Russia's huge oil deal with Saddam puts Moscow in a win-win situation - irrespective of US plans to attack Iraq, suggests Jonathan Eyal
In a move which appears designed to anger the United States, Russia has let it be known it is about to sign a huge oil deal with Iraq. Ostensibly, it could not have come at a worse time for Washington.
The US administration has started hinting at its readiness to use the United Nations as part of an effort to build a more persuasive case for its planned military action against Iraq. The Americans do not believe the UN could accomplish anything. Washington wants a change of regime in Baghdad, not just the arms inspectors' return, as the UN demands.
Either way, using the UN even as just a political fig-leaf for war preparations requires the co-operation of the Russians in the Security Council. The Russian-Iraqi oil deal strengthens Moscow's direct economic involvement in the Middle East and serves as an warning that whatever games President Bush may be planning in the UN, Russian support cannot be taken for granted.
Yet, curiously, US officials have greeted the news of a fresh oil deal with barely concealed indifference. But it can be easily explained: the Americans know the Russians will do nothing to spoil Mr Bush's plans for a military campaign against Saddam Hussein, and the Kremlin calculates that almost regardless of the final outcome in this war Russia will emerge as a winner.
For decades the Russian foreign policy and military establishments used to be dominated by old Arab experts, and interestingly, the influence of these Moscow-based Arabists increased after the end of the Cold War, and especially when Mr Yevgeny Primakov became Russia's foreign minister under President Yeltsin.
Mr Primakov was the architect of a new Russian policy which advocated continued competition with the US for influence in the Middle East despite the demise of the old Soviet Union; his elevation to prime minister in the late 1990s marked the height of the Russian-US difficulties in the region.
But, luckily for the Americans, Mr Primakov has long departed, and the Russian military now is keener to sell weapons to established Arab regimes (such as Jordan, for instance) rather than the old radical Arab firebrands who never used to pay their weapon purchases anyway.
President Putin has other reasons for not rowing with the US over Iraq. Russia is still owed about $7 billion in unpaid Iraqi weapons purchases during the 1970s and 1980s. In the past Moscow believed the best way of recovering this money was through indirect support for Saddam Hussein. So, the Russians either portrayed themselves as mediators or as the champions of the Iraqi people, by demanding the end to economic sanctions.
Needless to say, the Iraqi dictator encouraged this view, by promising that when the sanctions were lifted and he could export unrestricted quantities of oil, his Russian bills would be paid in full.
Mr Putin has realised that this policy led nowhere. The more the Russians engaged in efforts designed to break down Iraq's isolation, the more the Americans were determined to maintain the sanctions. And the Russians were transformed into Saddam Hussein's pawn, without seeing one a single dollar of their debts.
If an attack on Iraq does not take place, the sanctions regime will collapse of its own accord, and Russia will be able to benefit financially, without incurring the Americans' wrath. If, however, Saddam Hussein is removed from power, the Russians will be well-placed with any new Iraqi regime.
All of Iraq's military equipment and much of its industrial infrastructure is of Russian origin. A government installed in Baghdad at the end of a war will be favourable to the Americans.
The temptation to turn to Russia for new engineering and military contracts will be irresistible. And, while Western governments will be constrained by public opinion from supplying weapons to a new Iraqi administration, the priority will be economic reconstruction and humanitarian aid and Moscow will have no such difficulties.
So not only does Russia stand a better chance of having its debt repaid if Saddam disappears, but they can also smell new defence contracts with an Iraqi military familiar with Russian military technology, and more likely to be able to afford cheaper Russian products. This argument won the generals in Moscow to Mr Putin's new policy in the Middle East.
And then there are the oil calculations. Much of the Iraqi oil-for-food programme is administered by Russian oil firms, as is much of the illegal smuggling and sanction-busting, which makes Russian oil companies best positioned to enter the fray once Saddam is removed.
But Putin's calculation goes further: he sees a future Iraq as Russia's ally in destroying the Organisation of Petroleum Exporting Countries (OPEC) as a body which fixes oil prices, thereby allowing Moscow to gain a bigger market share for oil exports.
SINCE the terrorist attacks on the US last September, the Russians have repeatedly refused to accept OPEC's production targets and have increased their Western markets. Iraq's proven oil reserves are second only to those of Saudi Arabia, and double those of Russia itself.
The return of Iraq to the community of oil-exporting countries will serve Russia well. It will downgrade the importance of Saudi Arabia as the chief oil supplier to the West, and blow to pieces OPEC's claims to regulate oil markets, if only because Iraq will try to export as much as possible.
The Russians do not have an interest in seeing oil prices collapse. Yet they believe that co-operation with Iraq would allow Moscow not only to continue dominating European energy markets, but also give the Kremlin the ability to dictate oil policies in the Middle East, largely at the expense of the Saudis and OPEC. The impending announcement of an oil deal is merely the first salvo in this aggressive oil marketing strategy; the Russians know that the deal will only become operative after Saddam has departed from the scene.
President Vladimir Putin cannot predict the outcome of an American-Iraqi confrontation. But the Americans can afford to rest, knowing that for the first time in more than 50 years Washington is able to plan for a military operation without worrying much about the reaction from the Kremlin.
Jonathan Eyal is director of studies at the Royal United Services Institute in London