Article Posted on : - Jul 01, 2010

The S-300 air defence missiles. A file photo

MOSCOW (PTI): Russia might have to pay a heavy price for scrapping its S-300 air defence missiles deal with Iran, frozen after the fresh UN Security Council, with the penalty for breaching the contract put at $ 400 million.

In addition, Iran could refuse to buy any more military products from Russia following this, resulting in an estimated annual loss of up to $500 million, a report has warned.

“The S-300 contract is worth some $800 million, while Russian experts estimate the penalty for breach of contract at $400 million,” a report in the Nezavisimaya Gazeta paper said on Wednesday, further pointing out that Tehran could turn to China for arms supplies, depriving Moscow a serious source of revenue.

Following the fresh UNSC sanctions slapped on Tehran on June 9 under US pressure, Moscow said it would freeze the delivery of S-300 missiles, an older Russian equivalent of US Patriot missiles.

Although the Foreign Ministry spokesman Andrei Nesterenko underscored that the new sanctions do not cover the sale of defensive weapons to Iran, but experts from the Federal Service for Military and Technical Cooperation – the nodal watchdog for foreign arms supplies – concluded that the missiles did come under the new set of sanctions.

However, Foreign Minister Sergei Lavrov has said the final decision in this regard has to be taken by President Dmitry Medvedev.

Moscow signed a contract on supplying Iran with at least five S-300 systems in December 2005, but nothing has been delivered.

The United States and Israel have urged Russia not to fulfil the contract, RIA Novosti reported.

The advanced version of the S-300 missile system, called S-300PMU1, has a range of over 150 kilometres (over 100 miles) and can intercept ballistic missiles and aircraft at low and high altitudes, making it effective in warding off air strikes.

Nezavisimaya Gazeta cautioned that Iran could refuse to buy any more military products from Russia, resulting in an estimated annual loss of up to $ 500 million.

Iranian Defence Minister Ahmad Wahidi last week warned that Russia would be responsible for the consequences of its failure to deliver S-300 surface-to-air missile systems to Iran.

Earlier in June, Iran banned its airlines from using Russian-built Tupolev Tu-154 airliners on domestic and international routes.

In addition, there have been reports of the imminent deportation of Russian pilots because the Islamic Republic already has “enough qualified flight personnel.”