Russia says Iran sanctions do not bar missile deal

MOSCOW (Reuters) - Russia's Foreign Ministry said Thursday that new U.N. sanctions against Iran over its nuclear program did not oblige Moscow to scrap a controversial deal to deliver surface-to-air missiles to Tehran.

Foreign Minister Sergei Lavrov said Moscow was also in talks on building more nuclear power plants in Iran in addition to the Bushehr site, due to open in August after years of delay. Such action would be sure to rile the West.

The U.N. Security Council's adoption -- with Kremlin support -- of a fourth round of sanctions against Iran on Wednesday raised fresh questions over the future of Russia's contract to sell S-300 missiles to Tehran, a foe of the United States and Israel.

Foreign Ministry spokesman Andrei Nesterenko spoke after the Interfax news agency quoted an unnamed Russian arms industry source as saying Moscow would freeze the S-300 contract because of the newly passed sanctions.

"The U.N. Security Council decision is binding for all countries and Russia is no exception," Interfax quoted the source as saying. "Naturally, the contract to deliver S-300 missile systems will be frozen."

But Nesterenko said that portable missile systems like shoulder-launched weapons were the only air defense weapons whose sale to Iran would be banned under the sanctions.

"Air defense weapons, with the exception of portable missile systems, are not included in the U.N. registry of conventional weapons which are mentioned by the resolution on Iran," he said.

The Security Council resolution bans the sale of missile systems listed in the United Nations Register on Conventional Arms. That register does not include the S-300 so the contract would not technically be banned.

But Security Council diplomats said the resolution's call for all U.N. member states to "exercise vigilance and restraint" regarding any arms sales to Iran meant that Moscow was being strongly discouraged from delivering the missiles.

U.S. State Department spokesman P.J. Crowley said it was clear the S-300 missiles were not affected by the U.N. sanctions resolution but Washington "recognized and appreciated the restraint that Russia has shown" by not yet delivering the weapons.

He also noted that Russia had significant arms and other trade with Iran and that the resolution had significantly expanded the restrictions on arms sales in a way that directly affected Russia.

"So this was very meaningful for Russia to agree to the restrictions that are in this resolution," Crowley said.

BARGAINING CHIP

The Kremlin's move toward support for new sanctions against Iran has been accompanied by repeated assurances from Russian officials that the measures would not affect the S-300 deal.

Diplomats in Moscow had said Russia wanted to keep the deal in reserve as a bargaining chip with Tehran and Western powers trying to rein in Iran's nuclear activity, which they say is aimed at developing the ability to produce nuclear warheads.

A U.N. resolution outlawing the S-300 contract would be a significant concession by Moscow to the West and would be bound to worsen already strained Russian ties with Tehran, which has accused Moscow of foot-dragging on delivering the missiles.

In Washington, Republican Senator Jon Kyl criticized the U.N. sanctions resolution for excluding the S-300 deal and Russia's construction of Iran's first nuclear power plant near Bushehr, which Moscow says will open in August.

Lavrov, speaking to reporters in the Uzbek capital Tashkent, said Russia was in discussions with Iran on possible additional nuclear power plants.

"We are practically discussing this now," he said.

Russia has worked hard to water down successive rounds of sanctions against Iran, saying such punishments rarely work.

But Moscow has been dismayed by Tehran's failure to disclose full details about its uranium enrichment program. Diplomats say privately that Kremlin leaders have been burned several times while trying to get Iranian leaders to cooperate.

President Barack Obama assiduously courted Russian support for the new sanctions and U.S. officials have pointed to Moscow's backing as a positive result of Obama's "reset" aimed at improving long-strained ties.

But Russia has repeatedly warned of the dangers of any military attack on Iran, a point underlined by Prime Minister Vladimir Putin this week.

"This would lead to a massive tragedy," Putin told French reporters before a visit to Paris. "The consequences would be catastrophic in terms of the radicalization of the Islamic world and the destabilization of the region."

(Additional reporting by Guy Faulconbridge and Steve Gutterman in Moscow, Denis Dyomkin in Tashkent, Louis Charbonneau at the United Nations; Editing by Mark Heinrich and Eric Walsh)