Iranian President Mohammed Khatami's recent visit to Russia resulted in expanded strategic cooperation between the two states, particularly in the areas of weapons and nuclear and ballistic missile technology. Iran already is the third largest importer of Russian arms after China and India.[1] A new de facto alliance between Russia and Iran that increases Tehran's military capabilities will make this sponsor of terrorism more of a threat to vital U.S. interests in the Persian Gulf as well as to the security of America's allies in the Middle East. Moreover, by gaining nuclear-tipped intercontinental ballistic missiles (ICBMs) and other advanced weapons systems, Iran could one day threaten the United States directly.

Nevertheless, Moscow has ignored Washington's repeated protests over the proliferation of its advanced weaponry and technology to Iran, particularly technology that could be used in producing weapons of mass destruction (WMD). For these reasons, Khatami's visit to Moscow on March 12-15 and the agreement by Iranian officials to buy state-of-the-art Russian surface-to-air missile defense systems have greatly increased concerns in Washington over this close relationship. On March 19, Secretary of State Colin Powell issued a warning to both Russia and Iran that the United States would closely watch their military cooperation and would take unspecified action if their activities threatened to destabilize the Middle East.[2]

Rhetoric alone will not be enough to deter cooperation between Iran and Russia. The Bush Administration will need to employ an array of military, diplomatic, and economic measures to slow Iran's strategic buildup of weapons, deal with its radical Islamic regime, and prevent further deterioration of U.S. relations with Russia. The Administration should proceed cautiously but deliberately to:

• Maintain a strong U.S. military presence in the Persian Gulf to deter and defend against Iranian aggression or terrorism;
• Ensure that no U.S. enterprises or government credits contribute to Iran's buildup of missiles or development of weapons of mass destruction;
• Prevent American investors from subsidizing Russian projects that generate revenue for the Iranian government that could be used to purchase advanced military technology;
• Task the interagency WMD working group at the National Security Council with designing a strategy for sanctioning Russia and Iran because of their proliferation activities;
• Support the rescheduling of Russia's $150 billion debt to the Paris Club only in exchange for Moscow's active cooperation in cutting the flow of advanced military technology to Iran and other states;
• Accelerate the development of sea-based missile defense systems to be deployed in the Mediterranean and the Persian Gulf;
• Strengthen U.S. military ties to the Gulf Cooperation Council, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, and encourage the council's members to form a more effective military alliance; and
• Assist the Iranian people in their quest to achieve genuine democracy.

How Russia Has Contributed to Iran's Military Buildup

Concerns over Russia's increasing military ties with Iran, especially in the area of weapons proliferation, have grown since 1994 when senior Iranian officials first took steps to establish relations with Russian bureaucrats in charge of nuclear and missile programs in the post-Soviet military-industrial complex. Up to $25 million changed hands to facilitate Tehran's access to Russian advanced technology.[3]

After intensive consultations, Vice President Al Gore and Russian Prime Minister Viktor Chernomyrdin on June 30, 1995, signed a confidential agreement that was supposed to limit Moscow's sales of arms to Iran. Russia agreed to supply only weapons specified under the 1989 Soviet-Iranian military agreements and promised not to deliver advanced conventional or "destabilizing" weapons to Iran. Finally, Russia agreed not to sell any weapons to Iran beyond December 31, 1999.[4]

With sales exceeding $4 billion between 1992 and 2000, however, Iran is now the third largest customer for Russian weapons. Among the systems Russia supplied to Iran in the 1990s are three Kilo-class attack submarines, which could be used to disrupt shipping in the Gulf; eight MiG-29 fighter bombers; 10 Su-24 fighter bombers; and hundreds of tanks and armored personnel carriers.[5]

In addition, the Russian Ministry of Nuclear Industry and affiliated firms may have transferred uranium enrichment technology to Iran while building a civilian nuclear reactor slated for completion in 2003 in the Gulf port of Bushehr.[6] This technology is necessary in the development of nuclear bombs. Moscow has facilitated the sale of technology to Iran that is used in the manufacture of the Soviet-era SS-4 intermediate range ballistic missiles (IRBMs) and has helped Iran to develop its Shahab-3 IRBM, which has a range of 1,200 kilometers and is capable of hitting targets throughout the Middle East, including Saudi Arabia and Israel.[7]

