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Iran weighs shift to China as primary military supplier


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2.aspWorld Tribune:


Russia's defense industry has become concerned that Iran could turn to China as a key military supplier.


Russian industry sources have warned that Iran, disappointed with major delays in arms projects, would end its military relationship with Moscow.



A key threat has been Russia's failure to deliver the S-300PMU1 air defense system to Teheran. Under the estimated $1 billion contract, the first of at least five S-300 systems was to have arrived in Iran in March 2009.


Iran was already said to have received systems from China deemed similar to the S-300. The sources said Beijing was also helping Teheran develop indigenous air defense systems as well as other military platforms.


They said Iran was believed to be discussing military procurement with China, which has also offered significant technology transfers.


"If the Russian leadership does not act quickly, we could lose most or all of the Iranian market," a Russian source said.


"Russia's losses will amount to the value of the contract plus penalties for breach of contract," the Moscow-based daily Nezavisimaya Gazeta said.


Nezavisimaya asserted that compensation for Russia's violation of the S-300 could amount to 50 percent of the contract. The newspaper said Iran could then halt all procurement of Russian military platforms.


The sources said Russia has supplied Iran with up to $500 million per year in defense equipment. They said the bulk of the contracts were comprised of the delivery of spare parts, upgrades and munitions.


In June, Tehran ordered a halt in the procurement of the Russian-origin Tu-154 aircraft for Iran's airlines. At the same time, Russian air trainers were also expelled from the Islamic republic.


The sources said Prime Minister Vladimir Putin, responsible for Russia's defense industry, has been under strong pressure to approve the delivery of the S-300 to Iran. They said the Kremlin has determined that the delivery of the S-300 would not violate the United Nations Security Council sanctions imposed on Teheran in June 2010.


"It's up to Putin and he is taking his time," the source said.




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