Eager to Invest in Iranian Energy, Russians Seek Support to Undercut Western Sanctions

UNITED NATIONS _ Even as the White House praised Russia for declining to sell anti-aircraft missiles to Iran in violation of U.N. sanctions, Russian diplomats were quietly recruiting other countries this week to undercut tougher penalties imposed on the Islamic Republic.

Russia supported weak U.N. sanctions approved in June to pressure Iran over its nuclear program. But it has strongly objected to tougher sanctions added individually by the United States, the European Union and four other allied countries. It fears those sanctions may also end up hurting Russian businesses that do business in Iran.

It is unclear whether Russia’s effort at the United Nations this week to rally major developing countries, which see huge business opportunities in Iran, will bear fruit. But Moscow’s pushback sends a troubling signal about the prospects for more rigorous efforts to force Iran to bend. And it raises questions about whether the Obama administration has much to show for its highly publicized effort to “reset” relations with the Kremlin.

While Tehran insists it is interested only in generating electricity, the U.S. and many other countries believe Iran’s nuclear program is aimed at trying to build a bomb. Frustrated at the relatively weak sanctions approved in June that targeted arms sales, Iran’s nuclear sector and the Revolutionary Guards, the Obama administration and its allies imposed their own sanctions aimed at crimping trade and cutting off foreign investment in Iran’s vital energy sector.
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As diplomats from around the world convened in New York for the annual United Nations General Assembly meetings this week, Russian diplomats tried to enlist like-minded countries to make a stand against those unilateral sanctions.

In a Wednesday meeting with diplomats from China, India and Brazil, the Russians raised the prospect of a U.N. General Assembly resolution that, while not binding, would send a loud signal from countries eager to seize opportunities in Iran’s energy sector – and probably weaken the ability of the U.S. and its allies to get other countries to go along with their tougher approach.

All four countries oppose the unilateral sanctions. Another important opponent is Turkey, which has signaled a keen interest in additional energy deals with its neighbor Iran.

Among members of this group, “there is a broad agreement on principles,” said a diplomat from another nation involved in the talks. The diplomat, who spoke on condition of anonymity, said the group is not yet ready to offer a specific resolution.

Sergey Ryabkov, the deputy Russian foreign minister, said it was unfair for the U.S. and Western allies to unilaterally impose tough measures after they had failed to convince other U.N. Security Council members to accept them.

“They adopt the precisely the same elements that we were unable to agree with at the United Nations,” Ryabkov said in an interview. “This is really a question of political ethics, political morality.”

Russia, which has just completed construction of the Iran’s first nuclear power plant in Bushehr, sees large business opportunities in the Islamic Republic. But it fears that the U.S. sanctions could prevent Russian companies from doing business with the United States if they also are doing business in Iran. And they fear that multinational companies based in other countries might also shy away from dealing with their Russian counterparts, for fear that they too will face punishment from Washington.

Since the U.N. resolution was adopted, Turkey and China have sold huge cargoes of gasoline to Iran, energy traders say. Russia signed a long-term energy partnership with Iran’s Energy Ministry, and China has further increased commitment to invest in the energy sector to a value of $40 billion.

While those actions do not violate the U.N. sanctions, they underscore a vulnerability for the U.S. and its allies. If some countries continue to do business with the Iranian energy sector, Western companies may pressure their governments to drop the sanctions that put them at a competitive disadvantage.

Senior State Department officials said they were aware that some countries were talking about resisting the national sanctions, but downplayed the threat.

Diplomats say that one potential way out of the dispute is to open discussions on a plan to limit how far individual countries can go in imposing their own penalties on a country that already is under U.N. sanctions.

Russia’s maneuver also raises questions about the Obama administration’s claims of improved ties with Moscow, suggesting that the relationship remains more complicated than the administration is ready to acknowledge.

On Wednesday, the White House heaped praise on Russia for deciding against a sale of anti-aircraft missiles to Iran, saying Russian President Dimitry Medvedev had “shown leadership in holding Iran accountable for its actions, from start to finish.”

Mark Dubowitz of the Foundation for the Defense of Democracy, a research organization that advocates tough sanctions, said Russia has been playing a “double game, voicing a kind of tepid support” for the Western effort, even while continuing to build economic ties with Tehran.

He said that a U.N. resolution from this group would be a “shot across the bow” of the U.S. and its allies.

Dubowitz said Russia and China have done little to enforce any of the sanctions, and that major Russian and Chinese companies continue to chase business with Iran as Western companies pull back to avoid being punished.

China has been “even more active in the energy sector, scooping up deals left by others,” he said.

Dubowitz said that Robert Einhorn, the senior State Department official responsible for organizing international enforcement of the sanctions, has not yet met top Chinese officials although he sought a meeting more than a month ago. U.S. officials say it is a scheduling problem; Dubowitz said it reflects Chinese resistance.

Paul Saunders, a Russia specialist at the Nixon Center in Washington, said Russia’s actions “make clear Russian ambivalence, and suggest it’s going to be difficult, if it’s possible at all, to get Russia to do much on the sanctions.”

He said Russian officials had promised the Iranians during the U.N. Security Council negotiations leading to imposition of the sanctions that “we’ll take care of you.” But Moscow was put in an awkward position when the U.S. and several allies added their own tougher sanctions within two months.

Saunders said another reason for the resistance of Russian and Chinese officials to the sanctions is that many senior officials in those countries have personal financial ties to the big energy companies.

Ryabkov, the Russian diplomat, said Russia and its allies were objecting not only to the sanctions themselves, but to the pattern of Western countries to try to win mild sanctions from the U.N. to establish the international legitimacy of the effort, only to follow up with much tougher unilateral punishments.