Iraqi War: Price of the Problem

British Prime Minister Anthony Blair came to Moscow to persuade Russian President Vladimir Putin that Russia should support the US in the UN Security Council. As is known, three permanent members of the Security Council, France, China, and Russia, strongly object to the coming war against Iraq. If Russia finally gives up, the USA will be more successful in pressing France and China. But why should Russia agree to war with Saddam Hussein? Especially since Russia is greatly interested in the Iraqi oil business. This time, we will unlikely trust the insignificant promises of US top-officials that Russia’s interests will be protected by the US State Department. The State Department will probably try to protect Russian interests, but it is a question of whether or not American business bigwigs will do the same. However, the problem is really very delicate for Russia, as next year’s budget is based on the price of oil.

The British Daily Telegraph commented on the present-day situation. The influential newspaper thinks that Russia is objecting to war against Iraq because of the consequences it may bring to the world oil market. It is no secret that Russia’s economy strongly depends on oil exports, and even more so on the price raw exports. In this respect, Russia’s interests are very close to OPEC’s, which is doing its best to prevent a drop in oil prices. At that, Russia and the USA declared their mutual interests and even created an energy treaty. The US propaganda machine has already worked on the first supplies of Russian oil to the US strategic reserve. However, this is just propaganda.

In fact, the interests of the two newly declared energy partners are really very different. The USA needs more than low oil prices and control over the oil market. It is clear why US governmental officials speak a lot about the energy security of the country: America needs complete control over Iraqi oil. And when it gets it, America won’t care at all what happens on the world’s oil market. The USA will get as much oil from Iraq as it wishes, and it won’t care whether the prices are high or low. Russia, on the contrary, is extremely anxious about the forecasted drop in oil prices. If the price of oil drops, the Russian budget, which is already scheduled for the next year, will go to pieces. This means that Russia won’t be able to meet its foreign debt payments, not to mention what consequences such a drop would bring to the domestic situation on the whole. It may resemble chaos after a strong earthquake.

Russia oil magnate, President of the Yukos oil company Mikhail Khodorkovsky said in the State Duma today that, if a military operation begins against Iraq, oil prices will drop to 14-16 dollars per barrel at best, and from 12-14 dollars at worst. If the war doesn’t last long and America achieves its objectives rather quickly, low oil prices will remain for an indefinitely long period. The oligarch is sure that this will have a disastrous effect on the budget and the Russian oil industry on the whole. Certainly, with the course of time, oil prices will return to 27 USD per barrel. However, this period, although not an extremely long one, will completely destroy the Russian economy.

The Daily Telegraph says that drop in oil prices will mean the beginning of a financialcatastrophe for Russia, where much financing is currently spent on economic reforms. The British newspaper wrote that on October 9, 2002, the Kremlin said it was ready to allow a military operation in Iraq, but asked for a rather high price at that.

The American mass media report with reference to undisclosed diplomatic sources that Russia has already named the price of its consent to wage a war in the Persian Gulf. It is reported that Russian authorities would like to get the following for their support: contracts to the sum of tens of billions of dollars for the restoration of Iraq’s economy; incorporation into the WTO; abolishment of the Jackson-Vanik amendment; wide access of Russian goods (not only oil and gas) to the American markets and US’s indulgence to possible operations carried out by Russia in the network of anti-terrorism struggle (not only in Georgia). Until now, experts supposed that the USA would agree to Russian demands with some stipulations, but then wouldn’t follow through. Right before his trip to Russia, Anthony Blair gave an interview to BBC, which broke this assurance. He said that Russia would undoubtedly ask for significant financial guarantees in exchange for its support . “Russia evidently has interests of its own, but I doubt this is a question of price only,” Anthony Blair said. “This is a question of providing guarantees to the whole world. We should look after the interests of all countries, including Russia.” However, the British politician isn’t quite right with his statement, as Russia’s interests currently hinge on money only.

That is why this is just a question of price and guarantees. In exchange for another collapse of its economy caused by the US-led “small, triumphant war,” Russia quite naturally wants to obtain governmental contractual work in the volumes necessary to prevent ultimate destruction of the Russian economy. This is the price Russia asks for.

In other words, this is financial maintenance of Russia from Western developed countries in exchange for its support of the military campaign against Iraq. Unfortunately, this is too expensive. Even if the USA meets Russia’s every claim, this will have an effect after 2-3 years only, if it at all. However, the Russian economy may collapse at any moment as soon as the world oil prices drop. And the things which are supposed to stimulate stagnating American economy will turn out to be deadly for the Russian economy. Moreover, this will also cause danger to Vladimir Putin’s second term as president, to Russia’s further democratic development, and so on. There is no reasonable politician in the USA who can say that, when America gets Iraqi oil, it won’t care what nationalist patriots and generals with nuclear missiles are doing in Russia.

That is why, despite Blair’s visit to Russia (or probably due to it), an unknown committee of solidarity with Iraqi people is going to organize a protest action against the war against Iraq in front of the US Consulate Office in St. Petersburg tomorrow.

Dmitry Slobodanuk PRAVDA.Ru

Translated by Maria Gousseva

Read the original in Russian: http://www.pravda.ru/main/2002/10/10/48239.html

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