Russia insists on linking sanctions to nuclear talks, Iran stands firm

Moscow wants a written US guarantee that its trade, investment & military-technical cooperation with Iran would not be hindered by Western sanctions

Iran said on Monday it would not be dictated to by foreign interests, after Russia appeared to link efforts to revive a deal over its nuclear programme to sanctions over Ukraine, which Moscow's envoy to Tehran called a misunderstanding.

A deal over reviving Iran's 2015 pact with world powers seemed close, all parties to negotiations in Vienna said on Friday after months of indirect talks between Tehran and Washington.

But Russian Foreign Minister Sergei Lavrov added uncertainty on Saturday, saying Moscow wanted a written U.S. guarantee that its trade, investment and military-technical cooperation with Iran would not be hindered by Western sanctions imposed since it invaded Ukraine.

Iran’s Foreign Minister Hossein Amirabdollahian said Tehran would not allow "any foreign elements to undermine its national interests", Iran's state media reported, while the foreign ministry said it awaited an explanation from Russia.

The Iranian semi-official news agency Tasnim quoted Moscow’s Ambassador to Tehran Levan Dzhagaryan as saying that Russia — which France on Monday warned not to resort to blackmail over efforts to revive the deal —planned to give Iran an explanation of the guarantees it has requested from the United States.

Asked about Lavrov’s statement about linking Ukraine sanctions to the nuclear pact, Dzhagaryan told Tasnim “there is a misunderstanding in this regard”. He did not elaborate. Oil prices hit their highest since 2008 on Monday amid market supply fears as the US and European allies considered banning Russian oil imports.

Russia’s new bond rules split creditors based on sanctions (Bloomberg)

Vladimir Putin introduced new rules for foreign creditors that will set debt payments depending on whether or not investors are based in a country that’s sanctioned Russia, dividing bondholders into two distinct categories.

Authorities said at the weekend that Russia and Russian companies will be allowed to pay creditors from “countries that engage in hostile activities” in rubles, even on securities denominated in other currencies. But they also said creditors in countries that haven’t imposed sanctions may be able to receive the payment in foreign currency with special permission. The nations deemed “unfriendly” include the US, the UK, Japan and EU members. 

Russia is trying to show it can continue to honor its financial obligations amid uncertainty about whether the country will default on a debt payment.  For many, the key date coming up is March 16. That’s because while some of Russia’s foreign sovereign debt allows repayments in rubles, the $117 million worth of coupons on dollar bonds due on that day don’t have that option. If Russia decides to pay in rubles, it could eventually lead to a default.