#14 - JRL 7068
WPS Monitoring Agency
February 18, 2003
POLITICAL FORECASTS/[press review]
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
IRAQ CRISIS AND RUSSIA: HOW TO SIT ON THREE CHAIRS?

The press is counting days and weeks before the war in Iraq. First, they said it would start on February 17; now, they say the beginning of the anti-Saddam operation has been slightly delayed. The media reports that an Egyptian newspaper convincingly called a new date: February 23 through 25. One way or another, no one doubts the inevitability of the operation. The [Expert] magazine writes that the fate of Saddam Hussein's regime was decided a year ago, when George Bush used the term "evil axis" for the first time. The magazine states that the US considers dethroning of Hussein its "transcendental mission which does not require rational grounding." That is why the US administration started looking for material evidence of Baghdadi regime's fault in order to have the support of its NATO allies: the US society does not require this grounding. According to latest polls, 66% of Americans think the anti-Iraqi operation is necessary.

Europeans have a different position.

"Before start, the campaign in the Persian gulf has led to the first victim - the European unity and attempts to transform the Old World into an independent player on the world arena." "Big Europe" turned to be unprepared for this, the [Vremya Novostei] newspaper says.

The newspaper says due to the Iraq issue the European Union has split into two opposing groupings. Eight European leaders headed by British prime minister Tony Blair announced their readiness to support the US. German Chancellor Gerhard Schroeder headed their opponents. He has become the center of the anti-American movement, which "is extremely strange for the country that had been the major US's bastion in the continental Europe for half a century," the paper says.

According to observers, all started with Schroeder's using of anti-American rhetoric during his election campaign. Responding to accusations of the opposition of being unable to defeat the recession and the growing unemployment rate, the chancellor switched the public attention to foreign political issues. moreover, Schroeder announced that Germany will follow "its own German" way while deciding the Iraq issue, independently on Washington's policy. This statement shocked both Europe and the US. Historical memory worked and the "special German way" caused concerns of Germany's European neighbors. However, the main thing is that if Germany has decided everything for itself, the attempt of the EU countries to work out a common position on the Iraq issue lost its sense.

Hence, [Vremya Novostei] notes, the Iraqi crisis has demonstrated "how far the European Union is from its declared goal - to become a powerful independent player on the international arena." It is especially evident now, after new members from Central and Eastern Europe joined the EU.

The newspaper stresses that judging by everything, it will take much effort before Europeans will learn how to be a good team, how to play a game, "in which beautiful statements will not cover prior prejudices concerning each other and the intention of each country to resolve its own issues for itself."

However, from the standpoint of the [Expert] magazine, the European anti-American alliance is doomed to fail. The magazine thinks that at the very last moment Jacque Chirac will joint the anti-Iraqi coalition like his predecessor during the Desert Storm. The magazine cites a French analyst, "On the one hand, France speaks as Germany, on the other hand, it is preparing to the war as England... France is willing to stay a global and undoubtedly military player."

Things are different in Germany, as its government has become the hostage tot eh public opinion in the country. [Expert] stresses that the German electorate "wants impossible - a foreign political independence, a peaceful sky, and economic prosperity". This wish is impossible to fulfill at present, and EU newcomers, Eastern European countries, understand it very well. They have unanimously supported the United States.

[Expert] thinks the neophytes are so enthusiastic also because they "hope the alliance with the US will protect them from attacks on their sovereignty by "Old European" countries".

A top diplomat of one of Eastern European countries said frankly to the [Konservator] weekly that the choice in the conflict between the US and Germany is rather difficult for Prague and Warsaw. "A lion's share of the economies of these countries is supported with German money. At the same time, Eastern Europe intuitively welcomes all that weakens Germany: "warm feelings" towards it are similar to their former "warm feelings" to the Soviet Union. The only difference is that Russians have left, while Germans..." Overall, the situation is rather ambiguous, ""Old" Europe is intriguing against the new master, "new" Europe is intriguing against the "old" one. Evidently, the bargaining will last until the first shot, later, all will be in the same boat, the loser will be overboard. It is only necessary to sell oneself for more."

At the same time, it is difficult to believe that there are countries that will oppose to the US under the threat of a possible international isolation. US presidential aid on national security issues Ms. Condoleezza Rice defined the US's position very distinctly in her interview with the [Gazeta] periodical, "We all a responsible for what is going on in Iraq. We are responsible for allowing Saddam Hussein to carry out his armament programs for twelve years. We have done nothing to stop Hussein's tyranny in the country regardless of the UN resolutions."

At the same time, different sources report that the total number of the US forces in the Persian Gulf has reached 150,000 through 200,000 people.

