Russia, Iran close to satellite deal

NICOSIA — Iran and Russia are preparing to conclude a deal for the manufacture of the first satellite launched by the Islamic republic.

Russia faces China and France in the competition to build Iran's communications satellite. India has withdrawn from the bidding.

The decision over the satellite project comes as Russia plans to sell more than 570 T-72C tanks and 1,000 armored vehicles to Iran. The Russian RIA news agency said the sale is based on a contract signed before Moscow suspended arms sales in accordance with a 1995 agreement with the United States.

The government daily Iran said Russia is expected to win the Iranian satellite project. The newspaper quoted an Iranian government source as saying that the issue with Moscow now concerns price. Russia's bid, the source said, appears too high for Teheran.

Iranian officials are in Moscow to complete the deal for the production of the Zohreh satellite. The project calls for six such satellites to be built in what would comprise an estimated $300 million telecommunications network in space. The first satellite could be launched by 2003.

Iranian budget woes have delayed the project, which was to have been launched in November. Iran had been seeking a satellite since 1978.

Russian officials have welcomed the prospect of winning the Iranian project. On Tuesday, the Russian Space Agency hosted visiting Iranian President Mohammed Khatami.

"Iran has plans to develop high-tech industries and join in all areas of scientific and technical progress," Russian Space Agency chief Yuri Koptev said. "Russia has every chance of winning it [the Iranian satellite project] and then we will manufacture a satellite for Iran, launch it and, possibly, will control its flight."

In Washington, the Bush administration has decided to extend sanctions on Iran that bar trade and investment. The current sanctions on U.S. investment were to have expired on Thursday.

"The actions and policies of the Government of Iran continue to threaten the national security, foreign policy, and economy of the United States," President George Bush said on Tuesday.

Iranian officials said the test will be whether the United States renews the Iran-Libyan Sanctions Act when it expires in August. This law imposes sanctions on foreign companies that invest more than $40 million in Iran.

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