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Iran and Russia’s recently announced $20 billion oil-for-goods trade deal has sparked concerns that Moscow is seeking to open up a direct line into Tehran for the import of sanctioned nuclear equipment and military hardware, shipments that would flatly violate the terms of the recently inked interim nuclear deal.
Tehran and Moscow are in the last stages of finalizing the trade deal, which would provide Russia with half-a-million barrels of Iranian oil a day. The deal would boost Iranian exports by as much as 50 percent a day, according to experts.
The trade deal could open the floodgates between the two nations and has sparked concerns that the trade pact will open a “channel for the transfer of sanctioned nuclear equipment or military hardware to Iran, not to mention other illicit financial transactions,” according to Mark Dubowitz, executive director of the Foundation for Defense of Democracies (FDD).
The trade deal also led Sens. Mark Kirk (R., Ill.) and Robert Menendez (D., N.J.) to demand that the White House immediately reinstate harsh sanctions on Iran if it goes through with the deal and violates the interim agreement, which provided Iran with more than $7 billion in sanctions relief.
Both lawmakers and experts have expressed frustration that the Obama administration has stood on the sidelines as Iran exploits the interim deal for billions and continues an intense economic and military buildup that includes the testing of advanced ballistic missiles.
Iran has been exporting well above 1 million barrels of oil per day for the past five months despite repeated White House assurances that this would not take place under the interim deal.
News of the trade deal’s finalization came on the same day that Iran announced that its trade with Turkey exceeded $2 billion in just the first two months of 2014.
Menendez and Kirk, the principal congressional forces behind Iran sanctions legislation that is opposed by the Obama administration, expressed alarm “that the barter agreement [between Iran and Moscow] may provide for the transfer to Iran of items of significant value to Iran’s military and its nuclear program.”
They pressed President Barack Obama to “put Iran on notice that the United States is prepared to re-instate these sanctions should Iran attempt to evade our sanctions and violate the terms of the JPA.”
The trade deal could pave the way for Iran to acquire highly advanced Russian weapons systems, which Tehran has been seeking to purchase for months.
These include the S-300 long-range surface-to-air missile system, which is similar to America’s Patriot missile.
“The Russian system is considered to be one of the most effective air-defense systems in the world. After intense lobbying by the United States and Israel, and the passage of United Nations sanctions which even Moscow interpreted as banning the sale, Russia canceled its promised delivery of the S-300 to Iran in 2010,” Dubowitz noted in his recently analysis. “But Iran has not dropped its request; the system could be a strong deterrent to a U.S. or Israeli strike against Iranian nuclear facilities.”
While Iran’s economy has rebounded in recent months due to the interim deal, experts like Dubowitz warn that the trade deal with Russia will significantly reverse the inroads made by U.S. sanctions over the years.
“The deal would ease further pressure on Iran’s battered energy sector and at least partially restore Iran’s access to oil customers with Russian help,” he wrote.
Kirk and Menendez warned that the trade deal may violate the terms of the interim deal, which was supposed to freeze portions of Iran’s nuclear program.
“If Iran moves forward with this effort to evade U.S. sanctions and violate the terms of oil sanctions relief provided for in the [interim deal], the United States should respond by instating the crude oil sanctions, rigorously enforcing significant reductions in global purchases of Iranian crude oil, and sanctioning violations to the fullest extent of the law,” they wrote in their recent letter to Obama.
FDD’s Dubowitz also called on the administration to warn Russia that it is enabling and aiding Iran’s rogue behavior.
“The Obama administration, with congressional backing, should make it clear to Russia that any illicit barter scheme, especially one involving Iranian oil and sanctioned goods (such as advanced missile systems), will trigger punishing sanctions against Russian sanctions busters. Moreover, this would be a clear violation of both Iran’s and Russia’s obligations under the Geneva interim agreement,” he wrote.
“As a result, if the deal proceeds in any way, the administration should re-impose all the existing sanctions against Iran that were suspended as part of the Geneva agreement and clear the way for the passage of congressional legislation targeting Iranian oil exports, currently being blocked by the administration,” Dubowitz wrote.
Meanwhile, trade between Iran and Turkey hit $2.115 billion during the first two months of 2014, according to the country’s state-run Fars News Agency.
Iran-Turkey trade hit more than $24 billion in 2013 and the countries aim to top $30 billion in trade by 2015, according to Iranian officials.