Russia and Iraq plan to sign new economic cooperation agreement

Russia and Iraq plan to sign a new five-year economic cooperation agreement worth $ 40 bn, reinforcing Moscow's close ties to Baghdad even as the United States weighs up a military attack to drive Iraqi President Saddam Hussein from power, Iraqi and Russian officials said. Russia's apparent refusal to abandon its long-time ally, despite vigorous US efforts to isolate Iraq, could make it even more difficult for the United States to rally Russian and other sceptical world leaders behind any invasion.
The five-year agreement will deal with cooperation in a variety of fields -- foremost oil, but also electrical energy, chemical products, irrigation, railroad construction and transportation. Soviet or Russian specialists built much of the infrastructure in Iraq, and Baghdad wants Russian expertise to help repair or upgrade it.

Russia has continued to strengthen ties with all three of the countries branded the "axis of evil" by US President George W. Bush: Iran, Iraq and North Korea. Despite President Vladimir Putin's friendship with Bush and support for the war on terrorism, Moscow last month released a separate plan calling for increased nuclear cooperation with Iran and invited North Korea's leader to visit Russia.
Russia plays a particularly important role in the future of Iraq. Russia has long been one of Iraq's chief benefactors in the international arena and a major trading partner and military supplier. But Bush aides have expressed hope that the United States could mollify Putin enough to keep protest to a minimum in the event of war.

For its part, Iraq has been lobbying hard to keep Russia in its corner, recognizing the dearth of friends that will stand up for it in a moment of crisis. Few countries have more significant economic interests in Iraq than Russia, totalling billions of dollars both in the form of unpaid Soviet-era debts and unrealised post-Soviet oil contracts.
"Russia was, is and will be our main partner," said Abbas Khalaf, Iraq's ambassador to Moscow. "What weneed from Moscow is moral, political and diplomatic support because Iraq has shown the whole world that it can defend itself. America's aggressive statements against Iraq aroused a negative reaction in Russia." Khalaf scoffed at recent speculation that Moscow has privately signalled to Washington that it would not seriously object to an attack on Iraq. Russia, he predicted, would do everything it could to stop a war.
"We're sure of it because Russia is a country that supports peace and stability in the whole world," he said. "It has a moral responsibility to prevent such aggressive plans against Iraq."

Khalaf, a high-ranking Foreign Ministry official and Hussein's personal translator, was dispatched to Moscow as the new envoy a month ago and has been making the rounds here to solidify the Russian political establishment behind Iraq. He disclosed the planned economic agreement at the embassy in central Moscow, and senior Russian officials confirmed it.
Oleg Buklemeshev, a top deputy to Prime Minister Mikhail Kasyanov, confirmed that after years of negotiations the framework has been vetted by various government agencies and sent to his boss's office for final approval. "All the ministries have agreed to the document," he said. As for a signing ceremony, he said, "It could happen very soon."
But Buklemeshev stressed that nothing in the program would violate UN sanctions imposed on Iraq after its 1990 invasion of Kuwait and said no arms would be involved. "I can assure you it's absolutely in line with all the existing international decisions toward Iraq," he said. US officials should not object, he added. "They should be OK provided they have correct information."

Under UN resolutions, Iraq can sell only limited amounts of oil each year to pay for food and medicine and rebuild the country's infrastructure. The sanctions are supposed to remain in place until UN inspectors certify that Iraq has eliminated its efforts to obtain nuclear, chemical and biological weapons. But Baghdad threw out theinspectors in 1998. UN and Iraqi officials have jousted recently over readmitting inspectors. Russia has encouraged a resolution of the issue that would forestall a US military attack.
As long as the sanctions remain in place, oil companies cannot proceed with their most ambitious plans to develop Iraqi oil fields. However, Russia gets the largest share of the petroleum sold under the UN oil-for-food program and overall still does about $ 4 bn in business a year with Iraq. Russia proposed changes in the pricing rules in the oil-for-food program that it argued have penalized Baghdad and discouraged oil sales.

Russia and Iraq have concluded a number of economic deals that have only sometimes come to fruition. The Bush administration said that it expected Russia to abide by UN resolutions in any economic pact with Iraq.
"We're confident Russia understands its obligations under UN Security Council resolutions and will abide by them," White House spokeswoman Claire Buchan said. Some Russian oil executives expressed doubt that the agreement could amount to much, given the international political climate. "We couldn't broaden our relationship with a regime that has a policy like that," said one oil company official.
At the same time, many of the oil executives were clearly eager for the chance to pursue more opportunities. Several asked how much money the new blueprint might mean for their companies.

Regardless of the economics, the symbolism of a signing ceremony could irritate US officials. Iraqi and Russian officials said the ceremony likely would take place in Baghdad and involve Cabinet-level officials, such as Iraq's oil minister and Russia's energy minister. Iraq had hoped Kasyanov might come, but his aide, Buklemeshev, said he did not think the prime minister would participate.