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Iraq: U.S. To Continue Pressing Russia Over Smart Sanctions

The United States' Iraq policy suffered a setback this month as Russia blocked efforts to win a UN Security Council consensus supporting so-called smart sanctions. But U.S. officials have said they will use the coming months to continue to try to win Russian support. RFE/RL correspondent Charles Recknagel looks at why Washington appears determined to pursue the smart sanctions initiative despite the difficulties it has encountered so far.

Prague, 13 July 2001 (RFE/RL) -- U.S. officials say they plan to continue pressing for smart sanctions on Iraq despite having to put aside their proposal at the UN earlier this month due to resistance from Russia.

Last week (4 July), the United States agreed to the UN extension of the oil-for-food program for another five months under its current conditions. The step postponed for an unspecified number of months an intensive U.S. and British effort at the UN to revamp the sanctions regime.

The U.S. decision came after the UN initially had extended the oil-for-food pact on 1 June for only 30 days -- rather than the usual half year -- to allow time for Security Council members to debate the smart sanctions proposal. The proposal sought to ease sanctions on civilian imports to Iraq but at the same time to tighten controls over military items by agreeing on a list of goods with both military and civilian uses. It also sought to stop Iraqi oil smuggling by ensuring that all Iraq's oil earnings go directly into a UN-controlled escrow account to be used only for buying humanitarian goods.

But even though Russia's resistance to the smart sanctions proposal set back U.S. and British efforts to modify the sanctions regime, there is little sign that Washington plans to abandon its efforts to gain Moscow's support.

U.S. National Security Adviser Condoleezza Rice said yesterday that President George W. Bush will take up the smart sanctions proposal with Russian President Vladimir Putin on 22 July, when they meet on the sidelines of a summit in Genoa of the G-7 industrial nations plus Russia. She said "it will be an issue. [We] have some work to do with the Russians."

Rice described the task of gaining Russian support for smart sanctions as difficult:

"It's been hard, tough sledding to get this through the P-5 [the five UN Security Council permanent members] and the UN Security Council, because the Russians have not been willing to go along."

Russia refused to support the U.S.-backed British proposal to revamp sanctions because it says the UN should concentrate instead on ways to suspend the sanctions. At the same time, Russian officials have said they worry that modifying the sanctions regime could hurt the economies of many countries, including Russia.

Iraq has thanked Moscow for taking that position and this week indicated it will repay Russia with lucrative trade deals. Iraqi Trade Minister Amir Mohammed Mehdi said Russians would have priority in future deals "in appreciation of their opposition to the wicked U.S.-British plan."

"The Washington Post" reports that Russian companies currently export nearly 40 percent of Iraq's oil under the oil-for-food program. Previously, the paper says, the Russians were promised billions of dollars' worth of oil development rights once sanctions are lifted.

At the same time, Baghdad has said it will punish the French, who initially took a middle ground in the smart sanctions debate before supporting the proposal along with China. Iraq's official "Babel" newspaper wrote that "nobody will believe that Iraq will allow French oil firms to work in Iraq after this strange stance [taken by Paris]."

Analysts say for the United States to now gain Russia's support for smart sanctions, it will have to convince Moscow that there is more to gain from good relations with Washington than with Baghdad.

David Mack, a regional expert at the Middle East Institute in Washington, D.C., told RFE/RL recently that Washington is looking for ways to convince Moscow there are benefits to supporting smart sanctions.

"There are potential quid pro quos in the U.S.-Russian relationship, just as there are in the U.S.-Chinese relationship. I don't think people would have predicted that we could have brought the Chinese aboard on the new sanctions policy, and we did. Our relations with the Russians cover such a multiplicity of issues that one would assume that viewed overall, the Russians prefer to have good relations with us rather than with Iraq."

Analysts say it still remains unclear why China, which often has followed Russia's lead at the UN regarding Iraq policy, supported the British-U.S. backed smart sanctions. Some press reports have said the Chinese support came soon after Washington eased its objections on the UN sanctions committee to some Chinese exports to Iraq. The sanctions committee reviews exports to assure they do not have a dual military and civilian use.

