US clash with Russia over rocket boycott threat to boycott

ALREADY BATTERED relations between the United States and Russia went from bad to worse yesterday as Washington threatened to stop launching American commercial satellites on Russian rockets - business worth millions of dollars to Moscow's impoverished space industry.

The move came as the Russian media was reverberating with thunderous denials of US allegations that three top Moscow scientific institutes have been helping Iran to develop nuclear weaponry and ballistic missiles. "We did not sell Iran a nuclear bomb!" said the front page headline of Segodnya newspaper.

The US national security adviser, Sandy Berger, announced sanctions on Tuesday against the Mendeleyev Chemical Technical University, the Scientific Research and Design Institute of Power and Technology and the Moscow Aviation Institute. The ban stops US companies buying from and selling to them.

At the heart of the issue is a nuclear plant that the Russians are building for Iran near the Gulf port of Bushehr. The Russians insist that the contract, signed in 1995, is a civil energy project but the Americans have long suspected that Iran is secretly using it to develop nuclear weapons.

The US, under pressure from Israel, is also alarmed by Iran's development of the Shahab-3 missile which, with a range of 800 miles, can reach Tel Aviv.

The Bushehr project is worth about $800m (pounds 500m) to Moscow - money that, with the economy in ruins, Moscow needs. And to the exasperation of the Americans, Russia is now also negotiating with the Iranians to build a second unit at Bushehr.

This has arisen a month after Moscow briefly recalled its ambassadors to London and Washington in a protest about the Anglo-American bombing of Baghdad.

However, Russia's dependence on the West for economic assistance means it can do little more than spout indignant rhetoric.

This may be one reason why Boris Yeltsin, who yesterday spent yet another day at his country retreat, has so far stayed out of the fray. It has been left to the powerful Prime Minister, Yevgeny Primakov, to condemn the US's "strong-arm methods" as "counter- productive".

Most Russians will see the sanctions as another example of American bullying and high-handed interference in Moscow's dealings with its neighbours - a view that will further fuel a potentially dangerous anti-Western trend.

Nor has the fact gone unnoticed that the issue coincides with the Clinton impeachment proceedings. "Whenever a US president feels the need to boost his rating you see this sort of action," said one commentator.

The US Secretary of State, Madeleine Albright, is due in Moscow later this month: she should not expect to be made welcome.