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Russia to Iran: Pay Up March 19, 2007

Posted by tkcollier in Business, Geopolitics, News.
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Russia Blog: Russia to Iran: Pay Up
The Islamic Republic of Iran is apparently running short on cash. According to the International Herald Tribune, the Iranian regime has twice failed to pay $25 million in monthly payments to Rosatom, Russia’s atomic energy agency, for work already completed on the Bushehr nuclear reactor.

Rosatom executives have confirmed that the Iranians failed to make their payment in full for the month of January and have not paid at all for this month. As a result, Rosatom has cancelled plans to deliver civilian-grade nuclear fuel to the reactor next month and is threatening to delay work at Bushehr. Russia is not willing to subsidize Iranian energy projects anymore than it was willing to keep subsidizing the former Soviet republics with cheap natural gas.

The Council on Foreign Relations recently released a report describing the decline of Iranian oil and gas production due to mismanagement and a lack of new investment. Last month MSNBC reported that the U.S. has secretly cut a deal with Saudi Arabia to boost Saudi production, thereby decreasing world oil prices and putting more economic pressure on Tehran (it costs the Saudis about half as much to pump a barrel of oil out of the ground as the Iranians). Russia Blog predicted that the U.S. might pursue this strategy to financially squeeze the mullahs in our post The Long War in the Middle East and Russian Oil back in August 2006.

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