Wednesday, August 01, 2007


Middle East
Jul 28, 2007
Page 1 of 2
A new crisis in Russia-Iran relations
By Kaveh L Afrasiabi

Moscow's decision to postpone the completion of a 1,000-megawatt reactor in Bushehr, Iran, has shocked Tehran and is bound to bring Russia-Iran relations to a crisis point, this at a time when neither country can afford to have such a negative impact on their geostrategic considerations.

On August 15, President Mahmud Ahmadinejad is due in Bishkek, Kyrgyzstan, to attend (as an observer) a summit of the

Shanghai Cooperation Organization (SCO), the regional security organization launched by Russia and China and encompassing the Central Asian states. Iran can potentially contribute to the SCO's security-related priorities and, certainly, to its anti-terrorism center.

Yet compared with last year when there were lively discussions, particularly in the Russian press, of Iran's inclusion as a member of SCO, not only is there no such talk this year but, worse, the crisis over Bushehr threatens the wellspring of the entire Iran-Russia relationship.

As usual, the Kremlin has veiled its "playing politics with Bushehr" by hiding behind its private contractors involved with the Bushehr project, who insist their announcement that Bushehr will not go operational this autumn as planned and will at the earliest the following autumn, is purely financial in nature.

According to Grigory Noginsky, chairman of the Federation Council Commission for Nuclear Energy, payments made by Iran for the construction of the plant "were in fact stopped in the beginning of the year. Even if Iran fully resumes payments today, there is such a notion as inertia, and I think that the launch will be possible in reality no earlier than in summer-autumn 2008."

This is nonsense, the Iranians insist, and they have threatened to go public by publishing all the records of Iran's regular payments to the Russian nuclear subcontractors. Noginsky's announcement coincided with a high-level Iranian delegation heading to Moscow to discuss the matter, making it look like a peremptory move on Russia's part to assure those talks are futile.

Thus the fate of the US$1 billion nuclear project has been cast under a thick cloud of uncertainty. "Confidence in the project has been undermined," Irina Yesipova, the spokeswoman for Atomstroiexport, which is building the Bushehr plant, told Interfax news agency.

As a result, confidence in Russia-Iran relations has been seriously undermined. From Iran's vantage point, there is no doubt that Moscow has appeased Washington, whose officials have openly asked Russia not to complete Bushehr.

This year, Russia also reneged on its contractual obligation to deliver nuclear fuel to Iran. Iran has a separate agreement with Moscow on nuclear fuel, which should have been respected. According to Ahmad Gharib, a former official of Iran's Atomic Energy Organization in charge of nuclear fuel, Iran can now complain against Russia for "failure to fulfill its contractual obligations". Gharib and a number of other Iranian current and/or former officials have criticized Tehran's "lack of political will" with respect to Russia's constant manipulation of its nuclear partnership with Iran for the sake of its relations with the US.

In a press interview on Wednesday, Ali Larijani, Iran's chief nuclear negotiator, once again accused the US of trying to deprive Iran of "nuclear technology and know-how". Certainly, Russia's willingness to accommodate the White House's objectives against Iran go a long mile in that direction. Gharib has rightly noted that "the operationalization of Bushehr greatly facilitates [the fulfillment] of Iran's nuclear rights and the procurement of peaceful nuclear technology".

The fact that Bushehr is now more than seven years behind schedule translates into serious worries about the future of Iran's power industry. Iran is in dire need of nuclear-generated electricity and the crisis over Bushehr directly translates into a crisis of economic planning in Iran. [1] The Russian leadership must realize the extent of damage to Iran, both short-term and long-term, caused by their toying with Bushehr for the sake of their US policy.

"Iran expects its friends to prevent the denial of Iran's legitimate rights," Iran's former president Ayatollah Ali Akbar Hashemi Rafsanjani has complained, and more bitter reactions on the part of other Iranian politicians have been reflected in the Iranian press. A growing number of parliamentarians openly use the word "betrayal" to describe the Kremlin's behavior. The Kremlin's other decision, to offer cooperation with the US in monitoring Iran's missile program through the giant radar stationed in Azerbaijan, has also met criticism by Iranian politicians.

At the same time, there are other points of tension between Russia and Iran, such as their competition for the European energy market. Russia has bitterly complained against the recent Iran-Turkmenistan-Turkey gas deal, which undermines Russia's energy strategy toward Europe, and the Iranian media have made

Continued 1 2


Tuesday, July 31, 2007

Saudis buy major supplier to U.S. military

WASHINGTON — Saudi Arabia has acquired a Massachusetts firm that is a leading supplier to the U.S. military.

The state-owned Saudi Basic Industries Corp. has purchased GE Plastics from General Electric for $11.6 billion. Based in Pittsfield, Mass., GE Plastics, with 11,000 employees, develops and manufactures plastic polymers, composites and polycarbonates used in U.S. military platforms, including fighter-jets, submarines and engines.

"SABIC's intention is to grow globally," SABIC chief executive officer Mohamed Al Mady said.

In May 2007, SABIC announced the acquisition of GE Plastics, regarded as the largest transaction ever completed in the United States by a Gulf Cooperation Council state. Seventy percent of SABIC, which employees 17,000 people, is owned by the Saudi government, with Middle East investors accounting for the rest of the company.

SABIC, established in 1976, bested the U.S.-based Apollo Management and the Dutch firm Bassell for the acquisition of GE Plastics. The Saudi company offered $11.6 billion for GE Plastics.

The purchase of GE Plastics must be approved by the Committee on Foreign Investments in the U.S, aligned with the Treasury Department. In March 2006, CFIUS enabled the purchase of Britain's Peninsular and Oriental Steam Navigation Co., which operates the six major U.S. ports, by the United Arab Emirates.

Congress protested the sale of P&O on grounds of national security, and the UAE's Dubai Ports World backed out of the deal. DP World, however, succeeded in its bid to acquire Britain's Doncasters Group Ltd., a manufacturer of precision aircraft engine parts for the U.S. military.

Executives said GE Plastics maintains contracts with the U.S. Defense Department, Homeland Security Department and the National Aeronautics and Space Administration, or NASA. Congress has not raised objections to the SABIC purchase.

Blog Archive