Deep Drilling Diplomacy


By Svetlana Babayeva and Georgy Bovt

WPS Russian Monitoring Agency
October 23, 2002

A senior executive from the LUKoil oil company told Reuters on condition of anonymity on Monday that the company does not have confidence in guarantees of its future interests in Iraq after the US has overthrown Saddam Hussein (if this happens): "We have repeatedly addressed the government with this problem but do not know yet what moves are made in this direction." If this is true, and a major oil company does not know who or how is concerned about the fate of a $4 billion contract to explore the Zapadnaya Kurna oil field after the UN lifts its sanctions, then what is the essence of Russia's foreign policy in the Iraqi sector? What are Russian diplomats discussing with US and UN representatives? What will Vladimir Putin and George W. Bush discuss in the near future? The matter does not only concern the summit of the Asian-Pacific Economic Community in Mexico. The matter concerns another meeting, which will be held somewhere in the north-western region of Russia. Several well-informed sources say that such a meeting is underway. It may take place right after NATO's summit in Prague and George W. Bush's visit to Vilnius (November 22). To all appearances, this meeting will dot all "if's". The dots cost billions of dollars. It has become fashionable in Moscow to emphasize the altruism of Russia's foreign policy. When answering a question about Russia's oil interests in Iraq at the recent meeting with the British prime minister, Vladimir Putin said that "we are not at a bazaar to haggle". After that Foreign Minister Igor Ivanov said that "oil is not a subject of secret negotiations with the US". He said this right after a statement by a leader of the Iraqi opposition, which dreams of coming to power using US weapons. The Iraqi representative hinted that "we will see what contracts we will uphold (in other words, succession is out of the question)".

Washington noticed and welcomed Igor Ivanov's thought: the Iraqi problem allegedly does not concern oil. In the meantime, many representatives of the Republican administration say that Russia must not receive guarantees regarding exploration of Iraq's oil riches on the eve of an inevitable attack. It is easy to understand the US: they do not want to defend Russia's economic interests. At the same time, it is very difficult to understand Russia's diffidence: Russia has not ventured to announce its claims. It is not clear what goals Russia pursues making diplomatic efforts in the Iraqi sector.

This week the US will submit another draft resolution regarding Iraq to the UN. It is supposed that this will be a soft version of the previous resolution, which stipulated a strike on Iraq, unless it obeyed the UN's demands. The French plan, which proposed two phases (inspectors would first report the results of inspections to the UN Security Council, and then the UN would decide the fate of a military operation) is no longer relevant. Izvestia forecasted on October 3 that Moscow and Washington would reach a compromise regarding Iraq by the end of the month. Today this compromise is more inevitable.

Vladimir Putin will leave Moscow for a week on October 24. He will visit Europe and Central America. He will meet with German Chancellor Gerhard Schroeder, US President George W. Bush (at the summit in Mexico), and Chinese leader Jiang Zemin (he will probably resign at a meeting of the Chinese Communist Party on November 8), who arrives to Mexico immediately after his meeting with George W. Bush at his Texas ranch. Putin visited the ranch a year ago. He and George W. Bush discussed Afghanistan, the ABM treaty, and friendship against common enemies. To date the agenda has changed: Iraq has become the focus of attention.

The US is again creating a coalition. Precisely for this reason the Chinese leader will visit Texas, and the Russian president will fly to Germany. A place for Russia is still reserved in the coalition. According to our sources, the fate of this place may finally be determined when (and if!) George W. Bush arrives in Russia to meet with Putin after the NATO summit in Prague and a visit to the Baltic States.

Our sources report that Russia and the US are now seeking a city where the meeting might take place. George W. Bush visited St. Petersburg not long ago. Nizhny Novgorod has not been considered yet; in addition, it is located far from the Lithuanian border. It is evident that George W. Bush will visit Vilnius after the NATO summit. It is not ruled out that the meeting will be held somewhere near Vilnius. However, a meeting in St. Petersburg is also possible. Perhaps, the meeting will never take place if the subject of negotiations disappears...

The subject is evident. A military strike on Iraq may start anytime from December (some source announce the precise date - December 6) to February. Climatic conditions are the main factor. The US thinks that it is impossible to fight in Iraq in other months: sand-storms and 50 degrees above zero.

In the meantime, the US is trying to receive a certain document from the UN in order to start an operation. The US might launch a unilateral campaign on the basis of military rights granted by the Congress to the president, but the US administration considers this path as being inadvisable. Last weekend the US changed its position toward military inspectors' return to Iraq.

On Monday Washington began to expert pressure on the Security Council in order to make it pass another resolution regarding Iraq this week. This means that the majority of the Security Council members have reached an agreement regarding the text of the resolution to send inspectors to Iraq so that they will be able to report their opinion about Iraq's programs aimed at creating mass destruction weapons by the end of November. The main thing is that a compromise between five permanent members of the UN Security Council has taken shape. Our sources in diplomatic circles confirm this. During consultations Russian politicians hinted to the French that they might support their "two-stage" version. After this, the French told the US that they were prepared for giving up their version in favor of Washington's, on condition that its wording would not be as harsh. Russia has found itself in a very strange situation. At the same time, the US press presented France (not Russia) as the main opponent of the US in the United Nations until October 22.

At present, there are two influential nations, which disapprove of a strike on Iraq - China and Germany. To all appearances, China will decide to abstain from voting as a result of Chinese leader Jiang Zemin's visit to George W. Bush's rancho. As for Germany, it will not conflict with the US no matter how pathetic German politicians' rhetoric might be. However, no one knows what might happen, which is why it is not clear who will persuade whom at an impending meeting between Putin and Schroeder (it will last for a few hours, and will be held in the Berlin airport)...

Only Russia remains. Against the background of France, which has never stated that it has not discussed the Total oil company's interests in Iraq, Moscow's position is noted for an indistinct idea about what it wants and what it does not want. Washington says: "Russia cannot offer distinct proposals in what projects it is interested in the post-Saddam Iraq." Anyway, the Russian oil company, which is interested in Iraqi contracts, does not know anything about this, though LUKoil president Vagit Alikperov recently stated in an interview with the Financial Times that he allegedly received some guarantees from Putin. Is it true?

No matter if the UN Security Council passes a harsh or soft resolution, the US will use it against Iraq. It is hardly likely that the resolution will restrain the US from striking. The question is who are the allies. Various US departments recently stated with strange synchronicity: in Europe the US has only two real allies - Britain and Russia. This sounds too much like pathos, but the fact that the US leader's possible visit to Russia is being discussed at all is very important. This also means that Russia's position is more flexible than as presented in the majority of official commentaries.

The New York Times says that over 300 Russian oil and gas companies, including LUKoil, Tatneft, Slavneft, Rosneft, and Gazprom, are now working in Iraq. Russian companies have the right to sell around 40% of Iraqi oil. At present Russian companies control close to 70 billion barrels of Iraqi oil (Iraq's explored reserves amount to 112 billion barrels). The Nation says that Russia's explored oil reserves do not exceed 49 billion barrels, the reserves of the Caspian region reach 15 billion barrels. The total oil reserves of Western major oil producers (the US, Canada, and Norway) are close to 44 billion barrels.(Translated by Alexander Dubovoi)

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