Russia will supply two batteries of S-300PMU2 Favorit air-defense system to Azerbaijan, Vedomosti.ru reports, referring to sources in the Russian defense industry. A Rosoboronexport representative made no comments. Azer Kasymov, Spokesman for the President of Azerbaijan, said he has no information.

The top manager of one of the enterprises and the manager of one the armaments factory, which produces components for the system, told Vedomosti.ru that the Azerbaijani Ministry of Defense signed a contract with Rosoboronexport last year for the supply of two batteries of S-300PMU2 Favorit air-defense system. According to the source, the sides are now executing the contract to complete it within a year or two.

Russia supplied S-300PMU2 Favorit systems to Algeria and China. A similar contract was signed with Iran, but it was not executed. Last April Russia cancelled the supply, and this June the U.S. Security Council imposed sanctions on Iran. Russia, in turn, reckoned them as a ban on the supply of S-300PMU2 Favorit systems.

In Soviet times the Baku air-defense system was the most powerful after the Moscow and Leningrad systems, says an officer of the RF Ministry of Defense. During 1990s it gradually fell into decline, so Azerbaijan’s wish to modernize it is quite natural. The supply of the air-defense system is unlikely to change the balance of forces between Armenia and Azerbaijan, as neither has modern striking aviation or ballistic missiles the S-300PMU2 Favorit systems are intended for. Baku must be securing itself against any aggravation of the Iran-related situation.

Azerbaijan’s purchase of two batteries worth at least U.S. $300m is the most expensive purchase of modern military equipment in the post-Soviet area (except for Russia), says Makhail Barabanov, Editor of  Moscow Defense Brief. Earlier modifications of S-300 systems were supplied to Belarus and Kazakhstan, but those were far less expensive deals.

Azerbaijan is spending petrodollars to modernize its army, purchasing arms from Ukraine, Belarus, Israel and South Africa, says Ruslan Pukhov, Director of the Strategies & Technologies Analysis Center. Azerbaijan purchased MiG-29 fighters and armored equipment from Ukraine, Spike missiles and unmanned aircraft from Israel, modernized Mi-24 helicopters from South Africa. If Moscow did not supply the modern air-defense systems to Azerbaijan, South Africa or Israel would do that. So it is the right deal in the context of Russia’s interests.