MOSCOW - As Russia begins to evacuate its
citizens from rebellion-torn Iraq, Moscow's move comes
as a grim reminder of increasing volatility in the
US-occupied country, as well as an ominous sign for
Russia's pursuit of Iraqi oil riches.
Russia's
Emergency Situations Ministry, which has already
dispatched planes to Baghdad, plans to evacuate 553
Russian citizens, as well as 263 citizens of other
former Soviet states, who are working for Russian
companies in Iraq.
Russia advised all of its
citizens to leave the country in light of the ongoing
hostage crisis there. Eight employees of energy company
Interenergoservice - three Russian citizens and five
Ukrainians - were in Baghdad to repair power stations.
They were seized by gunmen late Monday. Hostages told
Russian television channels that they were released on
Tuesday as soon as the abductors realized they were
working for a Russian company.
It took Moscow
little time to blame Iraqi administrators for the
hostage crisis. The Russian Foreign Ministry said the
kidnappings were the result of the deteriorating
situation in Iraq and that it is the coalition forces
that are responsible for the country's inadequate
security.
Russian media speculated that the
hostages were released promptly because of Moscow's
opposition to the United States-led invasion of Iraq.
Russia, which opposed the operation to depose former
president Saddam Hussein right from the start, does not
have any troops in the country.
But Foreign
Minister Sergei Lavrov said it is up to the companies
themselves to decide whether to evacuate or not.
Evacuation of Russian experts does not mean Russia has
completely pulled out of Iraq, Lavrov stated this week.
Some Russian companies are already pulling their
workers out of the country. State-owned Tekhnopromexport
has announced it is evacuating its 370 staffers, who are
building the Yusifiya power station near Baghdad.
Interenergoservis, which is restoring five Iraqi
power stations under a US$30 million contract, has 365
workers in Iraq. However, some experts reportedly
volunteered to stay in Iraq. Many of them come from
depressed Russian regions or less affluent former Soviet
states such as Ukraine, hence their modest income in
Iraq is a strong stimulus to stay. According to Russian
media reports, employees of Interenergoservice are being
paid wages of $600-700 per month for their hard and
dangerous work in Iraq.
Already this month, some
100 Russians have been evacuated, including
representatives of oil company Tatneft, truck maker
Kamaz and foreign trade association Mashinoimport.
Representatives of oil companies Zarubezhneft and LUKoil
reportedly remain in Baghdad.
Russia's Iraqi
interests For Russian businesses, the stakes are
high in Iraq. Current contracts of Russian companies in
Iraq reportedly total $1 billion. Meanwhile, evacuated
firms could face penalties for breach of contracts.
Moscow has been keen to secure its remaining
economic interests in Iraq. Last December, Russia
offered to write off more than half of Iraq's $8 billion
debt to Moscow, and pledged $4 billion in investments to
rebuild the country. The debt writeoff and investments
have yet to materialize.
However, Russia's top
oil firm, LUKoil, reopened a small office in Baghdad
aiming to revitalize a suspended project to develop the
West Qurna oilfields, which contain some of the largest
oil deposits in the world. A 23-year multibillion-dollar
deal to develop the West Qurna field was signed in 1997
between Iraq and a LUKoil-led consortium.
Under
the agreement, the Russian group would have developed
reserves set at 7 billion to 8 billion barrels. Saddam's
government canceled the contract in February 2003, but
LUKoil, which owns 68.5 percent of the West Qurna
project, insists that the contract is still valid and
has threatened to sue in international courts if the
contract is canceled.
Aiming at returning to
Iraq, LUKoil moved to cooperate with the US and supply
oil products. Last month, LUKoil's fully owned
subsidiary LUKoil International Trading and Supply Co
(LITASCO) signed a contract with Refinery Associates of
Texas Inc to deliver gasoline and diesel fuel to Iraq.
According to the contract, Geneva-registered LITASCO
would supply 1.3 million barrels (180,000 tons) of
gasoline and 950,000 barrels (130,000 tons) of diesel
fuel per quarter from April 1 onward.
