Finesse needed on "difficult" Iran - Russia senator

GENEVA (Reuters) - Russian nuclear energy support is intended to encourage Iran to play by global arms rules, a top Moscow senator said on Sunday, arguing Tehran's hardline Islamists responded best to diplomatic "chess," not "rugby."

Describing the Islamic republic as a difficult neighbour, Mikhail Margelov, chairman of the foreign affairs committee of the Federation Council of Russia, or upper parliament chamber, said Moscow had no hidden agenda in building and supplying fuel to Iran's first nuclear power plant.

Russia's role at the plant, inaugurated last month near the Gulf city of Bushehr, was aimed at securing Iranian compliance with the International Atomic Energy Agency (IAEA), the U.N. body that seeks to counter nuclear proliferation, he said.

"We do not have any illusions about the character of the Iranian regime at all," he told a Geneva meeting of the International Institute of International Studies think tank.

"That is why, if we cooperate with Iran in the field of nuclear energy when we do Bushehr, this is how we try to keep these guys playing by the rules of the IAEA."

"This is the only legal mechanism to keep them cooperating with the international institutions."

Western countries fear Iran is seeking to develop nuclear weapons but Tehran rejects the accusation, saying its atomic activities are peaceful and aimed at generating electricity.

To ease proliferation concerns, Russia will take back spent rods that could be used to make weapons-grade plutonium.

POSSIBLE ISLAMIST SUBVERSION

Margelov suggested a delicate factor in the Kremlin's approach to Iran was concern about potential Islamist subversion among Russia's Muslim minorities.

"We have to play chess with them. We do not believe, in our oriental policy, in playing rugby," he said.

"They are our neighbour -- our difficult neighbour -- and believe me through the 1990s we still do not know how many Islamic sport camps have they deployed in Tatarstan, Bashkortostan and the Caucasus."

"It's difficult to do politics in the Oriental countries, and we know that."

The Kremlin is struggling to contain a growing Islamist insurgency in its North Caucasus region. Chechen rebel leader Doku Umarov this month called on militants in heavily Muslim Tatarstan and Bashkortostan, in central Russia where there has been very little violence linked to Islam, to conduct attacks.

Iran remains under intense international pressure to stop uranium enrichment, something the West says it no longer needs to do as it can acquire nuclear fuel from abroad.

Moscow is also struggling to balance trade ties with Tehran and warmer relations with the United States, which is eager for Kremlin support to rein in Iranian nuclear activities.

Tehran's refusal to cease enrichment has resulted in a series of U.N. sanctions and tougher unilateral measures by the United States, the European Union and elsewhere.

In a report earlier this month, the IAEA said that Iran was pressing on with its nuclear programme in defiance of the sanctions and hampering the U.N. nuclear watchdog's work by barring some inspectors.

Iran has voiced anger over Moscow's backing of the sanctions in the Security Council, where Russia holds veto power.

(Editing by Elizabeth Fullerton)

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