Russian leaders hope to benefit both politically and economically from Moscow's efforts to defuse the international crisis over Iran's nuclear program.

Since the Soviet collapse in 1991, Russia's foreign policy and security elites have longed to restore the country's lost status as a great power. Russian strategists sense, quite rightly, that they are well positioned to capitalize on the Iranian crisis, thus enabling them to reestablish Moscow's great power bona fides.

An emergency meeting of the International Atomic Energy Agency, scheduled for February 2, will consider a response to Iran's nuclear research efforts. [For background see the EurasiaNet archive]. Iranian leaders prompted the IAEA special session with their January 10 announcement that Tehran would end its voluntary moratorium on the enrichment and reprocessing of uranium.

The Bush administration, backed to a lesser degree by European Union states, wants the IAEA to refer Iran to the United Nations Security Council to consider the imposition of sanctions. President George W. Bush in a January 23 policy speech warned that the international community could be "blackmailed" if Iran obtained nuclear weapons. Meanwhile, Russia and China, two countries with veto power, are pressing for a continuation of a dialogue that would keep the Iran nuclear issue out of the Security Council.

Russia has established itself as the key player in the crisis by advancing a compromise under which a joint Russian-Iranian venture would enrich uranium on Russian soil for use in the Iranian nuclear plant that a Russian firm is building in Bushehr, Iran. China on January 26 endorsed the Russian plan, with a Chinese Foreign Ministry spokesman adding that Beijing opposes "sanctions or threats of sanctions to solve problems."

Iran initially snubbed the Russian proposal, but the idea has gained traction during the past week. On January 23, Russian Foreign Minister, Sergei Lavrov, met in Moscow with Mehdi Safari, Iran's Deputy Foreign Minister and special envoy on Caspian regional security issues. They noted that Tehran and Moscow "support a dialogue on the nuclear problem." Lavrov stressed that contacts between Russia and Iran were ongoing and "intensive," adding that Moscow was committed to further developing bilateral relations with the Islamic republic with a view, shared by both sides, toward boosting regional security and cooperating on other issues.

The following day, Igor Ivanov, head of Russia's Security Council received Ali Larijani, secretary of Iran's Supreme National Security Council and the country's top nuclear negotiator. At a Moscow news conference, Larijani confirmed that Tehran views Russia's proposal "positively," adding, however, that the plan could be "perfected" in the course of the negotiations in February.

It would appear the Kremlin's current policy is to delay as long as possible a decision on whether to refer Iran to the UN Security Council over its alleged breaches of the Non-Proliferation Treaty. At the same time, Moscow is continuing to press Iranian leaders into accepting its compromise plan.

A peculiar mix of private interests and great power ambitions underlies the Kremlin's delicate balancing act on Iran's controversial nuclear program. Under Russian President Vladimir Putin, tightly-knit elite with extensive ties to the country's security structures has gained control of Russia's foreign and international economic policy. Russian officials are now looking to parlay Russia's political support for Iran into a significant expansion of bilateral economic cooperation, which, in turn, would enhance Moscow's regional geopolitical position.

Russia already has considerable trade ties with Iran, mainly in the spheres of nuclear energy and arms exports. Russia has nearly completed construction on the Bushehr nuclear power plant. Last year, Tehran announced plans to build 10 more nuclear plants – worth roughly $1 billion each. Naturally, Russia is keen to obtain a large share of the potential construction contracts for the planned reactors.

It's noteworthy that the controlling stake in Atomstroieksport, the company that is building Bushehr, belongs to Gazprombank, a subsidiary of Gazprom, the state-run energy monopoly. Gazprom's board chairman is Dmitry Medvedev, a former Kremlin chief of staff and currently serves as first deputy prime minister.

Russian-Iranian military and nuclear cooperation has long angered the United States. When last December it was reported that Moscow would supply sophisticated Tor-M1 air defense missile systems to Tehran under a billion-dollar contract, Russian Defense Minister Sergei Ivanov shrugged off American complaints, bluntly saying that Russia didn't care whether others liked the deal or not. Moreover, there is talk about possible sales to Tehran of even more advanced S-300 rocket systems. Both the Tor-M1 and S-300 systems are produced and marketed by the Almaz-Antei concern – a company established by president decree in 2002. The entity is reportedly controlled by the Kremlin with Putin aide and former Federal Security Service general, Viktor Ivanov, serving as Almaz-Antei's chairman.

Kremlin strategists understand that the introduction of sanctions against Tehran is possible if the UN Security Council takes up the Iranian nuclear issue. Many Russian experts consider it unlikely that an embargo against Iran's oil and gas exports could be introduced. A far more likely possibility would be a ban on the sale of military hardware, as well as on space and nuclear technologies, to Iran. The need to vote for, or veto, such measures would present a stark choice for Kremlin policymakers, who benefit from the multi-billion dollar deals with the Tehran government.