Cooperation between Moscow and Tehran increased after the election of President Vladimir Putin last spring and Moscow's November 2000 renunciation of the 1995 Gore-Chernomyrdin Agreement.[8] Anticipating lucrative arms sales, a large number of Russian hard-line politicians and generals have endorsed Russia's rapprochement with the Islamic Republic.[9] For its part, Tehran sees Russia as a valuable source of military technology that Western states have declined to provide since Iran's 1979 revolution.[10]

A Boost from Official State Visits

Khatami's state visit to Moscow reciprocated the visit of Russian Defense Minister Marshal Igor Sergeev to Tehran in December 2000. Sergeev's visit, in addition to being a major breakthrough in the military relationship between the two governments, was the first visit by a Russian defense minister to the Islamic Republic since Ayatollah Ruhollah Khomeini seized power in 1979.

During his visit to Iran, the former commander of the Russian Strategic Rocket Forces toured Iranian aerospace, electronics, and missile facilities and consulted with top Iranian leaders on strategic cooperation in the Middle East and Central Asia.[11] Sergeev and his Iranian counterpart discussed a 10-year arms and military technology program worth over $3 billion that would include training for Iranian military officers and engineers at Russian military academies. The representatives agreed that their governments would consult each other on "military doctrines, common challenges and threats," effectively bringing the status of their bilateral ties to that of an informal alliance.[12] Sergeev bluntly rejected U.S. concerns about the relationship, telling the Iranian media upon his arrival in that state that "Russia...intends to pursue its own ends."[13]

During President Khatami's visit to Russia last month, Putin reiterated that stance, stating that Russia has the right to defend itself.[14] Iranian officials toured a Russian missile factory and agreed to buy Osa and TOR-M1 surface-to-air missiles, which have missile defense capabilities. Khatami also toured a nuclear reactor plant in St. Petersburg and signaled that his country would buy another reactor from Russia. Since Iran already controls some of the world's largest natural gas reserves, the need for two nuclear reactors--at a cost of $1.8 billion--is questionable at best. The reactors could provide cover for a clandestine nuclear weapons program, which could make use of Iranian scientists who currently are studying nuclear physics and ballistic rocketry in Russia and the more than 500 Russian experts currently working in Iran on supposedly peaceful applications of nuclear science.

Why Russia is Dealing With Iran

Moscow has two strategic goals in pursuing a military relationship with Iran: keeping its own military-industrial complex solvent and building a coalition in Eurasia to counterbalance U.S. military superiority. Russia has found in Iran a large, oil-rich customer for its military-industrial complex, which supports over 2 million jobs. Russian leaders hoped the export revenues would allow them to save the research and development capabilities and technology base they inherited from the Soviet Union that could be used to develop new major weapons systems for the Russian armed forces and foreign customers. To achieve economies of scale, however, Russia needs access to large arms markets, such as China, India, and Iran.

The state-owned arms exporter, Rosoboronexport, is pursuing such former Soviet clients in the Middle East as Algeria, Libya, and Syria and is developing markets for arms in Latin America and East Asia, from Malaysia to Vietnam. Senior Russian officials reportedly have taken bribes from foreign customers anxious to gain access to Russia's sensitive technologies.[15] Moreover, direct payments from foreign customers are often put in offshore bank accounts, from which some funds find their way into private pockets.

More worrisome for U.S. policy planners is the geopolitical dimension of Russian-Iranian rapprochement. In early 1997, then-Foreign Minister Evgeny Primakov and his Iranian counterpart, Ali Akbar Velayati, issued a joint statement calling the U.S. presence in the Persian Gulf "totally unacceptable." Primakov sought to build a Eurasian counterbalance to the Euro-Atlantic alliance, which would be based on a coalition that included Russia, China, India, and Iran.[16] Such efforts make it likely that the United States and its allies will be the target of Russian-Iranian military cooperation in the future.

