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10 Apr, 2009 13:42

Will Iraqi PM bring Russia back?

Iraqi Prime Minister Nouri Al-Maliki has met President Dmitry Medvedev in Moscow. This means Russian contracts that were suspended after the 2003 U.S.-led invasion of Iraq could soon be restored.

Moscow is also keen to get involved in Iraq's largely untapped oil sector, with Baghdad interested in Russian military hardware.

According to some estimates, back in the 1970s and 1980s, up of 80% of Iraqi military hardware and weapons came from the Soviet Union.

But everything changed in August 1990, when the UN Security Council imposed comprehensive economic sanctions against Iraq after the county invaded Kuwait. The USSR joined the sanctions.

“Russia is ready to make its contribution to the development of modern Iraq, which is following the way of democratic development,” President Medvedev stated.

Now the Iraqi government wants to reinstall co-operation with Moscow. Ali Dabagh, Iraqi government spokesman said:

“Iraq wants to sign an arms deal with Russia. That's one of the main priorities in the development of our relations. We acknowledge that Russia is a different country now, and Iraq has changed as well. I know that Prime Minister Putin has the intention of developing relations with Iraq. The cancellation of debt is a clear sign of that.”

A call for action

Al-Maliki’s positive outlook has been confirmed during the meeting between the two countries’ Prime Ministers. Vladimir Putin noted during the bilateral meeting that:

“Russia and Iraq have been linked by friendly relations and decades of productive cooperation. We can use this basis to develop our relations in the future”.

The Iraqi head of state, for his part, has expressed optimism in switching the cooperation to a more practical plane:

“There are many question which we have to discuss with the Russian side, so that the dialogue switches to deciding technical aspects and practical realization of ideas, as well as strengthening bilateral cooperation."

The main aspects of cooperation discussed between the two heads of state were means of Russian investment into the Iraqi energy and oil sectors. As the TASS news agency reports, the Russian side is prepared to invest into “exploring and developing oil deposits, building oil and gas pipe lines, as well as building and modernizing electric power stations."

Return of Russian co-operation

The U.S. is still controlling Iraqi territory militarily. However, there are signs that Washington is not only aware of such talks between Moscow and Baghdad, but even financially supports projects such as that.

Last week, Russian Helicopters (Vertolyoty Rossii) company announced it sold 22 multifunctional Mi-17 helicopters to Iraq. The money for the deal – about $US 80 million – is being provided by the Pentagon.

Also, before leaving for Moscow, Nouri Al-Maliki said he would be willing to discuss the possibility of renewing some of the old contracts that Russian companies signed with Iraq during the Saddam Hussein regime.

That is something Moscow has also been lobbying for. In February 2008, Russia signed off most of Iraq’s Soviet-era debt, which totals around $US 12 billion dollar.

Iraq is now seeking new investment, especially in its oil and gas industry, and water and electric infrastructure.

Experts believe the Russian return will be successful.

The Head of research at Alfa Bank, Ron Smith believes that “Russia is very well positioned because of its historic personal ties between Russian diplomats and Iraqi diplomats, many of whom are still in power and influential in industry contacts.”

He said that “the fact that the Soviet Union worked there and had good contacts makes Russia very well positioned to get at least its fair share of the oil and gas contracts that Iraq is coming up with.”