The dispute between Russia and Iran over Tehran’s alleged failure to pay for the construction of the Bushehr nuclear power plant, which seemed resolved only two months ago, has flared up once again. [1] One indicator of the renewed confrontation was that Sergey Shmatko, the head of AtomStroiExport – the Russian company in charge of construction of nuclear power plants abroad – suddenly cancelled a visit to Tehran scheduled for the end of May 2007, during which details of completing the project were to be discussed. [2] The Chief of AtomStroiExport’s press service Irina Yesipova announced that negotiations were postponed because the parties failed to reach an agreement on the payment schedule for Bushehr’s completion. [3]

Sources in Rosatom, the Russian atomic nuclear agency, clarified that Iran had paid AtomStroiExport only $20 million since the beginning of 2007, where as the payment schedule required it to have paid $25 million each month. “It is now unmistakably clear that Iran is only pretending to make payments” the unnamed source commented. [4] Rosatom further clarified that the payment of $20 million was made in late March 2007, only a week before the deadline for cancelling the project, and then the Iranians again stopped making payments. “We have the sad feeling that [the Iranians] have lost interest,” said the same source. [5]

Additionally, AtomStroiExport said that the problems have not been resolved regarding the delivery of equipment for Bushehr manufactured by third parties for which Iran, rather than Russia, had contracted [6] The Rosatom source repeated the earlier position that Russia was prepared to complete construction of the facility, as long as Iran paid for the work, and he confirmed that nuclear fuel would be delivered no earlier than six months prior to the completion of the project, in keeping with the original agreement. [7]

Viktor Opekunov, chairman of the State Duma’s (the lower chamber of the Russian parliament) subcommittee on nuclear energy, declared that Russia had to be tough with Iran. “We are nearing serious political decisions,” he said, referring to the upcoming debates in the UN Security Council on the imposition of possible new sanctions against the Iranian nuclear program. Opekunov continued, “Perhaps we will have to make it clear to Tehran that Russia could lose its reasons to defend the Bushehr station when the [UN Security Council] defines the list of facilities subject to international sanctions.” [8] To date, the sanctions set forth in UN Security Council Resolutions 1737 and 1747 have focused on halting sensitive aspects of Iran’s nuclear program involving uranium enrichment and the separation of plutonium and have not sought to restrict completion of the Bushehr nuclear power plant project. [9]

As in the past, Iran insisted it was making all payments on time. Moreover, a spokesman for the Iranian Foreign Ministry announced that the country remained committed to the project and was prepared to work with Russia in resolving Moscow’s concerns regarding payment. [10]

Opinions as to the reasons for the renewed confrontation differed widely. Rosatom and AtomStroiExport place the responsibility squarely at Iran’s door. However, Rajab Safarov, a Russian expert on Iran, who is known for his staunch defense of the Iranian point of view, opined that at least part of the problem lay with the Russian Alfa-Bank, which is the primary financial agent for the Bushehr project. The Iranian side suspects, said Safarov, that Alfa-Bank is concerned that its participation in the controversial deal could hurt its reputation in global financial circles and is intentionally disrupting the transfer of payments. Referring to complaints regarding Iran’s treatment of third-party equipment manufacturers, he added that the Iranians only refused to pay Russia for the installation of equipment that had been purchased from third parties, but not received. AtomStroiExport, he said, insisted on being paid regardless. [11]

According to Russian radio journalist Dmitri Shusharin, the “uneven” payments by Iran are only the surface of a much deeper dispute. Russia, he said, is primarily concerned about the misuse of the nuclear fuel it is scheduled to transfer to Iran. If that fuel, comprised of non-weapons-usable low-enriched uranium, is diverted to Iran’s enrichment facility and enriched to weapons-grade level, he explained, “No one will be interested in legal fine print,” referring to provisions of the Bushehr contract banning such activities. Moscow, he continued, is seriously worried about the prospect of Iran acquiring nuclear weapons and is in the process of toughening its stance on that problem. He argued that Iran, for its part, is apparently not interested in having Russia complete the Bushehr nuclear power station and may be prepared to sever its ties to Russia in the nuclear energy field. [12]


Nikolai Sokov – Monterey Institute Center for Nonproliferation Studies