The Russian Federation and the Islamic Republic cooperate over a broad range of policy issues, with military ties being an important aspect of relations between the two countries. Since the collapse of the Soviet Union, Iran has refrained from actively promoting its brand of Islamic radicalism in the former Soviet republics. Despite fashioning itself as defender of all Muslims, Tehran did little when the Russian military slaughtered tens of thousands of Muslim civilians in the first Chechen war (1994-1996), and it put forth only weak protestations against Moscow's excessive use of force in the second Chechen war (1999-2001). Moscow and Tehran also have cooperated against Afghanistan's radical Taliban regime by supporting the anti-Taliban Northern Alliance opposition coalition; support Armenia rather than the pro-Turkish, pro-Western Azerbaijan; and oppose a "western" route for exporting oil from the Caspian Sea basin through Georgia to Turkey.

Some Russian officials, however, recognize that cooperation with Iran has its limits. As arms control expert Alexei Arbatov, Deputy Chairman of the Duma Defense Committee, has warned, technology transfers to Iran may backfire. Within 10 to 15 years, he predicts, Russian technology could be used by radical Islamic terrorists or in Iranian, Algerian, Saudi, Egyptian, and Libyan missiles and other weapons aimed at Russia.[17]

The Threat to U.S. Interests

Iran's military buildup poses direct threats to U.S. interests in the Middle East.[18] Iran has long aspired to play a dominant role in the Middle East and the Islamic world. Under the late Shah as well as the current radical Islamic leadership, Iran has sought to build its military capabilities and its ability to defend itself against Iraq. However, its aspirations go beyond legitimate self-defense. Islamic militants in Iran make little effort to hide the fact that they want to destroy the United States and its ally, Israel.

For example, senior Iranian officials, including the Supreme Leader Ayatollah Ali Khamanei, repeatedly have denied Israel's right to exist. In a 1998 parade in Tehran, a Shahab-3 missile carrier prominently displayed an inscription that read, "Israel should be wiped off the map."[19] By opposing Arab-Israeli peace negotiations and maintaining a militant anti-Israeli posture, Tehran hopes to build support for its leadership role in the Arab and Muslim world. Iran also backs the Hezballah (Party of God) terrorist organization that is based in Lebanon.

A more aggressive, nuclear Iran would cause further political instability that could lead to high oil prices, which would benefit both Russia and Iran as oil exporters. Moreover, a nuclear- and missile-armed Iran could well present a serious challenge to America's allies and major oil exporters in the Gulf. Iran could use its missile capabilities to blackmail the West, deter the United States and its allies from deploying forces to defend oil shipping routes, or deny the U.S. Navy access to the Gulf itself.

According to Admiral Thomas R. Wilson, Director of the Defense Intelligence Agency, Tehran is "not unlikely" to re-export the sensitive Russian technology for weapons of mass destruction it obtains to militant Muslim regimes or terrorist groups in other countries, from Algeria to Sudan.[20] If America's efforts to limit the proliferation of weapons and weapons technologies from China, Russia, and other countries to Iran fail, the United States will have little recourse but to impose sanctions on the violators and take other measures to punish countries that proliferate weapons of mass destruction.

Establishing a New U.S. Policy on Russia-Iran Cooperation

The Bush Administration faces many challenges in dealing with the issue of strategic military cooperation between Russia and Iran. It inherited an ineffective policy from the Clinton Administration, which attempted to reason with Russia to limit arms proliferation to Iran. Although the United States spent $5 billion to secure Russia's nuclear arsenal, Moscow still sold its sensitive nuclear and ballistic technology to China, Iran, and other states of concern. In addition, American companies paid Russia $2 billion for commercial satellite launches authorized by the Clinton White House as compensation for Moscow's agreement to give up its arms trade with Tehran.[21] Finally, President Clinton waived congressionally mandated sanctions against the suppliers of weapons and military technology to countries that support terrorism.

Congress attempted to limit the damage from these ill-advised Clinton Administration policies by imposing sanctions on companies that do business in Iran. In 1998, Congress overwhelmingly passed the Iran Missile Proliferation Sanctions Act (H.R. 2709) sponsored by Representative Benjamin Gilman (R-NY), chairman of the House International Relations Committee.[22] The act mandated that the President report to Congress when there is credible information that a foreign entity has transferred any technology that is governed by the Missile Technology Control Regime (MTCR). All licensed exports, sales of defense items, and U.S. government financial assistance to that entity would then be terminated. However, President Clinton vetoed that legislation in June 1998. Instead, he issued Executive Order 12938 to assign penalties to companies that provide assistance to nuclear, chemical, and biological weapons programs.[23]

Nevertheless, Congress insisted on stronger steps and passed the Iran Nonproliferation Act (P.L. 106-178), which was signed into law on March 14, 2000. This law authorizes, rather than mandates, the President to impose sanctions on Russian entities that assist Iran's missile or weapons of mass destruction programs. These sanctions include a ban on U.S. government procurement from or contracts with the entity, a ban on U.S. assistance to the entity, a ban on U.S. sales to the entity of any defense articles or services, and a denial of U.S. licenses for exports to the entity of items that can have military applications.

