Russian Railways (RZD) announced in January it had won a tender to build a 520-km (323-mile) rail line in Saudi Arabia.
Vladimir Yakunin said: "This was not a problem relating to technology or RZD. It is a problem in international relations."
The Russian company was to build a line from Al Zabirah to the King Khalid international airport (Riyadh) in central Saudi Arabia, to make up over one fifth of the North-South rail line in the Mideast state, which will have a total route of 2,400 km (1,500 miles).
The North-South project was launched in Saudi Arabia in 2005 to develop phosphate and bauxite deposits in the country's north and reduce the economy's dependence on oil exports. The entire project was expected to cost over $2 billion and was expected to be finished in 2010-2011.
