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C O N F I D E N T I A L MOSCOW 002531 
 
SIPDIS 
 
E.O. 12958: DECL: 10/06/2019 
TAGS: PGOV PREL RS IR
SUBJECT: MEDVEDEV, PUTIN, AND RUSSIA'S IRAN POLICY 
 
Classified By: Ambassador John Beyrle for reasons 1.4 (b) 
and (d). 
 
¶1. (C) SUMMARY:  Despite Russian President Medvedev's 
September 24 remarks that sanctions against Iran might be 
necessary, other government officials and experts here 
caution that Russia will remain, for the time being, 
reluctant to pursue a tougher line against Tehran.  The 
consensus among the Russian political elite is that 
maintaining a dialogue with the Iranians and exhausting 
diplomatic avenues is preferable to imposing sanctions in the 
near term.  While Medvedev as president is responsible for 
controlling arms and nuclear technology transfers, Prime 
Minister Putin remains closely identified with decisions on 
Iran policy, including the sale of civilian nuclear 
technology and weapons, which provides a boost to powerful 
state enterprises.  According to Deputy FM Ryabkov, Putin's 
relative silence on Iran since Medvedev's statements does not 
signal any difference between them on sanctions.  End 
Summary. 
 
Medvedev on Sanctions: Few Official Echoes 
------------------------------------------ 
 
¶2. (C) Russian Government officials, including Prime Minister 
Putin, have not yet echoed President Medvedev's public 
statement that Russia would consider the imposition of 
sanctions on Iran if the world community ran out of other 
options.  Asked about Russian views on the Qom revelation in 
New York September 25, FM Lavrov adopted a strikingly softer 
tone than in the just released Kremlin statement.  He noted 
that Iran had acted positively by notifying the IAEA about 
its plans to construct a new nuclear facility, and complained 
that some of Russia's "partner countries" in the P5-plus-1 
had not shared information about the Qom facility earlier. 
Lavrov stressed that Iran's cooperation with the world 
community as a member of the NPT with non-nuclear status 
could prove the peaceful nature of its nuclear program. 
 
¶3. (C) Before the most recent P5-plus-1 meeting in Geneva, PM 
 Putin said that Russia would not support "significant" 
changes to its approach on Iran.  Ariel Cohen, a senior 
fellow at the Heritage Foundation, said Putin and Lavrov told 
him in early September that they are opposed to tougher 
sanctions and the use of force against Iran.  Russian Deputy 
Foreign Minster Sergei Ryabkov said September 29 that Iran's 
recent proposals presented a "broad field for dialogue." 
Ryabkov added that whether sanctions against Iran might 
become inevitable was a "completely separate issue, one that 
we are not yet ready to address."  He stressed Russia's 
position was to do everything possible to find a "diplomatic, 
political solution to the Iranian nuclear problem." 
 
¶4. (SBU) While expressing concern over Iran's missile 
program, Russian Ambassador to NATO Dmitriy Rogozin stressed 
September 29 that Russia preferred political dialogue over 
tough measures that could trigger an "arms race in the 
region."  Russian Ambassador to the United States Sergey 
Kislyak said September 24 that sanctions were not the way to 
resolve the problem; rather, the point was how to find a 
"political solution that would eliminate this problem."  The 
priority was to "start a serious dialogue with our Iranian 
partners in seeking a way out of the situation." 
 
¶5. (C) Russia's message to domestic audiences also remains 
unchanged.  Despite Medvedev's carefully worded comments on 
sanctions in New York (called by one analyst here "a jewel of 
diplomatic casuistry"), even prominent Russians with ties to 
the Kremlin's domestic propaganda machine believe Russian 
support for Western sanctions is highly unlikely.  Medvedev 
advisor Gleb Pavlovskiy, President of the Effective Policy 
Foundation, and Maksim Shevchenko, President of the Russian 
World Foundation, even spoke in favor of completing Russia's 
frozen S-300 surface-to-air missile deal with Iran. 
 
Interpreting Putin's Silence 
---------------------------- 
 
¶6. (C) PM Putin's lack of public comment on the possibility 
of Iran sanctions after President Medvedev's public statement 
does not indicate disagreement between them on Iran, DFM 
Ryabkov told Ambassador Beyrle October 3.  Ryabkov repeated 
his comments, made in Geneva during P5-plus-1 talks, that 
Russia had not ruled out the possibility of sanctions, but 
would begin to contemplate them only as an absolute last 
resort. 
 
