1. Russia and Iraq NewsBase Wednesday, August 7, 2002 By Ben Aris in Moscow
Russia is looking forward to a war in Iraq. By doing nothing Russian oil companies could walk away with up to $40bn in oil deals, say experts.
Russia and Iraq are old friends. Russia's former Prime Minister Yevgeny Primakov is an Arabist and a personal friend of Saddam Hussein's. He lobbied against Gorbachev and Yeltsin in the 1980s for closer ties and in Soviet times Iraq relied on the USSR for most of its heavy engineering and arms.
Abbas Khalaf the Iraq ambassador to Russia said in July : "All our economic infrastructure, energy industry, defence industry, agriculture and 98 per cent of our military equipment are of Russian origin. If the sanctions are lifted, Iraq would have no choice except close cooperation with Russia."
Russian oil companies are certainly keen to take Khalaf up on the offer. Earlier this year Slavneft said that it had signed cooperation deals with Baghdad, but the new management said more recently that it was having second thoughts. However, LUKoil, Russia's largest oil company, and several other state-owned oil companies will be more than happy to go in Slavneft's place.
The prize on offer is reserves of an estimated 200bn barrels of oil - second only to Saudi Arabia and double Russia's 96bn barrels.
Andrei Ryabov, an analyst with Carnegie Endowment says: "Over the last two years Russia's oil companies have rapidly boosted oil production, but they have already come to the point where they are investing in other countries around them. LUKoil in particular is looking to the Middle East."
The Kremlin is also keen to cement ties with the Middle East through economic means. As time passes it becomes clearer that energy lies at the heart of Putin's recovery plans for Russia and international energy is being used as his main international relations tool.
Sarah Mendelson, an analyst with Centre for Strategic and International Studies in Washington says: "Oil dominates as the post-Soviet instrument of foreign policy. A deal is being cut between Washington and Moscow. The White House is trying to persuade the Kremlin that this will be in Russia's economic interests to stand aside."
Ryabov predicts that Russia will protest against American aggression until the point when force is used. After this it will roll over and accept the deals offer to placate it. Some experts estimate that Russia will earn up to $40bn in oil-related contracts.
Thanks to its strong ties with Iraq Russia also wins if there is no military action. Having backed its friends against those nasty American's Iraq will naturally turn to Moscow for help in rebuilding its tattered economy - especially now that Russian oil companies are doing so well for themselves.
"Russia is in a win win situation as it can take a free ride. If it complains about military actions the US will dangle free access to oil deals as a sop. If there is no military action and sanctions are lifted then Russia will be offered oil deals because its good relations with Iraq," says Mendelson.
These good relations are founded on something a little more solid that just longevity. Since the end of the Gulf War in 1991 Iraq has been cut off from the outside world. However, Hussein has managed to maintain one of the largest and most sophisticated armies in the region. Although he has not been able to buy new systems - and the American weapon development has come a long way in ten years - he has been able to keep his armies in working order through a steady stream of smuggled spare parts and munitions.
Pavel Felgenhauer, a well-respected Russian military analyst in Moscow said: "Sanction busting has been continuous and widespread. If the sanctions were water tight then the Iraqi arm would be on the same level as Zaire's army: no pants and only a few working Kalashnikovs."
Since sanctions were imposed Russia has become one of Iraq's few business partners. Russian companies already dominate Iraq's limited oil export trade under the UN oil-for-food programme, which has seen trade turnover between the two countries treble in the last year to $6 billion.
It seems that all the countries of the former Soviet Union have been accused of supplying Iraq with arms - and some of them probably have. Belarus earned a rebuke from the US State Department earlier this year for selling arms to unsavoury customers.
However, whether the arms are going to Iraq with official government sanction or not, they are going. The path of illicit arms deliveries has been worn smooth by the conflicts in the Balkans.
Officers in the Russian or other armies moonlight as arms dealers. Contracts are signed that deliver - on paper at least - arms to central European countries which are then shipped to Africa or South America. In reality these arms are flown or trucked to Jordan where they are taken to Baghdad over land. The $1bn a year business is paid for by illicit sanction-busting oil exports out by the same route.
What is not clear is if the Kremlin approves the trade in arms with Iraq or simply turns a blind eye. The Russian government is trying to walk a tightrope between cooperating with the US-lead war on terrorism campaign on one side and protecting its interests in the Middle East on the other. Happily for the Kremlin, this is one of those rare occasions when just standing still is probably the best thing to do.