Will Russia protect Iraq from the U.S.?

As Bush and Putin cozy up at the Crawford ranch, Russia is still blocking American moves against Saddam Hussein, because of billions to be made doing business with him.

Published November 16, 2001 12:28AM (EST)

With the sudden fall of Kabul and reportedly Kandahar, and the Taliban now on the run in Afghanistan, more eyes are turning toward Iraq, as the next "rogue state" that might be targeted in the U.S.-sponsored war on terrorism.

But if President Bush thought it was difficult assembling an international coalition to support the bombing in Afghanistan, an alliance endorsing strikes against Iraq would likely prove impossible to mold. The fact is, the United States is having trouble simply mustering enough international support to modify the sanctions being levied against Iraq, let alone bombing the country.

And even as Bush meets with Russian President Vladimir Putin at his Crawford ranch -- a meeting billed by the White House as a nuclear-arsenal slashing love fest -- his toughest enemy in modifying the sanctions or going after Saddam Hussein is Russia. Putin has in fact been cozying up to Hussein thanks to the billions of dollars to be made in Iraq.

Iraq owes Russia $8 billion, and won't pay off its old Soviet-era debts if sanctions are imposed. At the same time, Iraq has been courting Russian business, attracting 200 companies to a Baghdad International Fair last month. Trade volume between the two countries now stands at $4 billion, with Iraqi Trade Minister Mohammad Mehdi Salah recently promising that number would balloon to $40 billion if sanctions were lifted.

In June the U.S. tried to alter the decade-old Iraqi sanctions by loosening restrictions on civilian goods while tightening control on military imports, but it was publicly blocked by Russia. Iraq rewarded Russia by granting it exclusive rights to develop the largest oil fields in the Middle East, post-sanctions. France once controlled those rights, but they were rescinded when France supported smart sanctions. (Experts say Iraq is sitting on one of the largest untapped oil reserves in the world.)

So the topic of Iraq sanctions is almost certainly on the Bush-Putin Crawford agenda, and it will definitely come up again at the United Nations during the first week of December. If Russia again objects to America's so-called "smart sanctions," than the current, largely ineffective embargo would remain in place, representing a victory of sorts for Iraq. (Naturally, that country would prefer to have all its sanctions removed.)

Since Sept. 11, the contentious issue of sanctions has become enmeshed in a web of conflicting national interests, and international economic impulses. The question over how to proceed remains very much up in the air, even inside the White House, where administration hawks argue America ought to be planning military attacks against Iraq for its possible role in international terrorism, not maneuvering for diplomatic cover on the topic of sanctions.

Of course, if any direct evidence emerges that Iraq played a role in terrorism aimed at America, the question of sanctions would become moot. But to date there is no evidence, and last week the FBI downplayed the notion that recent anthrax attacks were linked to foreign terrorists, contradicting Iraqi critics, such as former CIA director James Woolsey and former United Nations-appointed arms-inspector Richard Butler, who suggested Hussein may have been behind the deadly mailings.

So if the Bush administration does want to make another pass at implementing smart sanctions against Iraq, it will have to get around Russia.

And despite its recent willingness to aid America in the war on terrorism, "There is no evidence yet Putin is ready to change his position" on sanctions, says Michael McFaul a a Russia expert at the Carnegie Endowment for International Peace.

The issue is money. McFaul says Russia's military-industrial complex is eager to enter into lucrative contracts with Iraq, but first needs the sanctions lifted. "It's about hard cash and a very important constituency within Russia with close ties to Putin," says McFaul.

Could Russia's relatively recent bond with Iraq be bought for the right price by America? "After Sept. 11, a lot of calculations have changed," says Raad Alkadiri, senior country analyst for the Petroleum Finance Company, a Washington-based consultancy. "Russia won't sell Iraq out cheaply. It has something America wants. If the U.S. wants Russia in the anti-terrorism campaign, then Russia can charge a price. That might mean greater investment from U.S. companies, or the recognition of Russia's role in the integration of Europe."

If that happens, says Alkadiri, "Russia may be willing to give up support for Iraq at the U.N."

Smart sanctions may not rank at the top of the Crawford agenda -- alongside reducing nuclear weapon inventories and the burgeoning war on terrorism -- but the topic cannot be ignored, because the clock is ticking. When smart sanctions were withdrawn from the U.N. last spring, that meant in six months time the issue would have to be addressed again. With less than three weeks to go until that deadline arrives, the question remains a muddled one.

Last spring, in an effort to both clamp down on embargoed goods being imported to and exported from Iraq, and to recast what had become a losing international debate over sanctions, the United States and Britain proposed leveling "smart sanctions" against Iraq.

