Russia pressing trade interests on Iraq

By Ron Popeski

MOSCOW (Reuters): Russia's announced intention to reject a U.S.-British proposal to alter UN sanctions on Iraq is linked to a drive to clinch contracts and pursue strategic interests in the Middle East, analysts said on Tuesday.

They said Moscow wanted to maintain its head start on potential competitors in developing the Iraqi oil industry and nurture diplomatic and -- eventually -- military contacts.

Government officials declined to comment on a letter sent by Foreign Minister Igor Ivanov rejecting the Anglo-American "smart sanctions" proposals, or on a possible Russian counter-proposal expected by UN diplomats.

But public figures and analysts said any Russian proposal had to offer Iraq hope that the sanctions imposed after Baghdad's 1990 invasion of Kuwait would eventually be lifted.

"Russia is unhappy with the Anglo-American proposal because it offers no light at the end of the tunnel for Iraq," said Konstantin Kosachyov, deputy head of the international affairs committee of the State Duma lower house.

Kosachyov, a close ally of former Prime Minister Yevgeny Primakov, Russia's top Arab specialist, said Russia's alternative would probably propose a resumption of UN missions to Iraq and a final deadline for lifting sanctions once they were satisfied Iraq held no chemical or biological weapons.

"But we believe this proposal has no chance in current conditions with support possible only from China," he said.

He said Russia was likely to veto the U.S.-British proposal.

In Baghdad, senior parliamentarian Salim al-Qubaisi welcomed Russia's reported stand ahead of Tuesday's public UN debate on sanctions and a July 3 deadline on adopting the resolution.

Deputy Prime Minister Tareq Aziz, quoted by the INA news agency, urged Russia "to resist such a colonial proposal".

The proposal would ease restrictions on civilian goods, uphold a ban on military equipment and seek agreement on "dual use" goods for both civilian and military purposes.

Russia has objected to the proposal, saying the United Nations should instead move towards a suspension of sanctions. It has also long urged Iraq to resume dialog with the UN on the weapons issue and allow new inspections.

Jalal Al-Mashta, Moscow correspondent for the London-based Arabic-language daily Al-Hayat, said the Russians were motivated by a desire to recoup some of the $30 billion in estimated lost contracts in the past decade when sanctions were in effect.

"The Iraqi market has huge potential for Russian exporters. The Russians know they are competing with France and even with U.S. companies," he said. "Trade turnover last year was $2.4 billion. Imagine what the level could be with sanctions lifted."

He said Russia was also preoccupied by the constant U.S. presence in the Gulf region "now as never before".

He added: "This is a cause for constant concern. Russia sees Iraq as one of its main partners in the region and intends to maintain solid economic, political and, in future, military relations with Baghdad."

Iraq's ambassador in Moscow, Mozher al-Douri, told reporters on Monday that Iraq would favor Russian firms doing business in the country in return for Moscow's opposition to the resolution.

Recouping Soviet-era debt is another consideration in the Kremlin's restoration of ties with Soviet-era allies viewed with mistrust in the West, including Libya and Cuba as well as Iraq.

Boris Makarenko, deputy director of the Center for Political Technologies think-tank, said debt and oil were critical in determining Moscow's alliances.

"Russia is in effect renewing a strategic anti-U.S. alliance with countries in the region for its own interests. One reason is to help it recover debts so it can repay debts to the West," Makarenko said.

"There is a history of cooperation in the Iraqi oil sphere and Russia hopes to use its assertiveness to help recover some of Iraq's debts. Russia has a special interest in working to remove the sanctions to remain a step ahead of its competitors."