Military observer of the [Novaya Gazeta] newspaper Pavel Felgengauer thinks it is the best evidence the war will start very soon, "Unlike Russia, the US never keeps its forces in the open field for long, as they are unable to live and train normally in such conditions and this reduces their combat abilities." Besides, in April the heat season start in the Persian Gulf and military equipment can start failing due to hot temperatures.

The Russian General Staff confirmed to the [Novaya Gazeta] observer, "According to our data, the operation is scheduled to start in the second half of February. The decision to start it has been taken but not declared as yet."

According to the [Moskovskie Novosti] weekly, the war is unlikely to end up with a minimum task "to get rid of Saddam and at least partially stop the nervousness close to national panic due to the fear of repeated attacks on New York." Konstantin Kosachev, deputy chairman of the Duma foreign affairs committee said in [Moskovskie Novosti] that there is also a maximum task, "to fix the new world model de facto, with the only force center, the United States."

Another Duma deputy, Vladimir Volkov - deputy chair of the defense committee - said even more radically in his interview with [Rossiiskie Vesti] that the "upcoming operation is the beginning of the war for the world leadership and mostly for the control of world's raw material resources."

Volkov does not doubt that "after Iraq it will be Iran." Moreover, he is convinced that Iran is the main goal of the US, and the anti-Iraq operation is a distracting maneuver. Eventually, Volkov says, the US will gain control of the whole region - Afghanistan, Iran, and Iraq.

As for Russia, Volkov thinks the anti-Iraq war will cause another economic disaster in the country.

Actually, if the oil barrel price falls to $13-15, it is not ruled out that the Russian budget will fail.

[Rossiiskie Vesti] published another version of the Russian apocalypses in case of the Persian War.

The weekly writes that the military operation will be able to sharply increase oil prices for several days and accelerate the increasing dollar failure. Right after the end of the operation President Bush will be able to announce a dollar circulation reform. [Rossiiskie Vesti] predicts that in this case there will be a financial default in Russia.

The weekly reminds that the government once ignored experts' recommendations to create the necessary infrastructure for exchanging dollars into euros, gold, and other assets. "As a result, the banking system may be paralyzed." Russian enterprises will reduce payments to the budget due to sharp export reduction and increase of low-quality imports. The weekly think the government will hardly likely to be able to overcome this crisis like in 1998 with the help of internal economic growth as the demand for Russian raw materials will hardly grow.

Overall, the question of Russia's position on the Iraq issue is one of the most complicated ones. Aforementioned Konstantin KOsachev reminded in his article in [Moskovskie Novosti] that the volume of Russia's trade with Iraq makes up 60% of all trade with Arabian countries. Kosachev writes, "Unfortunately, at present Russia has only a few markets for selling machines, fertilizers, chemicals, and medicines. Now, we are selling these good to Iraq. It will be wrong to lose such a market."

Besides, there is the problem of Iraq's debt to Russia, and Kosachev thinks the future of the debt is unpredictable if the Iraqi regime changes.

In short, Russia has to balance. On the one hand, it should not forget about its own economic interests. On the other hand, President Putin announced that under certain conditions Russia may support the military operation in Iraq. "Opposing the US, Kosachev says, we have never tried to protect the current Baghdadi regime."

One way or another, Russia is far from pacifism. We do no object to applying force in crisis situations, "but on distinctly determined that OBJECTIVE grounds, for the sake of interests of the society rather than the strongest of the most interested country." Until there are convincing evidence, Russia will not joint the alliance. Kosachev thinks Russia's present position on the Iraq issue is the only possible.

According to the [Vedomosti] newspaper, Russian diplomacy is successfully using the experience it received four years ago in Belgrade, "the main thing for war opponents is to save the face when the dictator they protect surrenders arms."

Apparently, the anti-military pathos becomes excessive after the war. That is why at present Russia has to simultaneously protect Iraq and criticize the US, "This will allow Russia to turn its back to Iraq without losing its international authority if necessary."

Russia should not join the US elite club, it is extremely unprofitable of the country, [Vedomosti] says. The Iraq issue will be resolved anyway, and eventually the "Old Europe" will find a common language with America. "At the same time, the Russian diplomacy will not be confused like in Yugoslavia."

Currently Putin is trying to be pragmatic will all participants of the conflict, [Izvestia] writes, as "Russia needs something from every one."

During the visit of the Russian president to France the necessity to cooperate in space and energy sectors was stressed several times.

Besides, Russia needs to receive much from the United States, "To buy Russian oil, not to pressure with duties, to make investments in the country." [Izvestia] returned again to Putin's statement, "Russia will never return to conflicting with its partners - neither Europe nor North America." Today, the paper writes, the Russian president "is trying to pass between two brawling apartments and to manage to borrow money form both to repair his own apartment."

The main concern of the [Izvestia] newspaper is that Russia may overestimate its resources and capacities and try to "resolve the US- Europe conflict" rather than remain a third, independent participant.

