier Chernomyrdin, most recently in their talks
in Washington, March 10-11, where they agreed to set up
a special expert joint commission to focus on issues of
missile and nuclear technology transfers.  Russian
officials at that time reportedly gave assurances that
tougher controls on missile technology transfers had
recently been put in place and that some violators were
already being prosecuted. (See Endnote 43.)
Russian Nuclear Cooperation with Iran
   Following the announcement of the Russian-Iranian
nuclear reactor deal in January 1995, the Clinton
Administration mounted an intense effort to persuade
Moscow to cancel the deal, with frequent meetings at the
sub-ministerial level and between the U.S. Secretaries of
State and Defense and their Russian counterparts and with
Chernomyrdin.  Moscow consistently rebuffed the U.S.
overtures.  At the Clinton-Yeltsin summit in Moscow in
May 1995, Yeltsin made a significant concession by
agreeing not to provide Iran with gas centrifuge
equipment   which would have enabled Iran to produce
highly enriched (weapons grade) uranium.  (These
centrifuges had been included in the January 1995
Russian-Iranian agreement.) Moscow also pledged to
tighten its monitoring of Iran's nuclear program and to
bring all spent nuclear fuel back to Russia.
   Nevertheless, although the Administration has
continued to view the Bushehr nuclear reactor program as
a very serious matter, it apparently has come to believe
that it cannot persuade the Russian Government to
renounce the deal.  As noted above, Congress has included
economic sanctions against Russia in the foreign aid bill
each year since 1995, but has acceded to Administration
requests for inclusion of presidential waiver authority
on national security grounds.  (See p. 2, above.)
   With H.R. 2709, Congress confronts Russia and the
Administration with more stringent requirements for
sanctions in connection with missile technology
transfers, although the bill also provides authority for
a presidential waiver on national security grounds. 
Final congressional action is expected in early June
1998.
         Pending Legislation (See Endnote 44.)
   A number of bills have been introduced in the 105thCongress 
dealing with Russian-Iranian missile technology
and nuclear reactor transfers, arms sales, and energy
sector investments.  The "Iran Missile Proliferation
Sanctions Act" (Title I of H.R. 2709, described above, p.
1, 3) has broad bipartisan support and was passed in both
chambers by seemingly "veto-proof" majorities.  H.R. 2709
combines sanctions on aid and trade with Russian missile
proliferators with Chemical Weapons Convention (CWC)
implementation legislation that the White House wants. 
The president vetoed the bill on June 23.  A veto-
override attempt is expected in July.  If it fails, it is
not clear if or when Congress will vote to approve the
CWC implementing legislation.
   Two nonbinding resolutions, H.Con.Res. 121 and
S.Con.Res. 48, introduced by Representative Harman and
Senator Kyl respectively, express the sense of the
Congress condemning Russian missile technology transfer
to Iran and urging the President to impose sanctions. 
S.Con.Res. 48 was passed by the Senate on November 7,
1997 and sent to the House.
                      ENDNOTES
1.  On May 20, Stephen Sestanovich, the president's
special adviser on the former Soviet Union, told the
Senate Foreign Relations subcommittee on Europe that
sanctions would be "profoundly counterproductive to U.S.
national interest with respect to Russia."  Although he
acknowledged that Russia had not yet succeeded in
stopping the leakage of missile technology to Iran, he
warned that sanctions could "risk inadvertently
undermining our efforts to stop Russia's support of
Iran's missile programs."  President Clinton conveyed a
similar message in a White House meeting with a group of
Senators on the evening of May 20.  Reuters; AP, May 21,
1998.
2.  Russia, United States: Moscow Condemns Senate Vote on
Sanctions, FBIS, Foreign Media Note, May 26, 1998.
3.  Washington Post, March 6, 1998, p. A11. After joining
the South Pars project, Gazprom turned down previously
offered U.S. Ex-Im Bank credits in apparent anticipation
of U.S. sanctions.
