Politics & Policy

Putin’s Iraq Tightrope Act

Russia is not about to veto the use of force against Baghdad.

That Vladimir Putin is a black belt in judo is well known; increasingly, the world is glimpsing another of his accomplishments: acrobatics.

His specialty? — three-ring circus U.N. diplomacy. Consider this: Russia, with a GDP twenty times smaller than that of the U.S., and less than a quarter of Germany’s, is playing in the big league with the great powers. Putin’s Security Council veto and close relationship with Paris, Berlin, Beijing, and Washington puts him in a unique position in the Western camp. However, he cannot continue his balancing act forever. At some point, Putin will need to decide whether he stands with the U.S. or with “old” Europe. And well-placed Moscow sources are saying that he is too smart to stand alone in the path of the American juggernaut.

On his recent visits to Paris and Berlin, Putin sounded like a proponent of “Old Europe,” backing the French-German axis of appeasement and employing language borrowed from former prime minister Evgeny Primakov about the “new multi-polar world.” It sounded like a rebuke to the U.S., especially in light of Russia’s past acquiescence to NATO enlargement, the jettisoning of the Anti-Ballistic Missile (ABM) Treaty, intelligence-sharing, and providing land access and overflight rights in the war against the Taliban.

Today, Moscow’s ties with Europe are closer than ever: Russia supplies over 30 percent of “old” Europe’s natural gas; it would like to increase its oil and electricity exports and attract European investments and technology. Putin needs to keep his business partners, Jacques and Gerhard, happy. He is also seeking a politically popular visa-free regime for Russians to travel to the EU by 2005.

For Russia, France, and Germany the Iraq scenario is not just about the 21st century geopolitical game of curbing U.S. influence. Above all, it is about 20th century multibillion-dollar Iraqi debts, huge sales contracts to Baghdad (with some fat kickbacks), and oil. France, for one, holds a large Iraqi debt incurred while supplying sophisticated weapons to Saddam to fight Iran in the 1980s. French president Jacques Chirac, who sold Mirage jets to Baghdad, called Saddam his personal friend.

French oil giant TotalFinaElf is the beneficiary of licenses to develop Iraq’s gargantuan fields Majnoon and Bin Umar, with reserves totaling 26 billion barrels. Saddam, however, intended to use these licenses as bribes to buy French (and Russian) votes in the U.N. Security Council — to lift sanctions or to secure the veto of a U.S.-led military operation.

Like Paris, Moscow also has much at stake in Iraq, including a Soviet-era debt of $7-8 billion. Adjusted for inflation, that debt is today worth $10-12 billion. Russian oil companies — including LUKoil (Russia’s major oil company) and government-owned Zarubezhneft — also have lucrative contracts to develop giant oil fields and wells in Iraq. These contracts, worth as much as $30 billion over 20 years, include the giant Qurna oil field in western Iraq. Finally, Iraq trades with Russia under the U.N.-sponsored oil-for-food program, turning over about $1.5-2 billion a year. (The volume of illegal trade between Russia and Iraq is not known).

In other words, a lot of powerful Russians are about to lose lucrative deals if the U.S. topples Saddam. And if the Iraqi oil industry is brought back online, oil prices might slide, and with them, Russian government oil revenues, which come from export tariffs and taxes.

As compensation for Russian interests in Iraq was not fully addressed in bilateral negotiations, the Bush administration may now find it difficult to bring Russia into a “coalition of the willing” to get rid of Saddam. Putin’s advisors in Moscow say that they would expect a quid pro quo for a policy of cooperation with the U.S., while pro-Iraq and anti-American Russian policymakers claim that the Kremlin will be left holding the bag. In addition, the rumor in Moscow is that Saudi Arabia has begun lobbying intensively for a Russian veto at the Security Council to prevent a U.S. operation to liberate Iraq. Predictably, Saudi lobbying comes with generous political “donations.”

In addition to the Middle East, Russia is also fully engaged in crisis management in the Far East. Putin is capitalizing on his excellent ties with the Chinese Communist leadership, which he has assiduously cultivated, and a personal relationship with North Korean dictator Kim Jong Il. Moscow is interested in building a trans-Korean railway and getting a leg up on the competition from neighboring countries, which is why the Russian government wants to work with Beijing and Washington to prevent Comrade Kim from going ballistic — and nuclear. Moreover, Russia, which fought Japan twice in the last century, would hate to see Tokyo acquire an effective nuclear deterrent. Hence, a meeting of the minds between Washington, Moscow, Beijing, and Tokyo is in order — and a place of honor at the great power table for Putin.

As the winds of war blow over the Iraqi desert and the Korean peninsula becomes the next flash-point, Washington will need Russia as a global, not just a European, strategic partner. Thus, even with its relatively small economy, Putin has made Moscow a global, not just a European player — just as it was in the Soviet days.

Putin is playing two-handed poker while enjoying a full deck of energy assets. He has a weak economic hand, but a strong geopolitical one, thanks to Russia’s unique geopolitical location and excellent strategic relationships. Putin is too smart to alienate George Bush, his ally in the war on terrorism, or to jeopardize Russia’s prospective energy market in the U.S. Therefore, while Russia may be posturing with France and Germany, Putin is pursuing his unique Realpolitik tightrope act, and is unlikely to impose a U.N. Security Council veto.

Ariel Cohen is a research fellow at the Heritage Foundation, the author of Russian Imperialism: Development and Crisis (1998), and author, with Gerald P. O’Driscoll, of The Road to Prosperity for Post-Saddam Iraq (2002).


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