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CNN Live Saturday

Russia, Iraq About to Sign Major Trade Deal

Aired August 17, 2002 - 12:05   ET

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

FREDRICKA WHITFIELD, CNN ANCHOR: CNN has confirmed reports that Russia and Iraq are about to sign a major trade agreement. The reported $40 billion deal flies in the face of U.S. threats to depose Iraqi leader Saddam Hussein. CNN Moscow bureau chief Jill Dougherty is on the story, and she has the details.
(BEGIN VIDEOTAPE)

JILL DOUGHERTY, CNN CORRESPONDENT: Iraq's ambassador to Russia, Abhas Khalaf (ph), tells CNN that Russia and Iraq are poised to sign a new five-year, $40 billion economic cooperation agreement. He says that signing could come as early as September. He also tells CNN that this economic cooperation agreement has been in the works since last year, when Iraq proposed it, and that it is now in the final stages of agreement by the Russian government.

The Russian government, for its part, and the Russian Foreign Ministry are saying no comment to that statement.

Ambassador Khalaf (ph) says that the agreement includes new projects in the area of oil, electricity, irrigation, railroads and transportation. And significantly, he says it would not violate U.N. sanctions against Iraq that were imposed after the Gulf War.

All of this comes at a very sensitive time, when the United States is trying to decide whether or not to attack Iraq. The ambassador, for his part, says that Iraq doesn't care what the United States thinks about it, and from the Russian perspective, there's an economic bottom line. After all, they have had long-standing political and economic relations with Iraq. In fact, Baghdad still owes Russia some $7 billion to $8 billion in old Soviet era debt.

Jill Dougherty, CNN, Moscow.

(END VIDEOTAPE)

WHITFIELD: Well, how is the news of the Moscow-Baghdad deal being received in the Bush administration? For those reactions, we go live to CNN White House correspondent Suzanne Malveaux who is in Crawford, Texas. Hi there, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Good morning. The White House is really responding with confidence in Russia. "They are one of our most important allies" -- I'm quoting now a White House spokesperson Claire Buchan, who said this morning here that "we are confident that Russia understand its obligations under the United Nations Security Council resolutions and that they will continue to abide by them." Meaning that Russia can buy and Iraq can sell a limited amount of oil for food under the U.N. resolutions, and that until those inspectors are allowed to go back into the country, until Iraq can prove that it no longer has weapons of mass destruction or is trying to develop those weapons, then they are not allowed to sell anything beyond that arrangement that has already been decided.

But, of course, as you know, this really complicates the matter for the Bush administration. President Bush has a very close relationship with President Vladimir Putin of Russia. They were seen together, and they met together in June at the G-8 summit in Canada. And one of the concerns and the tension here is the fact that the Bush administration cannot convince Russia to really let go and to distance itself from what the Bush administration calls the countries, the "axis of evil," that being North Korea, being Iraq, as we heard this morning, and Iran as well. There is still a nuclear program that they have developed that they continue to cooperate with Iran on that program.

Vladimir Putin has made it clear in the past that he will not let go of those ties. This is something that the White House has tried to get him to steer away from, to try to convince him, but it is very clear that Russia is -- has a very close tie with Iraq and continues to say that they do not agree with U.S. policy, the ousting of Saddam Hussein.

WHITFIELD: Well, Suzanne, other Republicans are even saying that they're starting to back-pedal a bit in supporting the Bush administration in any kind of U.S.-led war on Iraq, and now even the German chancellor is calling it, quote/unquote, "an adventure." Is it likely in the next coming days or weeks the Bush administration is going to start kind of back-pedaling itself on talking aggressively about any kind of U.S.-led invasion of Iraq?

MALVEAUX: It's an interesting point that you make, because a couple of weeks ago that's what people were saying exactly what was happening with the Bush administration. Some people saying, well, it looks like President Bush is taking less of a unilateralist approach when he started talking about consulting with members of Congress as well as U.S. allies. The Bush administration really taking issue with that characterization, saying, no, we have talked about that from the very beginning.

But you bring up a very good point, which is that top Republicans now are really coming out of the woodwork saying that, no, we do not agree with U.S. policy here. Let's take a wait and see approach. Not only have we heard from Henry Kissinger, but we have also this week seen that debate being played out on the front pages of the newspaper. Bush Sr.'s former national security adviser, Brent Scowcroft, the one who actually built this broad international coalition in support of the Gulf War, came out this week saying, no, we don't have enough evidence that Iraq is a threat to warrant ousting of Saddam Hussein. So it is going to be very interesting to see how this plays out.

WHITFIELD: All right. Thanks very much, Suzanne Malveaux from Crawford. MALVEAUX: Sure.

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