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Russia: Proposed Economic Agreement With Iraq Raising Questions

Moscow on 18 August confirmed reports it plans to ink a five-year, $40 billion economic-cooperation and trade agreement with Iraq. The deal, which may not see the light of day, is seen as a statement of opposition to a U.S. attack on Iraq rather than a serious attempt to throw a wrench in White House plans to oust Saddam Hussein.

Moscow, 19 August 2002 (RFE/RL) -- Russia and Iraq confirmed reports on 17-18 August that the two countries aim to sign a five-year economic-cooperation and trade deal worth $40 billion.

Speaking at a Moscow news conference today, Iraqi Ambassador Abbas Kunfud said Baghdad handed the draft document to Moscow in April 2001 and is now waiting for approval from Russian Prime Minister Mikhail Kasyanov. Kunfud said he was optimistic the deal would be signed. "What pleases us is that one of Mr. Kasyanov's aides [Oleg Buklemeshev] has already confirmed that information and confirmed that such a program exists and that program has passed through all the [necessary] ministries and departments of the Russian Federation," Kunfud said.

Kunfud refused to answer any questions about the details of the agreement, directing all questions to the "Russian side."

Moscow has so far declined to say when the deal might be signed, but the Kasyanov aide told Reuters the agreement includes plans for cooperation in several sectors, including oil, electric energy, and railroads. Interfax reported that the document includes provisions for 70 different projects and quoted a Russian Foreign Ministry source as saying that work on the agreement has been ongoing for several years. Both sides have said the deal would not violate United Nations sanctions imposed on Iraq.

Commenting on the potential Russia-Iraq deal, White House spokeswoman Claire Buchan said Washington expects Russia to honor UN resolutions on Iraq. In a statement reported 18 August by Reuters, Buchan said, "We're confident Russia understands its obligations under UN Security Council resolutions and will abide by them."

News of the deal comes amid increasing apprehension over White House aims to invade Iraq and topple Saddam Hussein. Washington says the Iraqi leader has been a threat since Iraq invaded Kuwait in 1990, setting off the Gulf War the following year.

Iraq, together with Iran and North Korea, is part of U.S. President George Bush's "axis of evil," states that he accuses of seeking to develop weapons of mass destruction. Iraq has repeatedly refused to allow UN inspectors into the country to examine its weapons capabilities.

Analysts in Russia say the pending Iraq-Russia agreement does not appear to be an attempt by Moscow to foil possible White House plans to oust Iraqi leader Saddam Hussein.

Aleksandr Konovalov, an analyst at Moscow's Institute for Strategic Assessments, told RFE/RL that Moscow understands it has little influence over a U.S. decision to invade Iraq and that the economic agreement with Baghdad is simply an attempt to register opposition to such plans.

Moscow may also be looking to position itself to take advantage of lucrative oil and other business deals that would likely follow a regime change in Iraq. "If a war doesn't take place, Russia will be able to say it helped avert aggression in the Middle East," Konovalov says. "If war does take place, Moscow can say that it tried to defend Russian economic interests."

In an Ekho Moskvy interview, Russian foreign-policy analyst Sergei Karaganov said the deal is likely to fall through because Baghdad, which reportedly still owes Moscow several billion dollars in Soviet-era debt, "doesn't have that kind of money."

The planned Iraq-Russia agreement is also reported to include plans for cooperation in the event UN sanctions are lifted. Moscow issued calls on 16 August for the UN Security Council to meet to discuss the sanctions.

Under the current UN oil-for-food regime, Iraq is allowed to sell only limited amounts of oil to buy food and medicine.

Iraqi Ambassador Kunfud today denied that the agreement with Russia was an attempt to get around the sanctions. "We saw, see, and will continue to look at Russia as a serious, dependable partner on whom it is possible to depend, notwithstanding all the rumors and all the investigations of our enemies. That's why we feel that this [agreement] comes out of the strategic principles upheld by Iraq," Kunfud said.

Iraqi Foreign Minister Naji Sabri plans to visit Moscow in September to discuss relations with the UN and Baghdad's recent statements that it would once again allow weapons inspectors into the country, Interfax reported.