Russia and the Iraq Crisis

CRS Report for Congress
Russia and the War in Iraq
Stuart D. Goldman
Specialist in Russian and Eurasian Affairs
Foreign Affairs, Defense, and Trade Division
Summary
Now that the U.S.-led coalition has overthrown Saddam Hussein’s regime in Iraq,
the question of Russia’s position on the conflict again focuses on political and economic
issues, including Russia’s role in the UN. President Putin still appears to be trying to
balance three competing interests: protecting Russian economic interests in Iraq;
restraining U.S. global dominance; and maintaining friendly relations with the United
States. This report will be updated periodically.
Decision making in Russia on key national security matters is widely believed to be
firmly in the hands of President Vladimir Putin. Putin’s position on Iraq has been
described by many in Russia and the West as an attempt to balance three competing
interests: a) Russia’s (mostly economic) interests in Iraq; b) Moscow’s desire to promote
a “multi-polar world” and restrain what it perceives as U.S. tendencies toward global
domination, unilateralism, and too-quick recourse to military force, and; c) Putin’s wish
to remain on good terms with the Bush Administration in furtherance of Putin’s own
domestic and national security agenda.
Russian Interests in Iraq
Most discussions of Russian interests in Iraq focus on economic factors. Moscow,
however, has cultivated friendly relations with Baghdad since the 1960s as part of its
general strategy toward the region in connection with the Arab-Israeli conflict and the
broader Cold War. The U.S.S.R. was Saddam’s main arms supplier during Iraq’s 1980-
1988 war with Iran. Russia still perceives itself as having strategic interests and an
historic role in that region and does not want to be seen as betraying a long-time friend.
Nevertheless, many analysts assume that economic factors have driven Russian
policy toward Iraq. Baghdad owed Moscow $7-$8 billion for Soviet-era arms sales during
the Iran-Iraq War. Adjusted for inflation, this debt may total $10-12 billion today. It is
widely believed that one of the reasons why Russia regularly took Iraq’s side in UN
debates in the 1990s over lifting sanctions was to facilitate debt repayment, especially as
Russia was very short of hard currency. Russian oil companies have contracts that could
be worth as much as $30 billion over 20 years to develop Iraqi oil fields. In addition,

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Russian firms have contracts worth billions to help modernize Iraq’s economic
infrastructure. In August 2002, Iraq announced that Russian firms would receive
contracts worth $40 billion over 5 years to modernize Iraq’s oil, electrical, chemical,
agricultural, and transport sectors.¹
Another Russian interest is the price of oil. The Russian economy is extraordinarily
dependent on oil and gas exports. In 2000, Russia’s oil exports earned $25.3 billion. The
total Russian Federal budget in 2000 was $48 billion. The price of oil peaked near $40
per barrel ($/bbl) in early March 2003. Russia profits greatly from high oil prices, the
biggest single factor behind Russian economic growth today. But Russian leaders fear
that a post-Saddam Iraq (with the second largest proven oil reserves in the world) might
maximize its oil output, dramatically driving down the price of oil. Some analysts
estimated that a $6/bbl fall in the price of oil could cut Russia’s projected economic
growth in 2003 in half. A sharper price drop, below $18/bbl, would severely impact
Russian government revenues, jeopardizing Moscow’s ability to pay salaries and pensions
and to fund its already meager social expenditures. With a Duma (lower legislative
chamber) election in December 2003 and Putin expected to seek reelection in March