4.  President Yeltsin dismissed Chernomyrdin and his
entire cabinet in a surprise move on March 23, 1998.  
5.  Defense News, February 10-16, 1997, pp. 1, 40.
6.  Carus, Seth, Ballistic Missiles in Modern Conflict,
New York, Praeger, 1991, p. 1-9, 35-48.
7.  Flight International, October 23-29, 1996, p. 17.
8.  Los Angeles Times, February 12, 1997, and Komersant-
Daily, February 14, 1997, p. 4, as reported in FBIS-SOV-
97-032, February 14, 1997.  The SS-4, developed in the
1950s, had a one-stage, liquid-fuel engine and a range of
1,800 to 2,000 km. It was being phased out of the Soviet
inventory when it was eliminated under the INF Treaty in
the 1980s.
9.  Defense News, April 14-20, 1997, pp. 1, 26; October
6-12, 1997, p. 4; February 2-8, 1998, p. 8; International
Herald Tribune, December 9, 1997, p. 1; Jane's
Intelligence Review Pointer, December 1997, p. 5; New
York Times, August 22, 1997, p. 1; Washington Post,
December 31, 1997, p. A1; Washington Times, October 2,
1997, p. A 11; October 10, 1997, pp. A1, A11, and January
20, 1998, p. A12.
10.  Defense News, October 6-12, 1997, p.4; Washington
Post, December 31, 1997, p. A1; Washington Times, October
2, 1997, p. A1 October 20, 1997, pp. A1, A1.
11.  Center for Nonproliferation Studies database
abstract of Jane's Defence Weekly, April 23, 1997, p. 4
and related articles, and abstract of Iran Brief,
September 9, 1996, pp. 1-2; Washington Times, February
24, 1998, p. A3.
12.  Philadelphia Inquirer, September 26, 1997, p. 3;
Associated Press, Russia Halts Missile-technology Sales
to Iran, January 30, 1998.
13.  Washington Times, October 20, 1997, pp. A1, A11.
14.  International Herald Tribune, December 9, 1997, p.
1.
15.  Tightening Control Over Exports of Dual-Use Products
and Services Related to Weapons of Mass Destruction and
their Means of Delivery, Russian Space Agency, Executive
Letter No. 53, February 23, 1998, implementing the
January 22, 1998 decree.
16.  Nucleonics Week, January 29, 1998, p. 14; Radio Free
Europe/Radio Liberty (RFE/RL) Newsline, January 23, 1998.
17.  Daniel Williams, "Russian Spy Agency Linked to
Iran," Washington Post, March 23, 1998, p. A14, and
conversation with Mr. Williams; Yevgeniya Albats, "Our
Man in Tehran," Novaya Gazeta Ponedelnik [Moscow], March
16-22, 1998, p. 4-5, cited in FBIS-TAC-98-076, March 17,
1998.
18.  New York Times, April 25, 1998, pp. 1, 24;
Washington Times, June 23, 1998, pp A1, A14.
19.  Defense News, April 6-12, 1998, p. 4.
20.  Jamestown Monitor, May 19, 1998.
21.  Ibid.
22.  Ibid; Office of the Secretary of Defense,
Proliferation: Threat and Response, November 1997, p. 27;
Reuters, Nov. 18, 1997.
23.  "Possibility Raised for Resuming Iranian Nuclear
Project."  Nucleonics Week, December 22, 1983, p. 1.  The
number may be exaggerated, but it is not impossible.  In
U.S. nuclear construction projects at their peak
construction workers numbered in the thousands. 
24.  Hoffman, David.  "Russia Expanding Role in Iranian
Power Plant." The Washington Post, February 22, 1998, p.
A30.
25.  "Russia Confirms Plan to Build Nuclear Plant in
Iran." Associated Press.  March 11, 1998.
26.   Elaine Sciolino, "Report Says Iran Seeks Atomic
Arms," New York Times, Oct. 31, 1991.
