Pre-emptive attacks are never popular, especially when the majority of the world doesn’t support you and even your allies are slowly back away from the table. The United States is caught in this scenario — no one is really eager to attack Iraq and our closest allies half-heartedly support us.
Aside from Great Britain, we don’t have one major power behind us. Some U.N. nations would rather avoid the entire situation or pretend to handle it by pleading for more time. It seems every week President Bush is dealt another blow — Turkey recently rejected the proposition allowing U.S. Troops to launch an attack from their soil. This passage failed despite a $6-billion economic aid package — essentially a bribe.
It’s interesting to see Russia deal with the entire situation because it has the most to lose from a post-Saddam Iraq.
Russia, one of the top oil-producing countries in the world, can be a superpower if it plays its cards properly with Iraq. It’s the biggest participant in the Iraq Oil for Goods Program, selling over $4 billion of goods to Iraq and setting up oil contracts worth billions of dollars. However, most of these contracts are only valid once U.N. sanctions are lifted.
Also, Saddam owes Russia $8 billion, which the Russians may never see if Saddam is taken out of power. The debt can easily be defaulted once a new regime takes over.
Whether or not President Bush will admit it, the overall goal is to tap into Iraq’s massive oil reserves, setting up a reliable source of oil imports. Of course, this will take years, but the benefits will be amazing. Because Saudi Arabia will no longer dictate oil prices as much, we won’t be as dependent on it.
However, this is another problem for Russia, which has a break-even price of $18 per barrel of oil. Any long-term downturn of oil prices will devastate the Russian economy.
Russia is in an interesting position. It must to maintain diplomatic relationships with Iraq, so it can secure any future oil profits and collect previous debt. But they must do this without overly upsetting the United States. If the U.S.-led coalition is successful, the countries can cut off Russia, making sure the Russians don’t get any new contracts. No country will agree to share the profits with Russia after it refused to support the coalition, supply troops for the war or aid with rebuilding.
The best-case scenario for Russia is that Iraq complies with the United Nations and the United States is forced to back down. Hopefully, this would lift sanctions, and Russia could finally start work on several lucrative contracts. It’s clear it can’t publicly state this, though, because it would dampen U.S. ties. President Vladimir Putin and Bush have enjoyed a good friendship. The countries haven’t been this cordial in decades, and Putin realizes his country will lose more from the partnership if ties are strained.
Putin is walking a fine line of maintaining good diplomatic ties with America while trying to keep the window open with Iraq. This is a foolish decision on his part. We are obviously doing more for the Russians right now, supporting them every year with economic aid. We even give them money to track their nuclear weapons.
However, Putin will have a tough time convincing his government to support war when it will hurt his country in the short term. Politicians are often short-sighted, and many will not understand why Russia may sacrifice billions of dollars in contracts just to maintain good relations with the United States. This will be a sacrifice for Russia, but it owes us after we’ve done so much for them in the past.
Besides, it’s not guaranteed its $8 billion payment will be defaulted. If Russia supports us now, we can easily cut it some slack, letting it have some oil contracts once the oil infrastructure is running. This will defer any subsequent hardships once it loses Iraqi oil contracts.
I honestly don’t understand how this is even a tough choice for Russia. It comes down to supporting either America or Iraq. The answer should be clear to anyone.
Vijay Ramanavarapu is a sophomore in business. He can be reached for comment at [email protected].
