Russia and Iraq: Russia seeks ‘reset’ with Iraq

[This report was also published in an altered form in The ISCIP Analyst, a publication of Boston University's Institute for the Study of Conlict, Ideology, and Policy, 30 April 2009.]

In a March 2009 editorial in Israel’s Haaretz daily, Zvi Bar’el surveyed the developing Middle Eastern situation and concluded, “A new strategic alliance is emerging right in front of us. It comprises Iran, Syria, Turkey and Iraq. In this alliance, Russia holds the cards and the United States, which stood by watching under George W. Bush, is trying to find room at the table.” (1) Coincidentally, the four previous issues of The ISCIP Analyst have included special reports on Russia’s relations with Iran, Turkey and Syria, finding that in all of these countries Russia indeed “holds the cards” thanks to its arms sales and development of the countries’ energy infrastructure. Although one may question whether the alliance truly exists — Bar’el omits Qatar, an important ally for Iran and Syria; current good relations between Turkey and Syria are still in their initial phase — Russia’s importance for Iran, Turkey and Syria is without doubt.

What about Iraq, where it is practically impossible for any country other than the United States to “hold the cards”? Recent comments from Russian and Iraqi officials seem to indicate that both countries are planning on renewing the relationship they shared before 2003. Greeting Iraqi Prime Minister Nouri al-Maliki at the Kremlin on April 10, President Medvedev heralded the opening of a “new page in Russian-Iraqi relations” (2). Condemning the U.S. presence in Iraq without specifically mentioning the U.S., Prime Ministers Putin and Maliki signed a joint statement looking to the future: "The Russian Federation attributes special significance to the agreement on the pullout of foreign forces from Iraq, which has been reached by the Iraqi government and ensured the possibility of Iraq's full control over security issues. … [Russia] supports the principles of independence, sovereignty, unity and territorial integrity of Iraq, non-interference in Iraqi internal affairs, and the right of Iraqi people to a democratic choice of their political future and use of natural and financial resources." (3)

Regarding natural and financial resources, Putin optimistically hopes for Iraq’s “full-scale renewal” of energy development contracts signed with Russia during the Saddam Hussein era. (4) Of particular concern is a 1997 contract estimated to be worth $3.7 billion over 23 years, stipulating that a consortium led by Lukoil would develop Iraq’s West Qurna-2 oil field, which is estimated to hold at least 8 billion barrels. (5) The Iraqi Oil Ministry inexplicably canceled the contract in the December 2002 run-up to war; although Lukoil believes that the Oil Ministry’s action was invalid, Lukoil president Vahid Alakbarov has said that the company is willing to “adapt” the terms of the contract. (6)

An anonymous Iraqi source told Russian newspaper Nezavisimaya Gazeta that Qurna-2 is out of the question. "The new authorities have already handed out to Western companies the oil contracts that were signed with Russian firms under the previous regime, primarily Western Qurna 2," the source claimed. (7) However, there has been no official announcement regarding the status of the contract, and as long things remains ambiguous, Russia has a few cards it can play from its hand to influence Iraq’s decision on Qurna-2 and future business deals.

Iraq is keen to have Russia cancel all of its outstanding debt to Russia, which totals approximately $1.5 billion, due to be repaid over 34 years. (8) The debt had totaled $11.3 billion up until February 2008, when Russia canceled nearly 90% of it without obtaining any reciprocal guarantees from Iraq, a decision that one Russian energy expert dubbed “extremely strange.” (9) During Maliki’s visit to Moscow, an Iraqi government spokesman made clear that debt cancellation is the key to the Iraqi energy market, even requesting further action from Russia: “Iraq is grateful to Russia for having written off its debts. This is why we believe that the way to the further development of relations is open. … We hope that a mechanism for the further writing off of Iraq's debt to Russia will begin to operate in the course of this visit.” (10)

In addition to the debt cancellation, Iraq covets Russia’s permanent U.N. Security Council vote. Iraq is still subject to some of the Hussein-era U.N. sanctions, the disposal of which requires a unanimous vote from the security council. Although it is unlikely that Russia would ultimately deny support to Iraq in this realm, Russia could stall the proceedings. China, another U.N. Security Council member that canceled a significant portion of its Iraqi debt, in November 2008 won reinstatement of a Hussein-era contract for China National Petroleum Corporation to develop Iraq’s Al-Ahbad oil field. (11)

