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CNN Saturday Morning News

Russia, Iraq Close to Signing Economic Cooperation Deal

Aired August 17, 2002 - 08:11   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

MILES O'BRIEN, CNN CORRESPONDENT: Today Iraq's ambassador to Russia is telling CNN Russia and Iraq are close to signing a $40 billion economic cooperation agreement. This comes as the U.S., as we well know, has been making many public statements about a possible attack against Saddam Hussein's regime.
Let's go to CNN Moscow bureau chief Jill Dougherty for the latest on all this -- Jill, post-9/11 it was said that U.S.-Russia relations were at an all time high. What does this mean?

JILL DOUGHERTY, CNN CORRESPONDENT: Well, this is kind of a complex situation and very sensitive, Miles, because as you said, this is just at the point that the U.S. is trying to decide whether or not to attack Iraq. But just about an hour ago, we spoke to the Iraqi ambassador to Russia. He told us, did confirm that it's a five year, $40 billion deal, economic cooperation agreement that he said could be signed as early as the beginning of September.

He said it was first proposed last year by the Iraqi side and, as he put it, it's in the last stages of agreement by the Russian government.

Of course, we contacted the Russian government. There was no comment from them and no comment from the Russian foreign ministry. Ambassador Abass Khalaff (ph) said that the agreement includes areas of oil, transportation, irrigation, electrical energy and railroads. He also said, most importantly, Iraq does not believe that it will violate the United Nations sanctions on Iraq that were imposed after the Gulf War.

Now, of course, we asked him how he feels this could have repercussions with the United States. He said firmly Iraq does not care what the United States thinks about it. And from the Russian perspective, although, again, we don't have any direct statements today, they have said that of course they have longstanding economic relations with Iraq, go back to the old Soviet days. In fact, Iraq owes Russia from $7 billion to $8 billion.

Back to you, Miles.

O'BRIEN: All right, Jill, let's head to the samovar for a minute and read some tea leaves, can we? What's really going on here? Is this part of a sort of a positioning in advance of an attack on Iraq? Is Russia trying to align itself with Iraq? Or are we going too far down the road here? DOUGHERTY: Well, you know, Russia has had relations with Iraq for a long time and coincidentally or not so incoincidentally, in just the past month we've had Russia having a flurry of activity with three countries that the U.S. calls part of the axis of evil. Iran, just last month it said, Russia said they're considering a long-term, 10 year, again, cooperative agreement to build peaceful, civilian nuclear power plants. And then, just this past Thursday or Friday, Russia confirmed that the head, the leader of North Korea would be visiting Russia in about just a few weeks.

So what they're trying to do is, of course, continue good relations with the United States, but on the other hand show that they can have an independent foreign policy, that they can independent economic relations and, they would argue, that they can do them without violating international law.

Now, there is a lot of sensitivity here, but there are also a lot of people in Russia who want to continue those relations and in the case of Iraq, it means some big money -- Miles.

O'BRIEN: It has a bit of a cold war echo to it, doesn't it?

DOUGHERTY: Well, it does. But they're not, obviously from the no comment today from the Russian side, they don't necessarily want to have this turn into a big fiasco, that they're saying, essentially the Russian position has been what we're doing with Iran, what we're doing with Iraq, what we're doing with North Korea should not get anybody worried because we are following the letter of the law in terms of the United Nations, etc.

So they're trying to kind of pay it from both sides at this point -- Miles.

O'BRIEN: Both sides against the middle.

OK, perhaps some might view that as a little bit of guilt by association.

Jill Dougherty, Moscow bureau chief, always good to have you drop in. We'll see you soon.

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