The Clinton Administration's counter-proliferation policy was too little, too late. It has neither limited the willingness of states or companies to sell advanced technology to Iran nor stopped the flow of forbidden items and technicians. Until the regime in Tehran abandons its anti-American stance or the Iranian people replace it with a democratic government, tensions between Iran and the United States and its allies are likely to remain high.

To staunch the transfer of Russian weapons and missile technology to Iran, the United States should develop a counter-proliferation policy that is deliberate, vigilant, and aggressive. Specifically, it should:

• Maintain a strong U.S. military presence in the Persian Gulf to deter and defend against military threats from Iran. Since the 1979 Islamic revolution, Iran has targeted Arab monarchies in the Persian Gulf with terrorism and subversion. It has sought to intimidate smaller neighbors with periodic naval exercises and has seized three islands claimed by the United Arab Emirates. To deter Iran from aggression and protect the free flow of oil exports, the United States must maintain a robust naval presence in the Gulf. As long as the United States stands by its allies, the chances of attack from Iran are low. A vigilant and robust naval presence in the Gulf would deter Iranian aggression, reassure nervous Arab states that the United States is committed to peace in the region, and help contain Iraq. The United States currently has deployed forces in Kuwait, Bahrain, and Saudi Arabia, and it has pre-positioned military equipment in Qatar. The United States should deploy as few ground troops as necessary in the region to avoid a political backlash that Iran, Iraq, or local anti-Western movements could exploit. U.S. naval forces should limit their time in port and restrict refueling and resupply operations to only the most secure facilities to reduce their vulnerability to terrorist attack.
• Ensure that U.S. enterprises and government credits do not contribute in any way to Iran's buildup of missiles or weapons of mass destruction programs. The United States should expand sanctions against Russian companies and institutions that help Iran build missiles or that transfer weapons technology. They should be forced to choose between trading with America or aiding Iran. Under the Anti-Terrorism and Effective Death Penalty Act of 1996 (P.L. 104-132), the President can withhold U.S. aid to any country that provides assistance to a government that the State Department deems a terrorist state. Iran has been on the U.S. terrorism list since 1984, and the State Department lists it as the most active state sponsor of international terrorism in its April 2000 Patterns of Global Terrorism report.[24] Finally, the Administration should suspend all Export-Import Bank and Overseas Private Investment Corporation insurance and credits to U.S. companies that do business with Russian entities that are linked to Iran's military build-up activities.
• Prevent U.S. investors from subsidizing Russian projects that could generate revenue for Iran, which Tehran could use to obtain advanced military technology. Russian companies investing in Iran should not be allowed to raise capital in U.S. financial markets. The Securities and Exchange Commission should deny U.S. investors access to Russian companies that do business in Iran. Such investment, particularly in Iran's energy sector, would generate revenue for Tehran that could be used to buy military technology and weapons systems from foreign suppliers. U.S. sanctions under the Iran and Libya Sanctions Act (P.L. 104-172) penalize companies that invest over $20 million in Iran's oil industry. However, these measures should be amended and expanded when the Iran and Libya Sanctions Act comes up for renewal later this year. For example, the waiver provisions should be toughened by excluding a presidential waiver for any company from a country that sells arms or nuclear equipment to Iran. Russian government-controlled companies, such as the natural gas monopoly Gazprom, should not be allowed to raise funds from U.S. investors for energy schemes in Iran, since they could fund its military buildup and ultimately could be used to threaten U.S. interests in the region.
• Task the interagency WMD working group at the National Security Council with designing a strategy for sanctioning Russia and Iran because of their proliferation activities. In the past, Congress has taken the lead in mandating sanctions against proliferators of WMD and related technologies. These sanctions, however, were narrowly focused on U.S. assistance or trade in goods and services, and have proven ineffective in stopping proliferation. A new approach by the Administration is necessary. The intelligence community should be tasked with a comprehensive assessment of the ongoing technology transfer and weapons programs, and with providing recommendations identifying "choking points" that are vulnerable to sanctions.

