Russia Plays Iran Sanctions Card in Caspian Port Dispute

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July 31, 2012

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(Bloomberg) — Russia is taking legal action to block companies controlled by Iran from acquiring the strategic Astrakhan port on the Caspian Sea in violation of United Nations sanctions, the Russian competition watchdog chief said.

“We know that these companies, through a certain chain, are under the direct control of the government or structures close to the government of the Islamic Republic of Iran,”, Igor Artemyev, head of the Federal Anti-Monopoly Service, told reporters in Moscow today. “Ports are strategic assets.”

After the Russian government blocked the deal two years ago, the Iranian-controlled companies bought a significant stake in the port, which carries strategic national importance, from its Russian owners and now control at least 25 percent, Artemyev said. Russia is working on annulling the deal, which contravenes United Nations sanctions against Iran imposed over its disputed nuclear program, he said.

Five nations share the Caspian: Russia, Iran, Kazakhstan, Azerbaijan and Turkmenistan. The five littoral states have failed to agree on the maritime boundaries of the Caspian Sea after the disintegration of the former Soviet Union in 1991. Various bilateral disputes over exploring the sea’s oil and gas resources regularly sour relations between the nations.

“The Iranians have provoked Russian anger with their actions here,” Alexei Malashenko, a Middle East analyst at the Carnegie Moscow Center, said by phone. ‘Relations are already difficult.”

The Russian court has already banned OAO Astrakhan Port from paying dividends and conducting share transactions, the service said in the statement. According to the court decision, the companies affected are Khazar Sea Shipping Lines, South Way Shipping Agency and Azores Shipping Company L.L.FZE. The companies, whose contact details were publicly unavailable, couldn’t be reached for comment.

Russia is part of the so-called P5+1 group along with China, France, Germany, U.K. and U.S, which is negotiating with Iran over its nuclear activities. The world powers want the Iranians to agree to stop producing 20 percent-enriched uranium, a level of purity a step short of bomb grade, and move current stockpiles out of the country to show that it isn’t seeking the capability to produce atomic weapons.

Western powers contend Iran is hiding a nuclear-weapons program, and the U.S. and Israel have declined to discount the possibility of military strikes against its atomic installations.

Russia also prohibited in 2010 the sale of Russian weapons, including S-300s missiles, to Iran after the UN imposed sanctions against the Islamic republic. Iran has sued Russia for breach of contract.

At the same time, Russia built Iran’s $1 billion Bushehr atomic plant, the country’s first, and the country has said it would like to order new Russian-made nuclear power stations.

By Ilya Arkhipov and Henry Meyer. Copyright 2012 Bloomberg

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