Undoubtedly, eventually this conflict will stop and Russia may "traditionally" charged with "acceleration of the international tension".

The [Kommersant] newspaper cited Andrew Wood, former British ambassador to Russia, and present British Petroleum consultant speaking on the consequences on the Iraq war for Russia. The newspaper asked Wood whether Russia will remain the loser if the US gains control of the oil market and reduce oil prices. Wood says, Russia should be both realistic and pragmatic: to realize the inevitability of the war and to try to carry out such policy to economically benefit from the war.

According to [Kommersant], Russia has succeeded in it: the cost of the Iraq issue for Russia is the transaction between the Tyumen Oil Company and BP.

Of course, the paper says, no one will ever admit it officially, however, the political reasons of the transaction are obvious, says [Kommersant].

Moreover, Nikolai Vardul, the editor of the economy column, there is direct evidence that the transaction between BP and TNK are "a payment for Russia's not opposing to the war." Apparently, as a result of the Iraq war the oil prices will fall, together with the assets of the company. Therefore, it would be much more profitable for British Petroleum to invest in the company after the military operation. "The decision to buy shares at the moment of extremely high prices is economically illogical - hence, we need to look for politics."

[Kommersant] is convinced that the aforementioned TNK-BP transaction is just an advance to Russia.

Nikolai Vardul says it is the nature of the investment society, "Here everyone one keeps an eye on the other, and if someone large and strong makes a sharp movement - such as a multi-billion transaction between BP and TNK - a line stands to this hole."

Their author stresses that there is hope that the long-expected time of strategic investors starts in Russia, "Thanks to Iraq."

Today Russia is trying to sit on three chairs, says Sergei Alekseev, president of the New Economic Prospect foundation in the [Nezavisimaya Gazeta] newspaper. It is trying not to offend Europe, to stay on friendly terms with the US and to retain good relations with the East. It is hardly likely.

In these terms, US Defense Secretary Donald Rumsfeld said once, "If you are trying to please everyone, there will be someone who dislikes it."

From the viewpoint of the author of the article in the [Nezavisimaya Gazeta], Russia should support the US even if the military operation in Iraq starts bypassing the UN Security Council resolution.

"Russia has its own geopolitical interests and advantages, Alekseev writes, which neither the East nor the West have." It has a huge territory which connects the two continents; it has substantial oil and gas resources, and it "will have a minimal risk in case of a potentially possible world financial crisis".

At the same time, Russia should make a number of well-thought moves before the beginning of the Iraq war. It is necessary to conclude more long-terms contracts at medium-profitable cost (approximately $30), taking into account that the prices will grow during the war. Thus, Russia will show itself as a sold and reliable partner and will partially protect itself from further oil price fluctuations.

Besides, the [Nezavisimaya Gazeta] expert says, "Russia should also create its own oil reserve like the US and in the future work with financial instruments rather than directly with raw materials."

Moreover, if carry out reasonable and pragmatic policy, the New economic Prospect foundation president predicts, the situation may make the Russian ruble a convertible currency. "We only have to take maximal advantage of the situation and try not to follow anyone."

Overall, as [Konservator] says, "IF Putin manages to resolve the Iraq crisis with honorable conditions for Russia, he will become one of the greatest politicians of today, our country will eventually have its own political face and will demonstrate that it can protect its own political interests." The title of the article is rather expressive "To Baghdad! To Baghdad!"

Referring on a source in the British press, the [Kommersant] newspaper reported that Pentagon had worked out the details of the anti-Iraq operation and several days ago it was presented to President Bush. According to the plan, the attack on Iraq should be ten-fold stronger than the power of bombing during the Desert Storm operation. After than, special forces and military equipment will start acting.

The operation is supposed to end within a week. The date of the operation is also mentioned: late February or early March. Meanwhile, the press notes, the 10 million anti-military manifestations in different countries last weekend stimulated their national governments very well - eventually, they found a consensus on the Iraq issue. European leaders announced with all responsibility that the EU crisis of late should be considered solved.

The force resolving of the operation has been accepted as "possible but extreme measure".

Presumably, the UN Security Council will make the final decision after international inspectors stop their work.

Besides, there have been disagreements in the Iraq leadership in recent days and Saddam Hussein ordered to house arrest his defense minister having suspected him of separate negotiations on surrender with the West.

Overall, as the Washington Post newspaper reports, George Bush has decided to give too more weeks: to the international society for diplomatic efforts, to Saddam Hussein - for voluntary disarmament.

It was a difficult decision for the US administration. As Donald Rumsfeld said, "Never do or say anything you do not want to read about on the Washington Post first column."

In two weeks March starts - all is according to the schedule... Mavra Kosichkina

(Translated by Arina Yevtikhova)