Publication: Monitor Volume: 8 Issue: 67

Iraqi authorities issued a blunt warning to Russian lawmakers earlier this week that Moscow would pay a steep economic price if it chose to go along with a U.S. plan to recast the UN sanctions regime on Iraq. The warning was issued in Baghdad on April 1 by Iraqi Deputy Prime Minister Tareq Aziz and Oil Minister Amr Rashid to a visiting delegation of Russian lawmakers. It came less than a week after Russian and U.S. negotiators achieved what has been described by media reports as a significant breakthrough in talks on reformulating UN sanctions policy toward Iraq. The Russian-U.S. agreement, which centers on rules regulating the entry of civilian versus military and dual-use goods into Iraq, has been submitted for consideration to UN Security Council members and could open the way to implementation of a revised sanctions regime later this spring, when the current phase of the existing “oil-for-food” program comes to a close. Since last year the U.S. and British governments have been pushing a so-called “smart sanctions” plan that would relax restrictions on the import into Iraq of civilian or humanitarian goods while simultaneously toughening controls over military and dual-use items. Moscow had long supported Baghdad in its categorical rejection of the smart sanctions plan, but the Russian-U.S. agreement reached after talks in Moscow on March 27-28 suggests that Moscow may now be prepared to join the U.S.-British initiative.

That shift is precisely what the Iraqis warned against this week. According to reports out of Baghdad, Aziz told the Russian lawmakers that Russia stands to suffer significant economic losses if it chooses to back the new sanctions plan. According to the Iraqi official, the volume of trade that Baghdad funnels to Russia under the oil-for-food program could fall by more than one half if the plan is implemented. And there are significant amounts of money involved. Under the current six-month phase of the oil-for-food program, for example, which expires on May 30, Russian companies reportedly signed contracts with Iraq worth US$2 billion. And because of Moscow’s political support for Iraq, including its decision last year to oppose the smart sanctions plan, Russia has become Iraq’s leading trading partner and the major recipient of Iraqi contracts under the oil-for-food program. According to Iraqi Oil Minister Amr Rashid, this relationship has been worth some US$30 billion to Russia over the last five years.

Even if that figure is exaggerated, Iraqi officials this week tried to make it clear that the price Moscow pays for supporting the U.S. sanctions plan will be steep. Aziz argued that continued support for Iraq makes the most sense for Russia, telling the visiting lawmakers that “by asking Russia to oppose the U.S. project, Iraq is not creating a burden for Russian diplomacy, but reminding Russia of its national interests.” He described the U.S.-drafted sanctions resolution as “the latest American plot” to harm Iraq’s economy, and exhorted Moscow to “stand fully by Iraq at the Security Council” or face the prospect of “losing its contracts in this oil-rich country.” Aziz also made clear what he said was Baghdad’s determination never to accept the new sanctions plan, and warned that Washington hoped to use this refusal to justify the launching of military strikes on Iraq. He urged Russia to head up an international coalition aimed at stopping the United States from launching any such attacks.

In a similar vein, Oil Minister Rashid urged those Russian firms involved in projects with Iraq “to pressure” the Russian government into opposing the new sanctions plan. The oil minister, who chairs an Iraq-Russia joint trade committee, said that these Russian companies should make clear to the Foreign Ministry just how large the contracts involved are (AP,, Itar-Tass, April 2; RIA, April 1).

The warnings Iraq issued earlier this week were not unexpected. Baghdad authorities have threatened on a number of occasions over the past several years that they would retaliate against Moscow if Russia failed to offer effective support to Iraq in UN Security Council deliberations on UN policy toward Iraq. And as a case in point, Russian government and oil officials have been able to observe what happened to France, which had also been a consistent supporter of Iraq but which saw lucrative levels of trade with Baghdad erode in retaliation for various French policies Baghdad deemed to be unhelpful. Indeed, Iraqi authorities have long used surging oil revenues to bolster Baghdad’s political goals, channeling these revenues to supporters on the UN Security Council–and to some neighboring countries–in a manner aimed at weaning them from Washington’s influence (Washington Post, July 3, 2001).

Increasingly, however, the Bush administration has tried to use economic incentives of its own in waging its diplomatic war against Iraq. As the Financial Times reported this week, recent U.S. moves to unfreeze more than US$700 million worth of contracts between Iraq and Russia served as a “sweetener” to help secure Russia’s agreement on the new sanctions plan (Financial Times, April 3; Izvestia, April 4). Whether those contracts will be enough to keep Russia on board remains to be seen, however. Indeed, Russian policy toward Iraq–and toward Washington’s efforts to isolate Baghdad–may ultimately depend upon both the broader state of Russian-U.S. bilateral relations and the future course of diplomatic developments in the Middle East and Persian Gulf more generally.