Russia Cancels $800 Million Iran Air-Defense Contract
Bloomberg Business Week / Lyubov Pronina

Oct. 7 (Bloomberg) -- Russia annulled a contract valued at about $800 million to supply an S-300 air-defense battery to Iran and is in talks on refunding an advance payment made by the Middle East country.
“We cancelled the contract,” Russian Technologies Corp. Chief Executive Officer Sergei Chemezov told reporters in Nicosia today. Iran “isn’t very happy” with the decision, “but we had no alternative.” The cancellation falls under a force majeure clause in the contract, he said.
The Kremlin said in June that the S-300 fell under United Nations sanctions against Iran, which banned sales of weaponry including fighter jets, attack helicopters, warships or missiles. President Dmitry Medvedev last month signed a decree banning the sale of weapons, including the S-300, to Iran in compliance with the sanctions.
Delivery of the S-300 would “represent a significant increase in the defense capability of Iranian forces,” U.S. General David Petraeus said in March.
Chemezov said Iran made a $166.8 million advance payment on the S-300 contract, and under the force majeure clause in the contract Russia must refund this amount. “We’re not obligated to return a penny more,” he said.

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