The move would have trimmed the number of items on the United Nations' so-called green list. Before those goods can flow into Iraq they must first be approved by the U.N.'s Sanctions Committee (where Britain and the U.S. enjoy veto, or "hold" power). The Committee determines whether the goods have a duel purpose, meaning they could in any way help Hussein rebuild his army following his failed invasion of Kuwait in 1990.

By contrast, smart sanctions would allow more types of civilian goods to flow more freely into Iraq without needing U.N. approval, while building higher, thicker walls around the remaining embargoed items, such as weapons and military-related goods.

If neighbor states complied, smart sanctions would cut down on the amount of money Hussein personally skimmed off the top of illicit oil sales, for instance, estimated to be more than $1 million a day. That's because through smart sanctions, the U.N. would gain direct control of revenues generated from Iraq's oil sales, by channeling the money through an escrow account. Together, the two moves would severely curtail Hussein's cash supply.

The U.S. hoped the move would address what, since 1998, had become a twofold problem. First, the current oil-for-food program allows Iraq to sell its oil and spend the money on only food, medicine and other humanitarian supplies. But thanks to porous Jordanian and Syrian borders, welcoming convoys routinely carrying embargoed goods such as computers, the oil-for-food sanctions have become something of a joke.

"It's more like oil-for-stuff," notes George Lopez, an expert on the smart sanction proposal. Lopez is director of policy studies at the Joan B. Kroc Institute for International Peace at Notre Dame University. He says Iraq's economy has, in relative terms, been flourishing in recent years because of the easily evaded sanctions.

Also, the United States has taken a public relations beating in international circles, thanks to critics who argue sanctions make the Iraqi people suffer for the sins of Hussein. More than 1 million Iraqi children, advocates estimate, have died as a result of sanctions.

"At the U.N., there's a feeling that the United States had had its way with Iraq for 10 years and that should be over," says Chris Toensing, editor of the Middle East Report.

But while the United States and Britain have seen sanctions as a means toward overthrowing Hussein, most of the international community has seen them as a way to get Hussein to dismantle Iraq's weapons of mass destruction, notes Kenneth Rodman, professor of government at Colby College, and an expert on international sanctions. "France and Russia have taken the position that there has to be an end process for the sanctions [on Iraq] to work."

In the end, Russia feared that smart sanctions would become permanent, thereby restricting the business it could conduct with Iraq, and used its veto power on the United Nations' Security Council to threaten to kill the proposal. Stung and frustrated, the United States, and Secretary of State Colin Powell in particular -- who personally lobbied world leaders for smart sanctions -- agreed to table the proposal for six months. In the meantime they've tried to win over Russia.

"The U.S. and the British know Russia has a price to sell Iraq and since last summer they've been trying to find out what that price was," says Alkadiri at the Petroleum Finance Company. Clearly, that price was changed on Sept. 11.

"I think Russia's quite playable on this," says Lopez, speculating on talks at the president's Texas ranch. "It's up to Bush and whether he's so pleased with how other issues have gone. Does he decide I won't jeopardize it by pushing sanctions. Or, I'm on a roll and I bet I can do this? It's not likely to be a contentious issue. If Putin says, 'You know our position,' the issue will be taken off the table. It's not seen as important enough to push Putin."

It's true Putin has used the events of Sept. 11 to embrace the West as an ally. in hopes of improving his country's dire economic situation. But that doesn't mean a potential flip-flop on smart sanctions comes without a price for him at home.

"There's a sense among the Russian elite that the country has already done enough" for the war on terrorism, says Paul Saunders, director of the Nixon Center, a foreign policy think tank in Washington, D.C. Those significant concessions include allowing U.S. military aircraft to fly over Russian territory, showing flexibility regarding the ABM treaty, and shutting down two military bases in Cuba and Vietnam.

Yet still there is no movement on sanctions.

Just this week, the Moscow-based Committee for International Cultural, Scientific and Business Cooperation with Iraq opposed any new smart sanctions, suggesting the Iraqi problem "has a direct influence on the political and economic interests of Russia."

Notes Saunders: "Russia has a fairly strong economic interest in having the sanctions lifted."

Barring a late U.S-Russia breakthrough, smart sanctions will be shelved for another six months at the U.N. If during that time Iraq moves more towards center stage in the war on terrorism, pressure will mount on Russia to also isolate Iraq.

"I think Putin's ambivalent about it all," says McFaul. "I think in the long term he realizes the potential problem. Does he really want to be the only government out there arming Saddam Hussein?"

By Eric Boehlert

Eric Boehlert, a former senior writer for Salon, is the author of "Lapdogs: How the Press Rolled Over for Bush."

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