¶7. (C) Most political commentators and analysts here have 
been echoing the same statements.  Tatyana Stanovaya of the 
Center for Political Technologies thought that Medvedev's 
seemingly more positive statement indicates no real 
rapprochement with the U.S. on Iran.  Rather, she said, his 
words are carefully calibrated to indicate a welcoming of 
U.S. willingness to use the P5-plus-1 format and engage in 
actual discussions with Iranian officials. 
 
¶8. (C) Nevertheless, Medvedev's New York comments and the 
September 25 Kremlin statement mark a definite toughening of 
Russian rhetoric on Iran.  Pravoe Delo co-Chairman Georgiy 
Bovt told us October 5 that Medvedev's use of the word 
"sanctions" represents a policy change.  Boyt cautioned that 
Medvedev's words would probably resonate with only a distinct 
minority of Russian society.  He believes it will be hard for 
Medvedev to sell Iran sanctions to the Russian bureaucracy 
without the full support of Putin.  At the Sochi Economic 
Forum, Putin blasted the U.S. for not allowing the export of 
certain high technology to Russia.  Boyt thinks Russia might 
ask for an easing of these restrictions in exchange for 
supporting sanctions. 
 
Sanctions: Economic Implications 
-------------------------------- 
 
¶9. (C) Despite Medvedev's presidential authority over arms 
transfers, Putin undoubtedly retains a critical, if not 
decisive role over an issue with such significant domestic 
economic implications as the transfer of nuclear technology 
and armaments to Iran.  Russia and Iran currently have 
limited military cooperation, so the effect of any lost 
revenue from arms sales to Iran would be small.  While the 
sale of S-300s to Iran, for example, would only net Russia 
from USD 750 million to USD one billion, future military 
sales could be considerably larger. 
 
¶10. (C) Several years ago Iran was a stable source of hard 
currency and this cash flow helped Russia preserve its 
nuclear construction sector.  The importance of Russia's 
trade with Iran has decreased, but Russian exports to Iran 
last year still exceeded USD 3 billion.  In the currently 
depressed Russian economy, that is not an insignificant 
amount.  In addition, great potential for future economic 
gain to Russia exists via civilian nuclear technology sales 
and increased military cooperation. 
 
¶11. (C) As the world's largest exporter of oil and gas, 
Russia also benefits significantly from the "instability 
premium" embedded in world oil prices due to tensions with 
Iran.  Even a USD 5 per barrel instability premium would net 
Russia almost USD 9 billion per year for oil and 
approximately USD 2-4 billion from its gas exports.  Finally, 
given Iran's position as the second largest owner of gas 
reserves, Russia's gas sector clearly benefits from the lack 
of international investment in the development of Iran's 
natural gas sector. 
 
Life without Iran 
----------------- 
 
¶12. (C) Russia could profit from alternatives to its 
continued support for Iran.  For example, news reports 
indicate that Saudi Arabia has offered to purchase the 
Russian S-400 system for USD two billion in an effort to 
force Moscow to back out of the S-300 deal with Iran. 
Medvedev cited Arab League concerns about Russia's close 
relationship with Iran when he stated that Russia's stance on 
Iran might be changing. 
 
¶13. (C) Israel also is clearly pushing Russia to take a 
firmer stance towards Tehran, in light of recent press 
reports that PM Netanyahu personally delivered a list of 
Russian scientists who contributed to Iran's nuclear program. 
 Conversations with Israeli diplomats in Moscow indicate that 
Israel believes there may be even more to Iran's program than 
is now known to the GOR and Russian decision makers.  They 
hint that Israeli disclosures on Russian participation could 
force Moscow into taking a harder line. 
 
COMMENT 
------- 
 
¶14. (C) Success in moving Russia to support tougher actions 
against Iran will require a coordinated strategy involving 
our friends and allies, including Israel and Saudi Arabia. 
The strategy may need to include the continuation of 
diplomatic efforts like the P5-plus-1 process and perhaps 
include new ways of engaging in dialogue with Iran.  A 
strategy created by a broad international consensus must 
offer Moscow a series of options that will challenge the 
stubborn mentality here that instinctively opposes common 
cause with the West on Iran.  Sanctions would have a major 
impact on the Russian economy, and especially to the domestic 
constituencies like RosOboronexport and RosAtom.  The fact 
that the economy and these key state-controlled enterprises 
are part of Putin's portfolio only reinforces the certainty 
that he will remain the key decision maker on any imposition 
of sanctions.  Key to the GOR's calculations would be any 
politically salable alternatives that benefit them both 
economically and politically.  End comment. 
Beyrle