Putin ponders

Russia hesitates to give the nod to the U.S.' `tough' resolution on Iraq in the U.N. Security Council, probably to win an assurance on its oil interests in Iraq in the event of a regime change.

AS the high-power diplomatic dance centred around Iraq becomes more desperate by the day, interestingly Russia's importance is dawning yet again on the West. Western diplomats and analysts engage, on a daily basis, in a `will he, won't he?' exercise with regard to President Vladimir Putin, attempting a barometer reading on Moscow's current mood vis-a-vis the United States' impending "tough" resolution on Iraq before the United nations Security council, which would clear the way for an allied armed intervention in the country. The hair-splitting around Moscow continues even as the Kremlin engulfs itself in a stone-cold sober fog, mulling over the matter even as it views the mist hanging on the Volga river, remembering better days.

In the latest turn to the unfolding saga, British Prime Minister Tony Blair accompanied by his wife Cherie Blair alighted in Moscow on October 9 and met President Putin at his hunting lodge outside Moscow. Blair had come with high hopes of gaining Moscow's support for a U.S.-drafted proposal on Iraq, but he seems to have gone home with mixed results. Putin, on the one hand, completely refuted the British dossier on Iraq, which seeks to establish the British and American view that Iraq possesses weapons of mass destruction. Putin stressed that he had no proof of Baghdad's alleged arsenal of chemical, biological and nuclear weapons. He informed the press that "Russia has not received persuasive proof from its partners of such weapons in Iraq. This thesis is confirmed by information sent by the CIA to (the U.S.) Congress".

However, Putin did not entirely write off the resolution. He said Russia would consider a new proposal if it was necessary to aid inspectors who had been absent from Iraq since 1998. He declared that "we don't exclude the possibility of reaching some coordinated decision in the shape of a U.N. Security Council resolution".

Further, Deputy Foreign Minister Yury Fedorov informed the press in Moscow that Russia might accept a new resolution so long as it was based on previous resolutions. However, he qualified the statement by saying that the resolution would be accepted only if it did not entail a use of armed force against Baghdad. Currently, Russia remains opposed to an armed intervention in Iraq.

Analysts perceive this development to be indicative of a thaw in Russia's position vis-a-vis the new resolution on Iraq. Initially, Moscow had resisted strongly the U.S.' intensive lobbying in the Security Council for a new weapons inspections resolution that would require Baghdad to allow U.N. inspectors unrestricted access to search for weapons of mass destruction or face armed intervention. However, there was a gradual softening in Moscow's position. On the eve of the conclusion of talks in Vienna between Iraqi officials and U.N. Chief Weapons Inspector Hans Blix, Russian Foreign Minister Igor Ivanov reflected: "First we should hold a U.N. Security Council meeting, listen to the Blix report and then decide whether there is a need for a new resolution or not. If, for the effective work of the inspectors, there is a need for additional decisions, we, of course, are ready to consider them."

Despite this softening of stance, the Kremlin has not given the go-ahead to the U.N. resolution, specifically the part that allows armed intervention in Iraq. At best Russia has signalled its readiness to work out a compromise formula on the issue. Moscow continues to put up the toughest opposition to Washington in the Security Council. Analysts feel that if Russia is won over, France and China will follow.

Even as hectic diplomatic manoeuvring is on in a bid to woo the Kremlin, analysts and diplomats continue to debate Moscow's price for compliance with Washington. So much so that on the eve of Blair's visit an irritated Putin declared to the press: "I have invited the Prime Minister and his wife here to discuss the whole complex of issues related to our cooperation, not to some kind of oriental bazaar."

Moscow-based analysts insist that Russia has major economic interests in Iraq and a massive ongoing trade relationship, which are the reasons for its current hesitation. According to an investigation conducted by Observer, Lukoil, the biggest oil company in Russia, signed a contract worth $20 billion in 1997 to drill the West Qurna oilfield. Further, the Russian giant Zarubezhneft signed a more recent contract, which was granted a potential $90 billion concession, to develop the Bin Umar oilfield. The total value of Iraqi President Saddam Hussein's foreign contract awards could reach $1.1 trillion, according to the International Energy Agency's World Energy Outlook 2001. In addition, Iraq owes Russia a Soviet-era debt of $7-12 billion. The two countries are discussing a five-year cooperation programme of $40 billion. The perception in Moscow is that the current trade with Iraq will be severely jeopardised if Saddam Hussein's regime is cut short and a new government established. The fear is that U.S. oil companies might come to dominate the Iraqi oil market, under-cutting Russian companies.

This reasoning has had a major impact on Russia's developing oil industry. According to recent reports, captains of Russia's oil business have been in close touch with their government on the Iraq issue and have asked the government to safeguard Russia's economic interests. Mikhael Khordorkovsky, board chairman of Yukos, Russia's second largest oil firm, recently informed a session of the state Duma's Fatherland All Russia Faction that a "U.S. attack on Iraq may inflict substantial damage to the oil industry of Russia and subsequently to Russia's oil dependent budget". His perception is that "in the pessimistic scenario in the case of the U.S. establishing control over Iraqi oilfields, the price for Russian Urals (crude) may drop on the world market". Under the circumstances, say analysts, before committing itself Russia would be looking for major concessions from the U.S. in the oil sector and in other areas. There are rumours in Moscow that closed-door negotiations are already on between the U.S. and Russia on the vital issue of Russian oil companies' access to the Iraqi oil industry in the case of a regime change.

Meanwhile, within the Russian leadership and among the public, disillusionment is growing vis-a-vis Putin's friendship with U.S. President George Bush, as many Russians see few concrete material gains from the relationship. The demand within Russia is for a more reciprocal relationship with the U.S. and the perception is that so far the giving has been only on the part of Russia. Russians justify their fears by pointing out that Putin was among the first world leaders to condole with Bush after the terrorist attacks in the U.S. on September 11, 2001. He not only empathised with the U.S. but also, in an unprecedented step, allowed the U.S. the use of Russian bases in Central Asia. Russia went the whole hog in cooperating with the U.S., even allowing the closure of Soviet-era bases in Cuba and Vietnam, accepting U.S. withdrawal from the Anti-Ballistic Missile Treaty of 1972 and tolerating the presence of U.S. military advisers in its backyard, Georgia. In the last case, acceptance by Moscow has come grudgingly.

Even as the U.S. steamed on with its war against terror first in Afghanistan and now in Iraq, the growing perception in Moscow is that despite extending considerable support Russia has received little from the U.S. It only got symbolic recognition as a market economy and promises of investment in its oil sector. On the whole, foreign direct investment in Russia has been sliding, the Soviet-era debt has not been forgiven, and Russia is still not a member of the World Trade Organisation. The Russian leadership and public remain disillusioned with the U.S. In the past couple of months, Russia, again in defiance of the U.S., has started renewing relations with its allies of the Soviet days. It has been courting Iran and Iraq, has even signed billion-dollar deals with Iraq. Russia's flirtation with countries of the so-called "axis of evil" has aroused both concern and comment in the West.

Russia may not be able to stop the U.S. from drum-beating on Iraq or stall it in the U.N. Security Council for long, but it is definitely delaying the "tough" resolution on Iraq. It is also sending home a message to the U.S. that it cannot be taken for granted. However, once weakened, it is waiting for the right bid. The growing perception within Russia is that it must get "returns" for its cooperation with the U.S. and it is not going to be a pushover for the elite club a second time over.