Developments during the last several weeks seem to suggest that Russia is reconsidering its nuclear cooperation with Iran. Just months ago, Moscow pledged with great fanfare that the Bushehr reactor would be ready for the first shipment of fuel in March and would reach criticality in September 2007. But in February, Russia backtracked, claiming it had to delay the fuel delivery because of missed payments. As for the reactor's launch, the only thing that's certain is that it will not happen in September. The situation became even more puzzling after reports that Russia warned Iran that Moscow might suspend the project if Tehran does not stop its enrichment program and that some Russian technical specialists are returning home.
Are we seeing a radical turn in Russian policy? Probably not, but the situation is more complicated.
The Bushehr nuclear power reactor has been one of the most contentious issues between the United States and Russia for more than a decade. The project began in the mid-1990s as part of the Russian nuclear industry's effort to sustain itself. Gradually, Bushehr came to symbolize the many disagreements that the United States and Russia engaged in during this time. The United States maintained that by providing nuclear assistance to Iran, Russia recklessly (if not deliberately) undermined U.S. security and stability in the Middle East, and that Russia's inability to stop the program illustrated the weakness and corruption of the Russian state. Russia, in turn, insisted that its assistance to Iran was completely legitimate, arguing that Iran wasn't trying to build a nuclear weapon and that the construction of a nuclear power plant in Bushehr would not bring Iran any closer to that goal anyway.
The disclosure of a previously undeclared Iranian uranium enrichment program in 2002 proved both sides of the debate wrong. Russia apparently did not know that Iran had a program with weapon potential, while the United States did not realize that it had been "barking up the wrong tree." Iran got its centrifuges from Pakistan, not Russia, and the Bushehr reactor did not play any significant role in that effort.
As the international community (rightly) focused its attention on the Iranian enrichment program, the construction in Bushehr continued. To be sure, the United States still wanted the project terminated, but it was no longer a high priority. For Russia, the Bushehr project was no longer as commercially attractive as it appeared in the 1990s; the construction delays and the spent fuel take-back arrangement that Russia made took their toll. Still, Russia was strongly committed to finishing the construction, if only to prove that it could complete the project despite U.S. pressure. When questions about the Iranian enrichment program led to the International Atomic Energy Agency (IAEA) to refer Iran to the U.N. Security Council, Russia supported sanctions against Iran, but only after Moscow made sure the sanctions wouldn't affect Bushehr's construction.
Now Russia seems to be deeply confused about what to do next. Rosatom, the Russian atomic energy agency, would certainly like to finish the project, if only to keep the option of building more reactors in Iran open. But it cannot ignore that nuclear cooperation with the United States could potentially bring access to the much more lucrative U.S. market. For example, Rosatom believes that it is in a good position to provide uranium enrichment services to the United States. It was hardly a coincidence that the problems with Iranian payments began when Russia and the United States were putting the finishing touches on the so-called "123 Agreement," which would make cooperation on nuclear issues possible.
Rosatom, however, is not setting Russian foreign policy, so it cannot terminate the Bushehr project. There are other powerful institutions in Russia that would like to keep the current Russian-Iranian cooperation going, even if this means confronting the West (think of arms sales, for example). Besides, Rosatom most likely understands that abandoning Bushehr now would deal a serious blow to its reputation as a commercial partner. In this situation, resorting to delays and hoping that the situation will somehow resolve itself is the only option.
The paradox of the current situation is that as much as it is in the international community's best interest for Iran to suspend its enrichment program, termination of the Bushehr project or further delays with fuel shipments would be the wrong decision. Doing so would undermine any confidence in future arrangements of guaranteed fuel supply for nuclear power reactors. Whatever elaborate schemes the international community comes up with to provide reliable access to nuclear fuel--fuel banks, IAEA oversight, etc.--they may as well not exist if they're not insulated from political pressure.
The correct thing to do in this situation would be to ship the fuel to Iran and to complete Bushehr's construction. The Security Council still can, and should, impose stringent sanctions on Iran, demanding a resolution of all the issues related to its enrichment program. But the Bushehr reactor should be left out of it. This sounds counterintuitive because it is. But this is probably the only way to provide an effective guarantee of reliable fuel supplies, and therefore, ensuring that the international community could successfully contain the spread of enrichment technology.