27.   Nonproliferation Center, Central Intelligence
Agency, The Weapons Proliferation Threat, March 1995, p.
12; R. James Woolsey, Director of Central Intelligence,
Testimony before a hearing on Proliferation Threats of
the 1990's, Senate Governmental Affairs Committee, Feb.
24, 1993, S. Hrg. 103-208, p. 53; Elaine Sciolino, "CIA
Says Iran Makes Progress On Atom Arms," New York Times,
Nov. 30, 1992.
28.  "Spokesman Denies Nuclear Sales to Iran." Agence
France Press, March 17, 1998.
29.  Shepherd, Leslie.  "Iranian Nuclear Chief to Visit
Russia Amid Controversy." AP, May 8, 1998.
30.   JPRS-TND-93-007, Mar. 5, 1993, "Russian Federation:
Foreign Intelligence Service Report," p. 28.
31.   JPRS-TAC-95-009-L, Apr. 6, 1995, "Russian Foreign
Intelligence Service Report on Nuclear Nonproliferation
Treaty," p. 19.
32.  "Russia Says Nuclear Sales to Iran Pose No Threat."
Reuters, May 11, 1998.
33.  Islamic Republic News Agency [IRNA] on Communique,
June 25, 1989, in FBIS-NES -89-121, June 26, 1989, p. 31-
33. 
34.  See Eisenstadt, Michael.  Iranian Military Power:
Capabilities and Intentions.  Policy Paper Number 42. 
Washington Institute for Near East Policy, 1996, p. 36. 
35.  Gertz, Bill. "U.S. Commander in Gulf Sees Increased
Threat From Iran," Washington Times, January 29, 1997,
p.A5. 
36.  Jones, Gareth.  "Russia, Iran Vow to Beef Up Ties,
United Over Iraq," Reuters, February 25, 1998. 
37.  Ze'ev Schiff, "Iran's Missiles   What's New?" 
Ha'aretz [Tel Aviv], November 10, 1997, p. 3, cited in
FBIS-TAC-97-314.
38.  This overview of Russian-Iranian relations is based
in part on the work of Robert O. Freedman.  See, for
example, his "Russia and Iran: A Tactical Alliance," SAIS
Review, v. 17, summer-fall 1997.  See also, Soviet Policy
Toward Iran and the Strategic Balance in Southwest Asia,
CRS Report 87-592, June 19, 1987, by Stuart D. Goldman.
39.  Some Azeri leaders publically declare the goal of
absorbing "southern Azerbaijan," which is part of Iran. 
Baku also resists Russian attempts to dominate Caspian
Sea oil and regional pipelines.  This provides a basis
for Russo-Iranian cooperation against Azerbaijan.
40.  A recent Russian newspaper article critical of the
government's complicity in Iran's missile development
program cautioned that, "Military assistance to Iran
could bring Russia approximately $2 billion annually. 
Possible losses from various sanctions [by] the EU and
the United States total approximately $50 billion." 
Albats, "Our Man in Tehran," p. 4.  The $50 billion
figure may be exaggerated, but the main thrust of the
warning is clear.
41.  On May 19, 1993, former NSC Senior Director for the
Near East Martin Indyk first described the
Administration's policy as one of "dual containment" of
Iran and Iraq. Text of Martin Indyk's speech can be found
in the proceedings of the Soref Symposium, Challenges to
U.S. Interests in the Middle East: Obstacles and
Opportunities, May 18-19, 1993.  Washington, Washington
Institute for Near East Policy, p. 1 - 8. 
42.  Jamestown Monitor, March 10, 1998; Defense News,
March 16-22, 1998, p. 12.
43.  CRS interviews with congressional staff and Russian
diplomats, March 1998.
44.  Drawn in part from CRS reports and memoranda by
Dianne Rennack, Analyst in Foreign Policy Legislation.
				END OF FILE



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