2004, such a development is dreaded in the Kremlin.²

Counterbalancing U.S. “Hyper-Power”
Many observers believe that Russian policy is also motivated by a desire to restrain
U.S. global domination and rein in perceived U.S. tendencies toward unilateralism and
excessive reliance on military force. The idea of a multi-polar world not totally
dominated by a single “hyper-power,” in which Russia would be a major international
player, still has strong appeal in Russia. Although Putin has adopted a generally
cooperative stance toward the United States, he does not want to be perceived at home as
an American “vassal” nor to give the Bush Administration a blank check where Russian
interests are concerned. Thus, Russia may have had an interest in principle in opposing
“unilateral” U.S. military action in Iraq. Putin does not seek to project Russia into the
forefront of an anti-American coalition. He seeks, in cooperation with traditional U.S.
allies France and Germany as well as with Russian partners such as China, to put some
limits on U.S. power, especially its recourse to “unilateral” military force.
Cooperation with the United States
Against Russia’s economic interests in Iraq and its interest in restraining American
global domination, is the strategic decision Putin made in 2001 to reorient Russian foreign
and defense policy toward broad cooperation with the United States. Putin sees Russia’s
economic reconstruction and revitalization proceeding from its integration in the global
economic system dominated by the advanced industrial democracies – something that
cannot be accomplished in an atmosphere of political/military confrontation or
antagonism with the United States. Putin therefore shifted Russian national security

¹ Ariel Cohen, Russia and the Axis of Evil: Money, Ambition, and U.S. Interests, prepared
statement at House International Relations Committee hearing, February 26, 3003.
² Mark Brzezinski and Lee Wolosky, “Russia has Reason to Worry,” International Herald
Tribune, January 17, 2003, p. 8.

policy toward integration with the West and cooperation with the United States.³ Most
observers believe this remains the basis of Putin’s national security policy.
By February 2003, Russian experts concluded that war in Iraq was virtually
inevitable and Russia began evacuating its citizens. Although Russia opposed U.S.
military action. it hoped to prevent this disagreement from damaging broader bilateral
relations. On March 12, Deputy Foreign Minister Georgi Mamedov said that if war
erupts, Russia “will cooperate with the United States for an early resolution” of the
conflict. “We will strive to minimize negative effects and bring the situation back to
political and diplomatic arenas.”⁴
Russia’s Balancing Act
As the Bush Administration began to make clear in 2002 its determination to
overthrow the regime of Iraqi President Saddam Hussein, Moscow reassessed its Iraq
policy. By mid-2002, some Russian officials and scholars hinted that Moscow might not
object too strongly to U.S. military action against Iraq, provided that Washington did not
act unilaterally and that Russian economic interests in Iraq were respected.⁵ These
discussions were reported in the Russian and U.S. press and undoubtedly were detected
in Baghdad. Iraq’s announcement (August 16, 2002) of the $40 billion agreement for
Russian firms to modernize Iraq’s infrastructure may have been an attempt to ensure
Russian political support. However, in December 2002, Iraqi authorities cancelled a $3.7
billion contract with Lukoil, Russia’s largest oil company to develop the huge West Qurna
oil field. Many analysts viewed this as retaliation against Lukoil, whose CEO, Vagit
Alekperov, reportedly held discussions with U.S. Energy Secretary Spencer Abraham and
Iraqi opposition leaders about Lukoil’s future role in a post-Saddam Iraq.⁶
Moscow can also be seen trying to balance its interest in preserving a major role for
itself in a multi-polar world in cooperation with France, Germany, and China, on one
hand, against its desire to avoid conflict with the United States on an issue Washington
views as vital, on the other. This was demonstrated in the negotiations leading up the UN
Security Council’s (UNSC) approval of Resolution 1441 (November 8, 2002), in which
France took the lead in pressing the United States for concessions while Russia played a
more moderate role.
Many observers believed that the conclusion of Putin’s balancing act would be a deal
with Washington whereby Russia would agree not to use its UNSC veto in return for U.S.
guarantees of Russian economic interests in Iraq. A Russian parliamentary leader close
to Putin suggested such a deal in October 2002.⁷ In February 2003, Boris Nemtsov,

³ CRS Report RL31543, Russia's National Security Policy After Sept. 11. See p. 2-15.
⁴ “Russia Suggests it May Not Veto New U.N. Resolution on Iraq” Kyodo, March 12, 2003.
⁵ Discussions with Russian officials and scholars, 2002.
⁶ Financial Times, February 11, 2003, p. 4; RFE/RL Newsline, “Promises for Rhetoric: The
Virtual Relationship of Russia and Iraq,” December 18, 2002.
⁷ Discussion Mikhail Margelov, Chairman of the Foreign Affairs Committee of the upper
(continued...)

