Russia's newest tie to Iraq

Amid uncertainty about US war plans toward Iraq, Russia is poised to sign a $40 billion economic cooperation deal with the regime of Saddam Hussein that could complicate the White House's military strategy, while boosting Kremlin influence.

On its face, the five-year agreement – confirmed by Russian officials over the weekend – might appear a risky move for President Vladimir Putin, who has forced Russia down a pro-West path, and is considered an ally in Washington's "war on terror."

Moscow has made it clear that it does not support Washington's policy of "regime change" for longtime Russian ally Iraq. The Kremlin also has recently deepened financial and political ties with two other nations which Mr. Bush has included with Iraq as part of an "axis of evil" – Iran and North Korea.

But analysts say Putin is betting that his pursuit of an independent policy will result in a winning hand for Russia – without dealing a blow to the developing friendship between Russia and the US, analysts say.

The logic is that if America holds its fire, Moscow will be able to claim that it helped prevent war. This claim could help fulfill Putin's goal of restoring some of Russia's former status as a superpower. And if the US does strike Iraq, Russia's reputation would still grow in most Arab countries and in many others that oppose any US war in Iraq.

"Deep down, Putin doesn't think it will spoil his relations with Bush, and [hopes] that Bush will not see this as an anti-American gesture, but as a gesture of goodwill to Arabs and the Third World," says Georgy Mirsky, a senior researcher at the Russian Academy of Science's Institute of International Economics and Relations.

Iraqi and Russian officials insist that the latest deal, which would give Russia a stake in developing Iraqi oil fields, and also includes electricity and infrastructure projects, will not violate United Nations sanctions imposed on Iraq after its August 1990 invasion of Kuwait.

But that doesn't mean that Washington is happy about it. Sen. Richard Lugar (R) of Indiana, a senior member of the Foreign Relations Committee, told NBC's "Meet the Press" on Sunday that Russia and the US "have a coincidence of interests in Iraq" and "it's not very nice to express it in this way, with a symbolic gesture, even if it doesn't mean very much."

Russia has been a top contender for business prospects in Iraq, with more than $15 billion in current Russian-Iraqi deals, some of it in debt owed by Iraq from Soviet times. The Kremlin has stood up for Iraq in the UN Security Council in almost every confrontation since the 1991 Gulf War.

"America insists on its right for one-sided actions, but at the same time it doesn't suppose that other countries might also have this right," says Gleb Pavlovsky, a former Kremlin insider who is now chief editor of Russkiy Zhurnal, a daily Internet magazine.

Even as Washington seeks to isolate Iraq, accusing it of secretly pursuing weapons of mass destruction, Russian businessmen and arms experts are reported to be active in Baghdad.

Ambassador Abbas Khalaf, a ranking Iraqi Foreign Ministry official who has served as a translator to Saddam Hussein and was sent to Moscow in the past month, says he expects Russian Prime Minister Mikhail Kasyanov to sign the latest deal, which has been in the works for more than a year, in the first half of September.

"We have the money," Mr. Khalaf told Vremya Novostei, noting that Iraq earns billions each year from oil sales, even under UN sanctions. "We give Russians full priority. Over 200 Russian companies are now working in our country."

The Moscow daily Kommersant wrote yesterday that if sanctions against Iraq are lifted, Russia is set to renew arms sales to the regime. The newspaper added that its military sources said that Russian military cooperation organizations "have become more active in Iraq lately." Even more Russian workers in Iraq will pose "new problems for the US" because it "won't be easy for Washington to bomb the citizens of the country which is one of the allies in the antiterror coalition," the paper wrote.

While the deal may appear to be a desperate bid by Iraq to stave off war – the "last trump card" played by Baghdad to create a clash between Moscow and Washington, as the newspaper Izvestiya puts it – such a deal also makes sense for Russia, experts say.

"This is a way of saying to Washington that [Russia] still has outstanding agreements, and expects to be a player in any post-Saddam scenario," says Neil Partrick, an analyst at the Economist Intelligence Unit in London, who was formerly head of the Mideast program at the Royal United Services Institute for Defence Studies.

The deal is similar to the announcement last month that Russia was expanding its civilian nuclear power projects with Iran to a $10 billion, six-reactor project.

"While those might seem out of step with improved relations between Russia and the US, they reflect a desire [by Russia] to maintain independent operations in the Mideast," Partrick says.

The "ultra-hawkish sentiment" driving US Middle East policy at the moment will probably try to exclude Russia as much as possible from a post-Saddam Iraq, Partrick says, so Russia's latest Iraq deal may be seen in Washingtonas "further evidence that Moscow can't be trusted."

When the war rhetoric against Iraq stepped up in Washington earlier this year, US officials sought to mollify Russian opposition by making clear that it would ensure that any post-Saddam regime will honor its debts.

Talk of war with Iraq has caused unease, however, among many Russians – already unsettled by Putin's swift support of the US-led antiterrorism coalition, the presence of US troops in former Soviet Central Asia, and Russian acceptance of the US withdrawal from the Anti-Ballistic Missile Treaty.

"Putin has gone too far, in the opinion of many people, to be close to the Americans," says Mr. Mirsky, "so from time to time he has to do something to calm down all those Russian patriots. The more the war approaches, the more insistent the government attempts will be to show the world that it is preoccupied in trying to prevent war."