The country is solvent, but not for everyone
It is clear that Russia may have to give up any hope of getting its Iraq debts settled and have a chance of participation in the Iraqi economy. However, it seems that some Russian governmental officials stick to a different point of view after visiting Washington. Recently, Finance Minister Alexey Kudrin made some rather confident statements on the issue.
According to finance minister, nowadays Iraq "is a quite solvent state" that is able to pay off its debts. At first glance, this seems to be true — If we disregard the fact that Iraq's industrial infrastructure is seriously damaged after the war and the whole of the country is racked with chaos, massacres and plundering. The oil reserves in Iraq really are very impressive. The Russian vice premier is certainly right on this issue.
In Kudrin’s professed opinion, any new government introduced in Iraq must become the legal successor to Saddam's government, which means that it is to be responsible for its debts. Iraq's debts to Russia are among these. Taking the post-war situation in Iraq and the still-active sanctions regime into consideration, Kudrin demonstrated unwanted generosity and said Russia was ready to negotiate the possibilities of rescheduling of debt repayment.
Let’s consider the sanctions and the United Nation’s Oil for Food program, in the framework of which Russian companies have managed to earn up to $2 billion a year with Iraqi oil. The United Nations has plainly asked the United Nations to abolish all sanctions. It says that Saddam has been overthrown, and Iraq is on its way to freedom and democracy. France in its turn declared that the problem of sanctions abolishment would call for very serious bargaining. However, there is practically no doubt that all sanctions will soon be lifted in Iraq. There is no other alternative, in fact. Otherwise, proud France and the United Nations will not only find themselves marginalized, but will instantly turn into meaningless pygmies doomed for extinction. This is because only what "the American people approve" can exist and flourish on Iraqi territory.
We can draw a logical and believable conclusion: Even if Iraq is perfectly solvent, this does not at all mean at all that it will immediately start settling all of its debts — especially the debts to Russia that supplied tanks, guns and planes to Saddam. It is clear that Iraq will first pay off its debt to the liberator and its allies for the "freedom" they have brought to the country. Next will be payments to the liberator’s and its allies' corporations that are meant to restore the economy of the country. The new Iraqi government will also have to pay Iraq's Arab neighbors, who disliked the war very much, but were strong enough to subdue their anger and behaved prudently and loyally.
These actions require not only much time, but also much money. What is more, it is unlikely that the liberator will allow the released debtor to forget about the noble mission of making up for the military expenses borne by the United States. Therefore, the new Iraqi government will be unlikely to have an opportunity to pay billions of dollars back to Russia, to a country that supplied Saddam with weapons and, consequently, supported the Iraqi regime during the period of the UN sanctions and during the war. As for the United Nations, the organization declared itself to be in political opposition to Iraq's liberator and threatened to use veto rights at the UN Security Council. Now, it demands that the debts must be settled, oil contracts concluded with Iraq under Saddam must be preserved and that it must participate in restoration of the Iraqi economy, for which "holy American blood" was shed.
It is probable that the Russian finance minister was appointed to the post on the strength of his accountant’s manner of thinking. He doesn't let other issues distract him from the problem; he just disregards them. When the minister is charged with finding money to perform peak payments of Russian foreign debts, he is likely to find this money no matter what happens. He can probably be very convincing, although recently Prime Minister Mikhail Kasyanov criticized Kudrin for lack of professional reasoning.
The possibility cannot be ruled out that, if the finance minister had an opportunity, he would be able to persuade the U.S. president of the consistency and validity of his position. It is unlikely that it is evident to George W. Bush that, at a time when Russia isn't being coddled and is managing to settle its debts ahead of schedule, debts to it should also be repaid on time.
What is more, the Russian minister has just a few chances to be understood by the American president.
Besides, Bush prefers to listen to the advice of other people — even if one of them had to quit an important post because of a lobbying scandal. One such adviser of the present-day American authorities, unlike the optimistic Russian vice premier, thinks that Russia has nothing to hope for in Iraq. And this sounds quite right and fair.
Today, Richard Perle, the chairman of the Defense Policy Board, said it is dubious that contracts of Russian oil companies in Iraq will be resumed. He states that "It is highly likely that contracts previously concluded with Russia will be declared worthless." The adviser added at that the issue lies in the provenance of the new Iraqi government. It would certainly be extremely surprising to him if the new Iraqi government demonstrates the same attitude to Russia that Saddam Hussein did.
The U.S. adviser thinks the situation is the same with respect to France and Germany. In his words, neither Schroeder nor Chirac will be able to get to Baghdad without the assistance of the United Nations. The new Iraqi authorities won't welcome them in the country. There is no new government in power yet; however, the American general is already perfectly aware what wishes these people may have. This would be a rather obvious characteristic of a prospective Iraqi government.
Besides, Perle, like the U.S. president himself, thinks that the UN sanctions must be lifted from Iraq as soon as possible. The sanctions hamper development of the Iraqi economy, its people are suffering and payments to the United States are delayed.
The reason Perle had to quit the post of chairman of the Defense Policy Board is a scandal caused by his too-great concern for lobbying the interests of the company Global Crossing. At the same time, the scandal proves that the politician is experienced enough in economic geopolitics and business. To all appearances, he seems to be a very valuable man for U.S. policy. Otherwise, U.S. Secretary of Defense Donald Rumsfeld wouldn't regret Perle's resignation and retain an ordinary member’s seat for him in the council. Perle's resignation caused no harm to his authority in the U.S. administration: He is still the closest adviser to the Pentagon head, whose opinion is so much appreciated by George W. Bush.
Picture from Paris newspaper La Pensee Russe