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Russia, Oil, the United States, and the Future of Iraq

Allies in the Fourth World War

Georgi Bovt and Natalya Kornelyuk, Izvestiya (centrist), Moscow, Russia, April 15, 2003

An Iraqi man fills his tank with gas
An Iraqi man refuels his car near Basra, Oct. 21, 2002 (Photo: Laura Boushnak/AFP).
In the Iraqi city of Nasirya, the formation of the country’s future government began—under the supervision of retired [U.S.] Gen. Jay Garner, appointed by the coalition forces as the procurator of the transitional administration. What effect will this have on Russian interests in Iraq? The recent and unexpected declaration by Vladimir Putin regarding Russia's readiness to consider writing off or restructuring Iraqi debts to Russia, taken along with scraps of unofficial information, suggest that Moscow is absorbed in negotiations to increase Russia's presence in the new Iraq.

A plan for the 21st century: a Middle East without terrorists
British sources suggest that a provisional Iraqi government could come into existence in about two weeks, while an elected government would take at least half a year but no more than two. The country’s new ruler has been assigned an important role in a major U.S. project: the reconfiguration of the Middle East along principles that would eradicate all potential terrorist threats to Western civilization.

Some 60 Iraqi opposition figures, including a number of radicals from among Shia, Sunnis, Kurds, and even some survivors of the monarchy that was overthrown in 1958 came to the meeting Nasiriya. The United Nations was included as an observer, at Britain’s insistent request. In any event, U.S. President George Bush promised it a “vitally important role” in the reconstruction of Iraq. Let them wait and hear just what kind of a role. The main Shiite organization, the Islamist and pro-Iranian Supreme Council of the Islamist Revolution in Iraq, boycotted the meeting. In Nasiriya there were demonstrations of several thousand Shiites bearing such slogans as “Down with Saddam!” and “Down with America!” This wasn’t surprising: The Shia, who account for more than 60 percent of the population, are attempting revenge after many years of rule by a Sunni minority, including the years they spent under Saddam Hussein.

The head of the Iraqi National Congress, Ahmed Chalabi, was not at the meeting; he sent a representative. Nevertheless, many think he is destined for the leadership of the Iraqi part of the administration. So far, he has publicly shied away from this honor, offering assurances that he has no plans to play “any political role.” According to information from American sources, the CIA believes that Chalabi does not enjoy much popularity in Iraq, though he was warmly received in his homeland by his people. Actually, the same thing can be said about the entire opposition. The only people who can claim to have any national popularity or standing are the American soldiers distributing humanitarian aid. According to other information, Chalabi, though supported in large measure by hawks in the U.S. administration, does not enjoy favor in other factions. [On April 23, Garner told reporters that Chalabi is not Washington's choice to lead Iraq—WPR.]

Gen. Garner’s team of 25 people from the Administration for Reconstruction and Humanitarian Aid, plus 200 other bureaucrats—mainly from the United States, though there are representatives from Eastern Europe—will face a tough task. By the beginning of May, local organs of Garner’s administration will appear in the entire territory of this country of 26 million people.

Meanwhile, the reconfiguration of Iraq is, for the U.S. administration, just part of greater plan for reconstruction of the entire Middle East in the context of the war against international terrorism and its more dangerous manifestations in Islamist terrorism. The ideological basis for the reconstruction was worked out long before the war by a faction in the Republican administration.

In the heat of victory, the position of this faction has become even stronger. It is made up of U.S. Vice President Richard Cheney; Defense Secretary Donald Rumsfeld; Rumsfeld’s deputy, Paul Wolfowitz; and his assistant Richard Perle (until recently a deputy secretary). The starting point of the doctrine they formulated is preventative war against the sources of terrorism (or other methods of active influence against such sources), together with support of the market economy and democracy against authoritarianism.

