UPDATE: This morning's Playbook has a statement on the S-300 issue from National Security Staff spokesman Mike Hammer:
"The White House strongly welcomes the Executive Order signed by Russian President Medvedev which bans the transfer of advanced weaponry to Iran, including the S-300. We believe President Medvedev has demonstrated leadership on holding Iran accountable to its international obligations from start to finish. We welcome this faithful and robust implementation of UN Security Council resolution 1929, and we remain committed alongside our Russian and other P5+1 partners to finding a negotiated solution to the Iranian nuclear issue."
As for why the Russians finally decided to scuttle the arms deal after years of lobbying by Washington, the official speculated that Moscow now has something it needs -- and that it finally has faith that the U.S. is willing to help. Russia is jockeying for as much U.S. support as possible for their upcoming bid to join the World Trade Organization (WTO), and Moscow is planning to finalize its bid this year.
"Momentum on WTO accession is what they see as they next big negotiations with us. We're right in the middle of that. That's asymmetric because that's more in their interest than ours. I think we have to deliver on that," the official said.
But the Obama administration isn't asking Russia for favors or giving them out in return, the official explained. The idea is to make the U.S.-Russia relationship more valuable to the Russians than their relationship with Iran, and both countries should act in their own interests.
"The objective is not actually to develop a good relationship with Russia. The goal here is to advance our national security and economic interests and to promote universal values," the official said.