Even if Russia is unable to reinstate the Lukoil Qurna-2 contract, Iraq presents other possibilities to generate revenue. Iraq has released an estimate predicting that Russian companies will be assisting with the extraction of 6.5 million barrels of oil daily by 2016, and to that end Rosneft and Tatneft have reached the second round of bidding for contracts to develop 11 untapped oil fields. (12) Tekhnopromeksport has received a $133 million contract to renovate Hussein-era Russian-built power plants, with the possibility of further work upon fulfillment. (13) And of course, Russian arms sales, including helicopters and armored personnel carriers, are always on the table. An expert from Russia’s Center for Analysis of Strategies and Technologies told Kommersant, “The Iraqis are geared toward working with Soviet-era technology: It is cheap and familiar.” (14)

“We are certain that Russian companies should and will be our important partners,” Maliki affirmed during his meeting with Putin. (15) For now though, contrary to Bar’el’s Haaretz editorial, the U.S. holds all the cards in Iraq, and the warm-but-restrained Russian-Iraqi relationship may not drastically change for years to come. In the meantime, an editorial in the Moscow Times imagined a scenario significantly different than that put forth by Bar’el. Extrapolating on the potential for a thaw in relations between the U.S. and Iran, Fyodor Lukyanov writes, “[N]ormal U.S.-Iranian relations would open Iran's domestic market to Western technologies, including in the civilian nuclear power sector, thereby potentially leaving Russia on the sidelines in these lucrative markets.” (16) Lukyanov, like most observers, is pessimistic that the U.S. and Iran will patch up their differences any time soon, but his (and others’) willingness to moot the possibility is indicative of the notable changes, however minor, in U.S.-Iranian relations. The strategic alliance that Bar’el envisions is not a foregone conclusion.

(1) “We learned from the Palestinians,” Haaretz, 08 March 09, via http://www.haaretz.com/hasen/spages/1069327.html.
(2) “Russia Eyes Resumption of Military-technical Cooperation with Iraq,” Rossiyskaya Gazeta, 16 April 09, OSC Translated Text via World News Connection.
(3) “Russia Voices Importance Of Agreement On Coalition Pullout From Iraq,” ITAR-TASS, 10 April 09, OSC Transcribed Text via World News Connection.
(4) “Russia: Iraq seeks military, technical and oil-industry cooperation with Russia,” RBK Online, 21 April 09, OSC Translated Text via World News Connection.
(5) “Russia: al-Maliki Moscow Visit To Show He Is Not ‘American Puppet,’” Nezavisimaya Gazeta, 14 April 09, OSC Translated Text via World News Connection.
(6) “Iraqis Woo Russian Investment in Energy Projects, Plan Helicopter Purchase,” Nezavisimaya Gazeta, 14 April 09, OSC Translated Text via World News Connection.
(7) “Russia: al-Maliki Moscow Visit To Show He Is Not ‘American Puppet,’” Nezavisimaya Gazeta.
(8) Ibid.
(9) “Russia Will Shake Up Iraqi Oil; Renewal of Contracts Will Be Discussed in Talks With Country's Premier," Kommersant, 14 April 09, OSC Translated Text via World News Connection.
(10) “Russia: al-Maliki Moscow Visit To Show He Is Not ‘American Puppet,’” Nezavisimaya Gazeta.
(11) “Russia Will Shake Up Iraqi Oil; Renewal of Contracts Will Be Discussed in Talks With Country's Premier," Kommersant.
(12) “Iraqis Woo Russian Investment in Energy Projects, Plan Helicopter Purchase,” Nezavisimaya Gazeta. “Russia Eyes Resumption of Military-technical Cooperation with Iraq,” Rossiyskaya Gazeta.
(13) “Iraqis Woo Russian Investment in Energy Projects, Plan Helicopter Purchase,” Nezavisimaya Gazeta.
(14) “Russia Will Shake Up Iraqi Oil; Renewal of Contracts Will Be Discussed in Talks With Country's Premier," Kommersant.
(15) “Russia Eyes Resumption of Military-technical Cooperation with Iraq,” Rossiyskaya Gazeta.
(16) “High Stakes for Moscow in U.S. Play for Iran,” The Moscow Times, 15 April 09, via http://www.themoscowtimes.com/article/1045/42/376232.htm.
By Blake Brunner (brunner@bu.edu)