Thus, no sooner had the salvoes of war in Iraq quieted then threats were being made to Syria, Iran, Saudi Arabia, and even the Egypt, which sits on the needle of U.S. support. Part of the U.S. administration regards these regimes as “hopeless”—incapable of democratic (and antiterrorist) transformation. In other words, they must be reformed from within. James Woolsey—the former director of the CIA, a man who is close to Wolfowitz, the chief ideologue of Middle East reconstruction, and a member of a consultative council of the Pentagon—recently told an audience in Los Angeles: “The Cold War was in fact the Third World War; now the United States is entering a fourth, against the Iran’s religious leaders, fascist Iraq and Syria, and Islamist extremists.” In this context, organizations like the United Nations take on a secondary role as distributors of humanitarian assistance.

Reconstructing the Middle East is impossible without a resolution to the Israeli-Palestinian conflict that provides security guarantees to Israel. Ariel Sharon, Israel’s prime minister, recently made a sensational declaration regarding his willingness to exchange Jewish settlements in the Occupied Territories for peace with the Arabs. Thus, Israel, which during the war in Iraq had not made single gesture, is emerging from the shadows. Israeli firms are already prepared to assist in the repair of oil pipelines that remain from 1948 to allow the import of Iraqi oil via Jordan to Israel. Steps have been made to strengthen pressure on Syria. One of the most influential lobbies in the United States, the American-Israel Public Affairs Committee (AIPAC), demanded that after the U.N. sanctions are lifted, Iraqi oil should not be delivered to the world market via Syria, which made decent money on illegal deliveries during the sanctions, but through countries loyal to the West: Jordan and Turkey. John Bolton, deputy U.S. secretary of state and a person who is close to the above-mentioned circle of hawks, recently chose a meeting hall at AIPAC to declare: “After Iraq, we believe that the problem of nuclear weapons in Iran is no less serious than in North Korea.” Tellingly, a highly placed U.S. diplomat recently hinted to an Izvestiya journalist that the future of Russian-American relations would largely depend on the degree to which Moscow was prepared to cooperate with Washington on the very problem of reducing its nuclear cooperation with Iran. Washington’s general political direction is clear.

Practically all the influential think-tanks agree that the reconstruction of the Middle East cannot occur without Israel, which has the richest experience in fighting terrorism. One such organization is the Jewish Institute for National Security Affairs (JINSA) [JINSA, according to its Web site, “communicates with the national security establishment and the general public to explain the role Israel can and does play in bolstering American interests, as well as the link between American defense policy and the security of Israel”—WPR]. In 2000, JINSA solicited a pro-Israeli declaration from 43 prominent retired military personnel. One of the 43 was Gen. Jay Garner. Garner, by the way, immediately after being appointed to his current position, declared that one of the first acquaintances he would invite to work with him in Iraq would be Benjamin Ben-Eliezer, a former Israeli defense minister. Others linked to JINSA are Paul Wolfowitz, Dick Cheney, and Richard Perle. The leader of the Iraqi National Congress, Ahmed Chalabi—he is openly referred to as a protégé of Cheney and Rumsfeld—visited Israel several times in preparation for a future activities by a post-Saddam Hussein government, according to information obtained by Izvestiya.

Saddam Hussein represented a serious threat to Israel; Syria, perhaps, takes second place in level of threat. It was Hussein who, at the beginning of the Palestinian Intifada more than a year ago, declared: “We have to put an end to Zionism. If they [the Palestinians] cannot do it, Iraq has to do so itself.” It was Hussein who quite openly paid the families of Palestinian suicide bombers $25,000 for each terror attack against peaceful Israeli citizens. Fearful of the specter of worldwide Zionism, Arab leaders today are willing to do practically anything to prevent the realization of the plans of these “Elders of Zion.” At the same time, they do not want to acknowledge an obvious fact: The main enemy of the world’s developed countries is terrorism and the ideologies and states that support it. Such states, alas, are Islamic.

In August 2002, an analyst for the Santa Monica-based think-tank RAND presented a report on contemporary security threats to a United States congressional defense committee. He pointed to Saudi Arabia and its secret service as a “terrorist chain.” Today, having overthrown Saddam Hussein, Washington may free itself from dependence on Saudi oil (which could mean an increase in deliveries of Russian oil to the United States), and it may give itself a free hand with Riyadh regarding the financing of terrorism.