Also last
month, LUKoil president Vagit Alekperov traveled to Iraq
to meet with Oil Minister Ibrahim Bahr al-Ulloum to
discuss the West Qurna contract. Alekperov and Bahr
al-Ulloum signed a memorandum of understanding for
LUKoil to help rebuild the Iraqi oil industry and to
train 100-150 Iraqi oil workers a year. They also
reached "an understanding" on the West Qurna-2 contract,
according to Alekperov. Yet with a backdrop of
deteriorating security and the withdrawal of experts, it
remains to be seen how LUKoil could help rebuild the
Iraqi oil industry.
When Saddam was still in
power, Iraqi oil traded in the United Nations Oil for
Food Program brought Russian companies more than $4
billion. The Kremlin had also been in discussions with
Saddam's regime for a five-year economic cooperation
program worth $40 billion.
But in the wake of
Saddam's demise, Moscow's expectations in Iraq have
become less ambitious indeed. Nonetheless, many Russian
companies, including Interenergoservis and
Tekhnopromexport, still work on contracts in Iraq
related to the rebuilding of the country's
infrastructure under the Oil for Food Program.
However, allegations of graft in the program
have dealt a blow to Russian plans in Iraq. Early this
year there were media reports that some 40 Russian
companies and individuals, including entities linked to
the Russian Orthodox Church, the Communist Party and the
Liberal Democratic Party, allegedly took part in an
illegal kickback scheme for trading Iraqi oil under the
Oil for Food Program.
After UN Secretary General
Kofi Annan's moves to approve a probe of corruption in
the program, Russian officials and oil companies have
denied allegations of graft, yet Moscow has been
lukewarm over a possible UN investigation.
Russia was Iraq's largest supplier in the
program. Of the $18.3 billion in Oil for Food contracts
approved by the UN Security Council since the program
began, some $4.2 billion went to Russia. Eleven Russian
oil companies - Zarubezhneft, LUKoil, Onako, Sidanko,
Sibneft, Alfa Eko, Zarubezhneftegazstroi, Mashinoimport,
Rosneft, Nafta-Moskva and MES - were buying tens of
millions of barrels of oil from Iraq in Oil for Food
deals.
Russia has also insisted that US
accusations of illegal arms sales to Iraq, such as
claims of Oil for Food graft, were intended to elbow the
Russians away from Iraqi riches. The war of words first
began in March 2003, when Washington accused Russia of
failing to stop sales of night-vision goggles, Global
Positioning System navigation jammers and anti-tank
missiles to Iraq. The Kremlin has repeatedly criticized
the administration of US President George W Bush for
floating allegations that Russian companies had supplied
Saddam with defense equipment in violation of a UN arms
embargo.
Whatever the veracity of claims and
counter-claims, Russia and Iraq have maintained military
ties for decades. Between 1958 and 1990, Iraq was one of
the world's largest importers of weapons systems from
the Soviet Union. During those three decades, the Soviet
government in Moscow supplied Iraq with 4,630 tanks,
5,524 armored vehicles, 725 anti-tank missile systems,
325 air-defense missile systems, 1,593 portable "Igla"
air-defense missiles, 1,145 military aircraft and 41
naval vessels, according to Russian media reports. The
total bill reportedly amounted to more than $30 billion.
Upgrading these arsenals could provide Russia with a
number of lucrative deals.
Before the war, the
Kremlin had publicly spoken against the use of force on
Saddam's regime without authorization from the UN
Security Council, where as a permanent member Russia has
a veto. While Moscow remains critical, President
Vladimir Putin has stated that Russia does not wish to
see the US defeated. Russia has also called for a
political settlement to end the conflict and restore
Iraqi sovereignty.
In the meantime, Russia's
evacuation of its nationals from Iraq also highlight
Moscow's differences with other former Soviet states.
Foreign Minister Lavrov told reporters in Ukraine on
Tuesday that Russia is ready to help Ukrainian citizens
leave Iraq, although Ukraine has not yet requested this
kind of aid. Ukraine and Kazakhstan earlier indicated no
plans to withdraw their peacekeepers from Iraq. On
Tuesday, Georgian Prime Minister Zurab Zhvania and
Deputy Speaker Ziyafet Askerov of the Azerbaijani
parliament both announced that their countries were not
going to withdraw from Iraq. Georgia and Azerbaijan each
have some 150 peacekeepers in the country.
In
the meantime, Russia still has no plans to dispatch any
of its own troops to Iraq.
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Apr 16, 2004
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