former Deputy Premier and now leader of a liberal political party, wrote that, “If the
Americans and British can reassure Moscow that a future Iraqi regime will not be
prejudicial to Russian economic interests, they will be better placed to secure its
acquiescence.”⁸ Putin sent his chief of staff, Aleksandr Voloshin, to Washington
(February 24-25, 2003), where he met with the President, Secretary of State, and National
Security Advisor. The Russian press reported his trip as, “an attempt to seal concrete
economic deals in return for Russia's support or abstention on the Security Council.” U.S.
sources made a similar assessment.⁹
The U.S. Response
Based on U.S. and Russian press reports and discussions with U.S. and Russian
officials, it appears that the U.S. response is as follows: Russia’s economic interests in
Iraq will receive due consideration. However, a) Iraq owes money to many countries. Its
debt to Russia ought not be put in a special category in preference to all others. b) U.S.
oil companies, among others, have been shut out of Iraq for years. Why should Russian
firms be guaranteed a special privileged place in post-Saddam Iraq, possibly at the
expense of U.S. firms? c) Contrary to persistent Russian belief, the United States does
not control the price of oil and cannot guarantee specific price levels.
U.S. officials reportedly suggested an informal “gentleman’s agreement” to respect
Russian economic interests in Iraq.¹⁰ Russia wanted concrete, unequivocal guarantees.
As one Russian think tank director put it, “There were talks with the U.S. about Russian
economic interests in Iraq, but they did not succeed. There were [American] expressions
of sympathy but no guarantees.”¹¹
On February 28, 2003, the U.S. State Department designated three Chechen groups
with alleged links to Al Qaeda as terrorist organizations. On March 6, the Senate
unanimously approved the Strategic Offensive Reductions Treaty, and on March 10, Sen
Lugar introduced a bill (S. 580) to exempt Russia from the provisions of the Jackson-
Vanik amendment. None of these moves are directly related to Iraq, except perhaps in
their timing.¹²

⁷ (...continued)
chamber of the Russian Parliament, October 2002.
⁸ Boris Nemtsov and Vladimir Kara-Murza, “Russia Plays its Economic Card Over Iraq,”
Financial Times, February 25, 2003.
⁹ Vremya Novostei, [Moscow], February 28, 2003, cited in RFE/RL , Security and Foreign
Policy in Russia and the Postcommunist Region, March 4, 2003. RFE/RL Newsline, February 24,

2003.

¹⁰ Michael Dobbs and Susan Glasser, “Russian Oil Fears Play in Iraq Policy,” Washington Post,
November 22, 2002.
¹¹ Valeri Fyodorov, director of Political Friends, an independent Russian think-tank,cited in
National Post [Canada], February 11, 2003.
¹² “Putin Still Hedging on Whether to use Russia's Veto in U.N. Vote on War with Iraq,” AP,
March 4, 2003.