Analyst Mack says that one incentive to Russia might be using Baghdad's oil sale revenues to repay Iraq's longstanding debt to Moscow for past arms sales. That debt is estimated to total some $8 billion. Mack says:

"People in Washington are quite aware of the Russian desire to be able to somehow recoup their losses in Iraq over the years, because they invested heavily in that country in terms of military equipment particularly, and the Iraqis owe a huge debt to them."

He continues:

"I don't think it's out of the question that there might be arrangements made for some of the debt the Russians are owed to be repaid out of the escrow account. And if such arrangements were made, obviously it is in Russia's interest to make sure that as much of the oil revenue as possible continues to go into the escrow account."

Another area for incentives to Moscow might be for smart sanctions to allow greater foreign investment in Iraq's oil industry. Russia and France, to which Iraq also owes billions of dollars for past arms purchases, both want greater commercial involvement in Iraq's oil sector to help them recoup their debts.

Ted Carpenter, a U.S. policy expert at the Cato Institute in Washington, D.C., also says that a top priority for the Bush administration now is to build on what it sees as a generally positive relationship with Russia to make Moscow re-think its approach toward Iraq.

"There is little question that the Bush administration has had a course adjustment in its policy toward Russia since taking office. After initial rather hard-line statements, it is apparent that the administration wants to repair the relationship with Russia. That was true even before the Bush-Putin summit meeting [in Ljubljana on 16 June], but it has taken on momentum since then.

He continues:

"The administration would very much like to get Russia back on board with regard to sanctions policy toward Iraq. That is a major reason why Washington is going to try to work through the UN Security Council for a while longer."

U.S. officials so far have not set a date for when they might seek to resume the smart sanctions debate at the UN. Analysts say that another reason Washington will continue to press for a UN consensus on smart sanctions is the difficulty of undertaking any unilateral efforts to contain Iraq outside the UN framework.

A key goal of the smart sanctions is to convince Iraq's neighbors Turkey and Syria to transform the smuggling of Iraqi oil across their borders into a legitimate oil trade under the auspices of the UN oil-for-food program. Another is to bring under the program oil that Jordan currently purchases legally from Iraq.

But achieving those aims is difficult because Iraqi oil has become an integral part of all three countries' economies and Iraq has threatened to cut off its deliveries rather than put them under the UN program. The Iraqi regime earns an estimated $1.5 billion a year from oil smuggling and sales outside UN controls. It depends on those revenues to largely insulate itself -- though not the Iraqi population -- from the effects of the sanctions.

Mack says Washington's task of winning the cooperation of Iraq's neighbors on the oil question would be hard even if there were a UN decision to revamp sanctions. He says without such a decision, the task would be still more daunting.

"We would have to do something about the Jordanians and the Turks, in particular. And I don't think what has happened has made that any easier -- it has made it harder. It was already going to be hard. You were going to have to get their cooperation anyway even with the resolution, now you [would] have to get their cooperation without the resolution. And in the case of Syria, it is immensely complicated by the current stalemate in the Arab-Israeli peace process."

"The Wall Street Journal" reported this month that Jordan saves an estimated $500 million a year from discounted oil it imports from Iraq under a special waiver of the UN oil-for-food program. That is nearly twice what Jordan received in U.S. aid last year.

Turkey has taken no action against the smuggling of some 100,000 barrels a day of Iraqi petroleum products -- which go into Turkey's state-controlled fuel distribution network -- because it says it already has suffered too much from trade losses with Iraq under the sanctions regime. Ankara puts its trade losses at some $30 billion since sanctions were imposed after Iraq's invasion of Kuwait in 1990.

Syria denies receiving any smuggled oil through a pipeline connecting it to Iraq. But oil industry experts say Iraq provides Syria with some 100,000 barrels of illegal oil per day.

Washington and Britain hope that with a UN consensus, Turkey, Jordan, and Syria could be induced to establish tight controls on their borders to prevent Iraq from smuggling oil or importing military goods. What those inducements might be, however, has yet to be established.