The current WMD working group at the NSC should be tasked with developing a sanctions strategy that targets Russian and Iranian officials, businesses, and individuals involved in the proliferation of WMD technologies, materiel, or know-how, as well as their sources of financing. This strategy could include restrictions on access to U.S. capital markets, scrutiny of international investment and banking activities by violators, and stricter visa controls for the individuals involved. The working group should include representatives from the Department of State; the Department of Defense; the Financial Crimes Enforcement Network (FINCEN) and U.S. Customs Service within the Department of the Treasury; and (to control the visa regime for officials and business executives) the Immigration and Naturalization Service within the Department of Justice.

• Support the rescheduling of Russia's $150 billion debt to the Paris Club only in exchange for its active cooperation in cutting the flow of advanced military technology to Iran. The Administration should make clear that it opposes further rescheduling of Russian debt to the Paris Club as long as Moscow continues to export dangerous military technology to Iran. If Russia were to cooperate in stopping the flow of weapons technology to Iran, Washington should support debt rescheduling with full disclosure of past transactions. Disclosure of other proliferation activities, such as Russia's sales of advanced nuclear and ballistic missile technology to China and rogue states like Iraq, should also be included in any deal on debt rescheduling.
• Accelerate the deployment of sea-based missile defense systems on U.S. ships in the Mediterranean and the Persian Gulf. Washington should cooperate with Israel and Turkey in the Mediterranean region and the states of the Gulf Cooperation Council (GCC) to deploy a sea-based anti-ballistic missile system, the upgraded Navy Theater Wide (NTW) program, on U.S. ships. Once deployed, such a system would blunt the emerging threat of Iranian missile attack and bolster the ability of America's allies in the region to withstand Tehran's attempts at intimidation.
• Strengthen U.S. military ties with the Gulf Cooperation Council to help it become a more effective military alliance. Washington should assist the members of the Gulf Cooperation Council--Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates--in transforming their loose collective security arrangement into an effective military alliance. It can do so by expanding joint military exercises and defense planning; assuring the continuous stockpiling of military supplies in the region; helping the GCC members to integrate their command, control, and communications networks; and assisting them in coordinating their military training programs. The Gulf states should speed up execution of the Cooperative Defense Initiative to enhance interoperability. They also should improve control of airspace over the Gulf by accelerating work on an integrated civilian-military air traffic control system. Bolstering the GCC would lessen Iran's ability to intimidate its weaker neighbors and would enhance efforts to contain both Iran and Iraq.
• Assist the Iranian people in their quest to achieve genuine democracy. Despite the reform efforts of President Khatami, the current regime under Ayatollah Ali Khamanei remains a harsh dictatorship of radical Islamic ideologues. The Bush Administration should work with U.S. allies and non-governmental organizations (NGOs) to expose the regime's human rights violations. It should support the creation of an international network of NGOs concerned with the plight of Iranian students, businessmen, national and ethnic minorities, and women, the main supporters of reform who voted for President Khatami in 1997 and for reformers during the 2000 parliamentary elections. Washington should help Iranians gain access to uncensored information by expanding the broadcasting range and frequencies of Radio Free Europe/Radio Liberty and the Voice of America. This strategy, implemented under President Ronald Reagan in Soviet-dominated Eastern Europe, proved highly successful. Applied to Iran, it could lead to the ascendancy of democratic forms of government and leadership.

Conclusion

Russian assistance to Iran in developing ballistic missiles and weapons of mass destruction increasingly threatens U.S. interests, U.S. forces, and U.S. allies in the Middle East. Should Iran develop a nuclear arsenal, it could use it to deny the United States access to strategically important Persian Gulf shipping lanes and to interfere with the export of oil, wreaking havoc in global energy markets. In the longer term, it could use its missiles to threaten U.S. territory directly. The Administration must develop a comprehensive strategy that relies on pro-active diplomacy, creative economic countermeasures, and innovative military responses to address this growing threat from Iran.

Ariel Cohen, Ph.D. , is Research Fellow in Russian and Eurasian Studies, and James Phillips is Research Fellow in Middle Eastern Studies, in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.