The Bush Administration also brandished sticks as well as carrots. U.S. Ambassador
to Russia Alexander Vershbow reportedly told Russian reporters on March 12 that a
Russian veto of the U.S.-backed Security Council resolution on Iraq would damage
bilateral relations. Vershbow mentioned cooperation on security, energy, antiterrorism,
antimissile defenses, and the space program as areas that could be adversely affected by
a Russian veto of the resolution.¹³
Russia and the War in Iraq
In February 2003, Russian opposition to U.S. military action against Iraq hardened.
February 9-12, Putin traveled to Berlin and Paris and joined French President Chirac and
German Chancellor Schroeder in a joint declaration stating that there was still an
alternative to war and that Russia, France, and Germany were determined to work
together to complete disarmament in Iraq peacefully.¹⁴
On March 2, Putin rejected regime change as a legitimate goal in Iraq. “[T]he
international community cannot interfere with the domestic affairs of any country in order
to change its regime.... [T]he only legitimate goal the United Nations can pursue in this
situation is the disarmament of Iraq.”¹⁵ On March 10, Foreign Minister Ivanov declared
that if the U.S.-backed resolution authorizing war was submitted to the UNSC, Russia
would vote against it.”¹⁶
Soon after the U.S.-led coalition began military operations in Iraq, Putin called the
attack “a big mistake,” “unjustified,” and insisted that military action be ended quickly.
Russian media, like that in many other European countries, took a generally negative
attitude toward coalition military action, emphasizing innocent civilian casualties and
coalition mistakes and problems. In Russia, however, the Kremlin exercises very strong
influence over the media, especially TV. Russian public opinion overwhelmingly
opposed what most Russians saw as U.S. aggression. There were large anti-war rallies
in major cities and spontaneous manifestations of anti-Americanism.
‘There is something slightly alarming in Russia's new, more hard-line stance toward
the United States over Iraq,” observed the Moscow Times editorial page on February 27.
“President Vladimir Putin changed the tone ... when he warned of the dangers of U.S. and
British warmongering and called on the military to be ready to defend Russia's interests.
Then ... Russia, which had been straddling both sides, jumped firmly into the French and
German camp.”
Moscow’s shift suggests two questions: why the more hard-line stance toward U.S.
policy on Iraq; and has Putin irrevocably “jumped into the French and German camp”?
There are probably multiple factors behind Putin’s more hard-line stance toward the
United States. There is Russia’s interest in promoting a “multi-polar world” and

¹³ Izvestia [Moscow], March 12, 2003.
¹⁴ Ibid., February 27.
¹⁵ Summary of Putin’s remarks, Ibid., March 4, 2003.
¹⁶ Reuters, March 4, 2003; RFE/RL, Newsline, March 11, 2003.

bolstering the stature and authority of the UN vis-a-vis the United States. Most of
Russia’s political elites as well as the majority of the national security establishment were
hostile to the prospect of a U.S. war in Iraq. Over 90% of Russians also strongly opposed
the war.¹⁷ Putin may feel that he cannot appear completely to ignore the opinions of his
generals and diplomats, the political establishment, and the voters.
By early April, the demonstration – yet again – of America’s unrivaled military
capability must have been very disturbing to many Russians, especially in view of
Moscow’s miserable experiences in Chechnya. Russian military spokesmen regularly
claim that the U.S. Government is hiding its true casualty figures, which must be much
higher than announced. The wide and widening gap between U.S. and Russian military
capabilities both embarrasses and frightens many Russians.
Finally – and perhaps most important – it appears that the Bush Administration has
not given Moscow the firm assurances it wants guaranteeing Russian economic interests
in Iraq.
Now that the battlefield aspect of the Iraq conflict is essentially over, it remains to
be seen how strong Russian opposition will be to U.S. policy in Iraq. That may depend
on how Putin weighs the benefits of “principled” and domestically popular opposition to
the United States against the costs of incurring the enmity of the Bush Administration on
an issue that Bush clearly considers to be of supreme importance. The two presidents
spoke by telephone on March 18 and reportedly agreed that despite differences on Iraq,
bilateral cooperation on other issues would be increased. On March 20, Putin criticized
the U.S. attack as a “political blunder” that could jeopardize the international security
system. At the same time, other Russian officials emphasized the importance of
minimizing the damage in bilateral relations. U.S. Ambassador Vershbow, speaking on
Russian TV on March 20, also said that U.S.-Russian tension over Iraq would soon pass.
The Russian Duma postponed action on the Strategic Offensive Reductions Treaty, citing
the Iraq conflict. Several legislative leaders close to Putin, however, criticized this action
as against Russian interests and predicted Russian approval of the treaty soon.¹⁸

¹⁷ “Most Russians Oppose War in Iraq, Poll Shows,” Interfax [Moscow], March 5, 2003.
¹⁸ RFE/RL, March 19; RIA Novosti [Moscow], March 20, 2003; Agence France Presse, “Russia
Pledges to Ratify US Nuclear Treaty Despite Delay in Vote,” March 19, 2003.