Russia, Oil, Lukoil, and the Tyumen Oil Company
Throughout the Iraq crisis, Russian diplomacy shifted back and forth between idealism and pragmatism, between the idea that it is “impermissible to change the government of a sovereign country on the whim of even the most powerful state without the sanction of the United Nations” and “Moscow’s concern over guarantees of its economic interests in Iraq.” The latter involves oil contracts and multimillion-dollar debts (they haven’t been verified, but the most frequently mentioned figure is $8 billion). The most significant deals involve Lukoil in West Qurna. At the St. Petersburg summit of French, German, and Russian leaders, Putin made a declaration regarding the debts that surprised many people: that Russia was supposedly ready to talk about restructuring these debts. Does that mean we’re already giving up on getting any money? Or do we want to gain contacts with Iraq’s new leaders? A little bit of both.

It’s too soon to speak about a revised line from the Kremlin, but one should note that the idea of restructuring Iraq’s debts within the framework of the Paris Club is nothing more than a reference to Putin’s proposals of a year ago regarding conversion of Russian debts into foreign investment in Russia. As far as Iraq is concerned, this might concern investment in oilfields according to old or new contracts. The first name that comes to mind is Lukoil. It had the most generous contracts to open up the West Qurna oilfields. On the eve of the war, Hussein canceled these contracts without a thought. According to unofficial reports, he was furious that Russian oilmen had made overtures to the Iraqi opposition. Today Lukoil is trying to regain ground, hoping to hold on to its contracts in international arbitration courts. Knowledgeable people in oil circles admit that it would be difficult to eliminate this company from Iraq.

But there are other potential players: the Tyumen Oil Company (TNK), for example. TNK could break into Iraq on the shoulders of British Petroleum, which has a 50-percent stake in the company. One could speak of a new phenomenon in Russian business: BP-TNK, a typical transnational corporation. According to information obtained by Izvestiya, when Putin learned of the planned $6.75 billion BP-TNK deal [BP bought 50 percent of TNK’s shares from Mikhail Fridman and Pyotr Aven’s Alfa group, which had a controlling interest], this aroused suspicion in the Kremlin: What about Russia’s national interests? At the same time, BP, which was offered more than 50 percent, refused a greater stake: They wanted to have a parity partnership—50-50—to stimulate people from TNK and Alfa to lobby actively within the Russian leadership, “just in case.” At BP, they knew what they could do!

It is said that a call was needed from Tony Blair. The deal took place, but with respect to other possible large-scale transactions, it was made known from on high that these could wait. And now TNK may end up in the best position to enter Iraq.

If you ask today at BP about plans for Iraq, you’ll be met with a denial: We have no plans. It isn’t true. Because in early April, as coalition tanks were approaching Baghdad, BP put together a working group to work out a strategy on Iraq. This was done at the end of a meeting in London of representatives of the Iraqi opposition, officials from the State Department, and British oilmen. Peter Nolan, the head of long-range planning for the third-largest oil company, supervises the working group. Nolan serves under Tony Hayward, the executive director of exploration. According to Izvestiya’s information, a man named Fadhil Chalabi, a former undersecretary of oil at the Iraqi Ministry of Petroleum [and former deputy secretary of OPEC], is associated with this group. He is a cousin of the leader of Iraq’s National Congress, Ahmed Chalabi.

BP has operated in Iraq since the 1920s. At that time, it was called the Anglo-Iranian Oil Company and was the main shareholder of the Iraqi oil company. In 1961, five years after the Anglo-Iranian company became British Petroleum, the revolutionary government of Iraq annulled most of the company’s concessions, and in 1971, the remainder were nationalized. It is worth noting that BP’s leadership is no less close to the British government than, say, Gazprom is to the Russian government. The chief figure in BP, John Brown, was recently named by Tony Blair to the House of Lords.

It is important to note, too, that Alfa’s Fridman and Aven and TNK’s Viktor Vekselberg and Simon Kukes have decent connections among the American elites, including the Republican faction headed by Dick Cheney (with whom the famous oil company Haliburton is associated). And informal connections and the ability in big business to understand one another without exchanging words sometimes is much more powerful that any formal contracts. Those come later. Does anyone doubt that?

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