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. Last Updated: 07/27/2016

Russia Seeks to Salvage Iraq Deals

Iraq's massing of troops near the Kuwaiti border put Russia in a quandary: Moscow has sided with the United States against Iraq for reasons of politics and regional stability, but at the same time Russia aims to avoid alienating a country it sees as an important business partner.


In recent months, Russia has been moving closer to Iraq, eager to renew one of the former Soviet Union's most profitable friendships.


Last month, the two countries signed a $17 billion economic agreement that Russia hopes will allow it to collect at least part of a $7 billion debt and to exploit what it sees as a huge and hungry Iraqi market that will open up as soon as the United Nations lifts the sanctions against Iraq.


Even as the Russian Foreign Ministry urged Iraq on Monday to halt its bellicose troop movements and co-operate with the UN, Iraqi Oil Minister Safa Jawad Habubi arrived in Moscow to prepare a joint oil production deal that could be launched the moment sanctions against Iraq are lifted.


The Persian Gulf crisis apparently had no impact on the previously scheduled visit. Habubi was reportedly to meet with officials from the Fuel and Energy Ministry and four oil companies to discuss a $2.5 billion contract for Russian help in developing Iraqi oil fields, building a petroleum processing plant in northern Iraq and possibly constructing a new pipeline.


The Russian and Iraqi officials "are hopeful for a peaceful settlement of the crisis and feel it possible to thrash out a number of key issues now," Itar-Tass reported.


Less than a week ago, Russian officials were still hopeful that the international trade embargo against Iraq might be lifted in as little as six months.


Together with France and China, Russia had been lobbying the UN Security Council to consider setting a timetable for a partial lifting of sanctions, if Iraq continued to recognize the legitimacy of Kuwait's borders and comply with other UN demands.


Wails of frustration emanated from other Russian politicians and diplomats who saw those hopes evaporating Monday. Many blamed Iraqi President Saddam Hussein for destroying his own case.


Russia was quick to denounce the Iraqi action last week, and when U.S. President Bill Clinton telephoned President Boris Yeltsin on Monday, Yeltsin reportedly assured him that Moscow was urging Baghdad to stop the brinkmanship, according to Russian news reports.


Until Iraq overran Kuwait in August 1990, Saddam Hussein was one of the Soviet Union's best customers. He bought billions of dollars' worth of weapons and unlike other Soviet client states that paid in sugar or bananas or not at all, Hussein paid his bills promptly in "black hard currency" -- oil.


By the time the Gulf War began, about two-thirds of Iraq's aircraft were Soviet-built, as well as more than 4,000 tanks, roughly 4,000 other military vehicles, surface-to-air missiles, small ships and between 800 and 1,000 "Scud" missiles, according to Colonel Andrew Duncan of the International Institute for Strategic Studies in London.