Russia waffling on Iraq pays off

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Now that it seems the United States might back down from plans to attack Iraq, Russia's decision to first stand behind and then oppose American actions against Saddam has paid off handsomely both economically and politically, explain analysts from Stratfor, the global intelligence company.

In the political chaos of the post-Sept. 11 world, every state tried to wedge itself into the new order in a way that would most benefit itself. No state changed its role more than Russia. Before Sept. 11, Russia was flailing about in demographic decline, embittered and longing for the Cold War days when the world anxiously waited to find out what the Russians would do next.

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When Putin set Russia on a pro-Western policy track in the Sept. 11 aftermath, he was taking a huge risk – both for himself and for Russia. One component of this new policy was to withdraw longtime support for Iraq and align more closely with the United States, including in its plans for a campaign against Iraq.

But when Moscow realized that those allies in favor of the United States attacking Iraq were dwindling, it decided to officially oppose the war. By first assisting the United States in a public relations fight with anti-war Europe and then filling the keystone role in solidifying an international consensus against American action, Russia has gathered a small fortune in political capital and is reaping beneficial economic deals all along the way.

Before Sept. 11, Russia was Iraq's most stalwart defender in the United Nations Security Council. Moscow regularly hampered U.S.-UK efforts to reintroduce weapons inspectors or tighten the embargo. The reasons for the close ties were hardly shallow: Iraq owes Russia about $8 billion in Soviet-era debt, and Iraq has rewarded Russian firms – many of them state-affiliated – with plumb contracts.

But after Sept. 11, Moscow's support for Baghdad in the Security Council rapidly deflated. And in January 2002, Moscow pretty much abandoned Iraq when Prime Minister Mikhail Kasyanov refused to even meet Iraqi Foreign Minister Tariq Aziz and through assistants flatly told the dignitary that Iraq should actually implement U.N. resolutions. Kasyanov rubbed salt in the wound by labeling what Aziz thought would be a visit of several days as a "technical stopover." The glee in Washington was palpable.

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Although its new alignment with Washington has at times put Moscow in a politically awkward position, Russia has enjoyed a string of successes that would have been impossible without the American-Russian entente. Russia has eked out $10 billion in disarmament assistance from the United States for the next decade. And at America's behest, the elite Group of Seven nations also has agreed to give Russia $10 billion over the course of the next 10 years. Both the European Union and the United States granted Russia market economy status in early 2002, a decision that should open those markets to a few extra billion dollars-worth of Russian products over the next few years. Also, Russia has been fast tracked for WTO membership, while funding from the World Bank and European Bank for Reconstruction and Development has ticked steadily upward. Finally, should Russia need assistance, the IMF has clearly stated its readiness to pitch in with fresh loans.

But global opinion began to harden against a pending U.S. invasion, and Moscow found itself in the odd position of opposing both Europe and the Islamic world. The gratitude of the American foreign policy establishment came to seem like less of a fair tradeoff for rubbing traditional friends and hopeful allies the wrong way.

Soon the combination of dissatisfaction with America's inability to sell the war at home – much less abroad – left Russia with the fear that it would be left as America's only remaining ally in the war. As country after country weighed in against the United States, Russia slowly got back on the pro-Iraq bandwagon it had once driven. When Russia firmly declared its opposition to a war with Iraq in early August, it was the last major state to do so.

Russia's shift back to more traditional policy has preserved Russia's influence within the Arab world as regional players heave sighs of relief that there is again a counterweight to U.S. interests. Russian energy giants LUKoil and Sibneft are both in advanced negotiations with Kuwait for upstream investments. And Iraq's Aug. 19 announcement of a $40 billion oil and infrastructure deal with Russia indicates the road to Baghdad still runs through Moscow.

But while Moscow's standing is certainly higher than it was before Sept. 11– in the Gulf, Washington and Europe – it has hardly become a global arbiter. The Iraqi "deal" is a case in point. Much of the deal has been in negotiation for years, U.N. sanctions still circumscribe any heavy investment in Iraq's oil sector and, according to Stratfor sources in the Russian Energy Ministry, the $40 billion figure is a fabrication – invented simply to inject the illusion of substance.

The bottom line is that Russia has successfully inserted itself as an interlocutor between the United States and much of the rest of the world, a role that the United Kingdom normally occupies. So long as Russia can hold steady, it can count on the United States to be an active enabler, or at worst only a passive resistance, for Russian aspirations.

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