Russia freezes controversial laser deal with Iran

MOSCOW (Reuters) -- Russia has frozen a contract to sell laser equipment to Iran because of U.S. concern about technology transfers to the Islamic republic, a Russian government official said on Thursday.

Russia's Atomic Energy Ministry announced the freeze two days after a White House spokesman said that Moscow had suspended the deal at U.S. President Bill Clinton's urging because of concern that the equipment could help Tehran produce nuclear weapons.

"As regards the laser equipment at issue, a freeze has been placed on the contract in question with Iran," Ministry spokesman Yuri Bespalko said by telephone.

"We believe the equipment intended for Iran does not fall under the limitations of international export regulations. But, given the sensitive nature of the issue, especially on the part of the United States, for the moment the question is being dealt with by two commissions -- one Russian, one American."

The two commissions, he said, were expected to present their conclusions soon.

In St Petersburg, Russia's second city, the head of the institute due to supply the equipment said that it produced isotopes for medical use and slammed the U.S. stance.

"They (the United States) are linking this to production of nuclear weapons but in essence this is a fight for markets," Boris Yatsenko, director of the Science and Technology Centre of Microtechnology in St Petersburg, said by telephone.

"This is normal teaching equipment, used strictly for medicine. It certainly cannot be used to make weapons-grade uranium. I think our nuclear scientists will soon make it known that such a great stupidity should never have been thought up."

He said the technology could, in theory, produce fuel for a civil nuclear reactor, but the process would be very expensive.

White House spokesman Joe Lockhart said Clinton had raised the issue with Russian President Vladimir Putin at the July Group of Eight summit in Japan and at this month's U.N. Millennium summit.

U.S. sees no commercial use

A U.S. official contacted by Reuters said that officials had determined that the equipment had "no commercial application" and could not be used in commercial reactors.

Russia's relations with Iran and its insistence on pursuing commercial deals, particularly in the nuclear sphere, have been a source of irritation to Washington.

Russia has pursued a deal to help build a reactor at Iran's Bushehr nuclear power station despite Washington's insistence that Tehran could use the technology to produce nuclear weapons.

Bespalko said there were inherent guarantees for Iran's use of technology as it was a member of the Vienna-based International Atomic Energy Agency and therefore subject to periodic inspections of its civil nuclear sites.

Contact has increased between Washington and Tehran in recent months and their foreign ministers attended a U.N. meeting in New York devoted to Afghanistan earlier this month.

But Washington still puts Iran in a group with Iraq and North Korea of countries it views as unpredictable, with possible intentions of acquiring nuclear weapons technology.

Mikhail Pogorely, editor of the periodical "Nuclear Safety," saw no direct link to weapons production, but said Iran could still benefit from the technology.

"There is no clear answer here," he said. "I think the technology on its own cannot simply be turned into nuclear weapons, but once people start learning the alphabet, you can't stop them from learning the rest on their own."

(Additional reporting by Konstantin Trifonov in St Petersburg)

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