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Moscow: Russia might have to pay a heavy price for scrapping its S-300 air defence missiles deal with Iran, frozen after the fresh UN Security Council, with the penalty for breaching the contract put at USD 400 million.

In addition, Iran could refuse to buy any more military products from Russia following this, resulting in an estimated annual loss of up to USD 500 million, a report warned today.

"The S-300 contract is worth some USD 800 million, while Russian experts estimate the penalty for breach of contract at USD 400 million," a report in the Nezavisimaya Gazeta paper said today, further pointing out that Tehran could turn to China for arms supplies, depriving Moscow a serious source of revenue.

Following the fresh UNSC sanctions slapped on Tehran on June 9 under US pressure, Moscow said it would freeze the delivery of S-300 missiles, an older Russian equivalent of US Patriot missiles.

Although the Foreign Ministry spokesman Andrei Nesterenko underscored that the new sanctions do not cover the sale of defensive weapons to Iran, but experts from the Federal Service for Military and Technical Cooperation -- the nodal watchdog for foreign arms supplies -- concluded that the missiles did come under the new set of sanctions.

However, Foreign Minister Sergei Lavrov has said the final decision in this regard has to be taken by President Dmitry Medvedev.

Moscow signed a contract on supplying Iran with at least five S-300 sy... >>>