Putin, Iran's Rouhani to discuss trade, economic ties

MOSCOW (Reuters) - Russian President Vladimir Putin is expected to meet Iranian President Hassan Rouhani while they are in Tajikistan for a security summit to discuss trade and economic ties, a Kremlin official said on Wednesday. He did not say whether they would touch on an "oil-for-goods deal," which Tehran and Moscow have been discussing as a way to avoid Western sanctions imposed on Russia over the Ukraine crisis and on Tehran over its nuclear program. "Naturally, the main focus will be on strengthening trade and economic ties," Kremlin foreign policy adviser Yuri Ushakov told reporters in Moscow at a briefing on Wednesday before the Shanghai Cooperation Organisation (SCO) summit in the Tajik capital, Dushanbe. He also said Russia and Iran were concerned about a "certain trade decline." Kremlin data showed an almost one-third decline in trade turnover to $1.6 billion last year following Western sanctions against the oil-producing Middle Eastern nation. Russia's state-controlled grain trading company is looking to supply Iran with grains worth up to $500 million per year in exchange for oil, a further reduction to the value of a long-negotiated barter deal between the two countries. Russian Energy Minister Alexander Novak told state-run Rossyia-24 television that negotiations on the "oil-for-food" deal had not yet started, but did not rule out the possibility of a deal being completed in the future. U.S. State Department spokeswoman Marie Harf said the United States was watching for any possible developments and cautioned that Washington would act if the deal violated sanctions. "If they are deals that are sanctionable we will act," Harf told a daily briefing for reporters. "I don't want to get ahead of anything though, there are lots of rumors about what may transpire from this. We will watch and see," she added. Meanwhile, Ushakov said the two leaders would also discuss progress with Iran's nuclear program, as well as the Iraq and Syria crises. Tehran said in June it expected to sign a deal later this year with Russia to build two new 1,000-megawatt nuclear reactors in Iran, potentially boosting its case that it is refining uranium for civilian energy purposes. Russia, which built the Islamic Republic's first nuclear power station in Bushehr on the Gulf coast of southwest Iran, is one of six world powers negotiating with Iran on a long-term agreement to end a decade-old dispute over Tehran's nuclear program. Iran says its program is peaceful, but the West says it may be aimed at developing a nuclear arms capability. The SCO groups China, Russia, Tajikistan, Uzbekistan, Kyrgyzstan and Kazakhstan. Iran has observer status. (Reporting by Alexei Anishchuk, additional reporting by Lesley Wroughton in Washington; editing by Timothy Heritage, G Crosse)