Russia Opens Oil-For-Goods Swap, Approves Missile Deliveries to Iran

After reaching an interim deal with Tehran on its nuclear program with other world powers, Russia has approved the delivery of missile systems to Iran and started an oil-for-goods swap, indicating that Moscow may have a head-start to benefiting from the eventual lifting of sanctions on the Islamic Republic.

The Kremlin states that Russian President Vladimir Putin signed a decree ending a self-imposed ban on the delivery of the S-300 anti-missile rocket system to Iran, dissolving a major irritant between the two after Moscow canceled the initial contract in 2010 under pressure from the West.

A senior government official said in a separate statement that under the barter deal, Russia had begun supplying grain, equipment, and construction materials to Iran in exchange for the latter’s crude oil.

Officials from the two countries have issued contradictory statements as to whether a deal has been signed, but Deputy Foreign Minister Sergei Ryabkov reiterated on Monday that one was already underway.

Ryabkov told members of the upper house of parliament that “in exchange for Iranian crude oil supplies, we are delivering certain products. This is not banned or limited under the current sanctions regime”. He declined to share further details while the Russian Agriculture Ministry  and Energy Ministry, along with Iran, did not provide any comments.

Being Russia’s third largest buyer of wheat, Iran had been discussing the oil-for-goods agreement with Russia for more than a year. Russia hopes to reap economic and trade benefits if a final deal is reached based on the framework agreed by Iran and the six world powers – Russia, the United States, the United Kingdom, France, Germany, and China.

The talks are expected to come to a conclusion on June 30, by which a detailed technological agreement where Iran would curb its nuclear program and allow international intervention in exchange for the lifting of economic sanctions would be completed.

Head-start in the race

Russian Foreign Minister Sergei Lavrov said that the agreement concluded in Lausanne diminished the need for Moscow’s ban on the delivery of the S-300, which he describes as defensive, and therefore not a threat to Iran’s arch-foe, Israel.

He added that because the contract was suspended, “we did not receive major sums that we were due. We see no need to continue doing this given progress in talks on Iran’s nuclear program and the absolutely legitimate nature of the forthcoming deal”.

According to Leonid Ivashov, a retired Russian general who is now head of the Moscow-based Center for Geo-Political Analysis think-tank, the move was part of a race to secure potential contracts in Iran.

“If we now delay and leave Iran waiting, then tomorrow, when sanctions are fully lifted, Washington and its allies will get Iran’s large market”, he said quoted by RIA news agency.

Ryabkov suggested that Russia held high hopes that its support for Iran would be repaid through energy cooperation once international sanctions have been lifted against Tehran.

We are ready to provide our services and I am sure they will be pretty advantageous compared to other countries,” he stated. “We never gave up on Iran in a difficult situation… Both for oil and gas, I think the prospects for our cooperation should not be underestimated”.

He further added that Moscow supports the lifting of an arms embargo once a final nuclear deal has been established.

As a result of sanctions, Iran’s oil exports have been cut to about 1.1 million barrels per day from 2.5 million in 2012. Analysts claim that it is unlikely for Iran tosee a major boost in exports before next year.

A member of the upper house asked Ryabkov whether lifting sanctions on Tehran could undermine Russia’s position on global energy markets, particularly as the main gas supplier to Europe.

He replied that “[he is] not confident as yet that the Iranian side would be ready to carry out supplies of natural gas from its fields quickly and in large quantities to Europe. This requires infrastructure that is difficult to build”.


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John Dennis Mendiola
John Dennis Mendiola
A Business Administration graduate who takes interest in current events and existentialism. He is often found browsing the weird and bizarre during his spare time.