The Iran Brief®

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Issue No. 8, June 1, 1995

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Russian nuclear deals are on (Serial0817)

It is true that the contract does contain components of civilian and military nuclear energy. [...] Now we have agreed to separate those two."

- President Boris Yeltsin

Russian Minister of Atomic Energy Viktor Mikhailov announced lastweek that Russia intended to build a 40 MW research reactor in Iran,despite pressure from the United States to limit Russia's nuclearcooperation with Iran. He told the Interfax agency on May 22 that acontract for the research reactor should be signed "later this year."He also accused the West of inconsistency in acting to block thetraining in Russia of Iranian nuclear experts. "While the RussianNuclear Energy Ministry is criticized today for wanting to invite 20to 40 experts from Iran for training in the sphere of nuclear energy,thousands of Iranians are now studying the field in the USA andWestern Europe."

To muddy the waters even further, Mikhailov contradicted earlierstatements from the Russian Foreign Minister, saying that no decisionhad been made to cancel the contract to build a gas centrifugeenrichment plant in Iran. He argued that such a plant was unrelatedto nuclear weapons, and noted that Germany and Japan had similarplants.

Military technology: Following the summit in Moscow withPresident Clinton on May 10, a statement by President Yeltsin appearsto acknowledge that the original Jan. 8 agreement with Iran containednuclear military technology and material. "The contract was concludedlegitimately and in accordance with international law and nointernational treaties were violated in the process," Yeltsin said."But it is true that the contract does contain components of civilianand military nuclear energy. [...] Now we have agreed toseparate those two. In as much as they relate to the militarycomponent and the potential for creating weapons grade fuel and othermatters - the centrifuge, the construction of shafts - we havedecided to exclude those aspects from the contract. So the militarycomponent falls away and what remains is just a civilian nuclearpower station with light water reactors, which are designed toprovide heat and power."

Yeltsin's statement is a remarkable admission that theJan. 8 protocol was not as innocent as both the Russians and theIranians have tried to make out. A copy of the protocol, obtained bythe Natural Resource Defense Council (see below) confirms Yeltsin'sstatements. The mysterious "uranium shaft," translated variously as"mineshaft" or "vault," could be a reference to a nuclear weaponstest shaft, which must be dug several hundred meters below the earthand equipped with a variety of electronic sensors. Or it could be auranium mine, although this would not explain why Yeltsin called it a"military component" of the sale.

Speaking to ITAR-TASS one day after the summit, Viktor Mikhailovreiterated that Russia would not rule out building a centrifuge plantin Iran at some future date, and rejected the idea that theGore-Chernomyrdin commission would be discussing anything but"technical details" involving the disposition of spent fuel from thereactors, and the issue of conventional arms sales. The reactor saleitself, he said, was not on the table.

Kickbacks? One reason the Russians have not backed down on thepower plant deal is obviously financial. But behind the clearlylucrative agreement to complete the Busheir power plant could behidden a murkier financial arrangement with various individuals inthe Russian hierarchy.

Published accounts of the amount of the sale have variedsignificantly. Mikhailov told Interfax that the Iranian parliamenthad earmarked $700 million for the construction of the first powerunit in Busheir. But Iranian accounts of the agreement haveconsistently used the figure of $800 million, $20 million of whichwill go for an initial examination of existing work at the site, and$780 million for equipment and final construction.

Iranian government sources, contacted by The Iran Brief fromParis, hinted that the cause for the discrepancy involved asubstantial kickback - as much as $100 million - which would bespread among several Russian government officials. According to thesources, Vice Premier Chernomyrdin was promised a substantial cut, tosupport his new Center-Right coalition party, "Our House is Russia."Coincidentally, perhaps, Chernomyrdin established "Our House isRussia" just one month ago, and is already planning to fieldcandidate in the parliamentary elections later this year. Atvirtually the same time, he was named by President Yeltsin as theRussian co-chairman of the joint commission with the U.S. that willexamine Russia's nuclear and arms sales agreements with Iran.

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