Russia to return prepayment of $166.8 million to Iran for S-300 systems

Russia annulled a contract valued at about $800 million to supply an S-300 air-defense battery to Iran and is in talks on refunding an advance payment made by the Middle East country.

Russia owes Tehran only the prepayment of $166.8 million for S-300 air defense missile systems, Rostekhnologii head Sergei Chemezov said on Thursday.

The contract to supply Iran with the missile system, one of most effective in existence, was signed at the end of 2007. Russia was to supply five divisions' worth of S-300PMU-1 for $800 million. Russia canceled the contract to supply Tehran with S-300 air defense missile systems because of UN sanctions against the Islamic Republic, according to RIA Novosti.

The Kremlin said in June that the S-300 fell under United Nations sanctions against Iran, which banned sales of weaponry including fighter jets, attack helicopters, warships or missiles. President Dmitry Medvedev last month signed a decree banning the sale of weapons, including the S-300, to Iran in compliance with the sanctions.

Delivery of the S-300 would "represent a significant increase in the defense capability of Iranian forces," U.S. General David Petraeus said in March, according to Bloomberg.