Thursday, November 15, 2012

Russia: Who profits from Russia's arms problems in Iraq?

Sergei Vasilenko

World politics is full of intrigues. They are often built around powerful countries and their interests in the international arena. The hype surrounding the alleged failure of a large Russian arms deal with Iraq has made numerous headlines across the world. The matter has been solved now, but who was behind it and who profits from such intrigues?

The contract for the supply of Russian weapons was signed by Prime Minister Dmitry Medvedev and Nouri al-Maliki, his Iraqi counterpart, in October of this year. Under the agreement, Russia agreed to supply 48 "Panzer-1" air defense missile system and 36 Mi-28N attack helicopters. The total amount of the contract made up $4.2 billion. In addition, an agreement was achieved on Iraq's intention to purchase Russian MiG-29M/M2 jets and armored vehicles. It was the largest Russian-Iraqi deal since the fall of Saddam Hussein's regime in Baghdad. In addition, the contract testified to the fact that Iraq no longer looked at the United States in such an important issue as arms trade.

Everything went according to plan until November 10, 2012, when France Presse news agency said with reference to the adviser of the chairman of the Iraqi government that the contract could be terminated. Assistant to Iraqi Prime Minister, Ali Mousavi, said that the contract had been canceled over concerns related to corruption.

"When the prime minister of Iraq returned from the Russian Federation, he had suspicions about corruption. This is why he decided to revise the deal," said the adviser. The official added that there was investigation filed into the case. Mousavi did not specify whom exactly the investigation targeted. According to former Iraqi ambassador to Russia, Abbas Kunfuda, Baghdad was establishing a special commission to revise the contract, as Iraqi officials, who were involved in the deal, collected the bribes worth about $200 million. The contract will definitely be canceled, he said.

Iraqi officials tried to correct the situation after this sensational statement. Defense Minister Sadun al-Dulaimi called an urgent conference the same day and rebutted all the remarks by the prime minister's advisor. According to him, confusion could arise due to the delay in providing information about the contract to the anti-corruption service of Iraq. "The deal is going according to plan," the minister stated. However, despite the assuring statements from the Iraqi Defense Minister, Moscow will demand an official explanation from Baghdad.

"Negotiations with the Iraqi side have been conducted for a long time, we clarify their position on the controversial statements that have been made recently. We have not received any information about the changed plans that Baghdad supposedly had," a spokesperson for the Russian government said.

The Federal Service for Military and Technical Cooperation and Rosoboronexport (the company that executes the deal), has not received a notification of termination of the contract. There was no information received about the cancellation of the contract through diplomatic channels either. However, sources do not rule out the fact that there could be complications in the implementation of the deal, in which a third party could be involved.

Who benefits from the failure of the Russian-Iraqi contract? Even though the parties say that all goes according to plan, the concerns about the disruption of the contract are not unfounded. There are many opponents of the deal. The main ones of them are the United States and Ukraine. A senior official with the Russian military-industrial complex accused the Americans of disrupting the contract. "Washington stands behind the statements from Baghdad about the refusal to execute the arms supply contract. Washington tries to prevent the implementation of agreements between Russia and Iraq," the official said.

"The Americans have not been conducting combat operations in Iraq to give the arms market to Russia so easily," another source at military and diplomatic circles said. He also recalled that Ukraine was the first post-Soviet country that tried to enter the arms market of Iraq, but Russia came first. This could not but make Kiev angry. Opponents of the deal appealed to the sum of 4.2 billion dollars and tried to convince Baghdad that the price was too high. To confirm their words, they resorted to the contract concluded by Russia and Syria in 2006 for the delivery of 50 "Panzer-S1" complexes for the total cost of about $900 million. They claimed that the amount was several times lower than the amounts in the Russian-Iraqi contract.

Russia's competitors of on the arms market hinted to the Iraqi authorities on the corruption constituent. Supposedly, they said, the real cost of the package deal was much lower, whereas the difference would be lost. When Russian and Iraqi officials were working on the terms of the agreement, the Iraqi partners had no questions to the Russian side. There were no talks about corruption at all. The ministry also said that after the information about the deal was released, they launched a media war against Russia.

Experts believe that the deal could be complicated due to a number of internal Iraqi factors. "There was a Kurdish formation created on a part of the country, which may eventually become the basis for independent Kurdistan, - said Ruslan Pukhov, the director of the Center for Analysis of Strategies and Technologies. - Representatives of the Kurds in the administration of the country (President Jalal Talabani and Foreign Minister Hoshyar Zebari are ethnic Kurds) do not want the central government in Baghdad to purchase Mi-28N helicopters, which theoretically could be used against the Kurds."

All the experts agree that there is no corruption at all, it is the U.S. authorities showing pressure on Iraq. After all, Washington used to be Baghdad's main military supplier.

The Defense Ministry of Iraq launched the rearmament program in the country after the combat action was over. As part of the program, Iraq purchased 36 fighters, vehicle sets for the assembly of tanks, armored vehicles and other weapons from the United States worth around $12 billion. Recently, however, the government of Nouri al-Maliki tries to show independence and comes into conflict with the United States. As a result, Iraq started to look for another supplier of weapons and found it in the face of Russia. Certainly, the U.S. authorities did not like it, and they decided to act more decisively. Washington showed tremendous political pressure to force Iraq to terminate the agreement. The U.S. seeks to monopolize the Iraqi military market so that U.S. companies could continue to profit from arms supplies in the still unstable country. Immediately after al-Maliki's return from Moscow, a U.S. representative for defense cooperation arrived in Iraq for talks.

"The Russian side has no understanding of what is really happening in Iraq," the former Iraqi ambassador to Russia said. He noted that many people mistakenly began to associate the failure of the contract with the dismissal of Russia's former Defense Minister Anatoly Serdyukov, as well as with the inefficiency of Russian weapons. However, this is not the case. It should be noted that Iraqi officials, as it seems, do not understand what to do next either. Besides the U.S., local MPs show pressure on the Prime Minister of the country. They signed a petition demanding the arms deal should be suspended. However, the government of Iraq plans to send a delegation to Russia in the near future to renew the contract.

Some experts give a different version of the conflict. According to them, the deal is on the verge of failure, because the Iraqi government could not share the prize for the arms contract that certain contractors were supposed to receive. Some experts say that the compensation amounts to $500 million. But this version, like the version of corruption, seems unconvincing.

Russian officials said they were not going to give up without a fight. Moscow wants official explanations from Baghdad. If the Russian-Iraqi contract is going to be executed, Russia will become the second largest supplier of arms to Iraq (the first place is taken by the United States). This will create excellent conditions for further promotion of Russian arms to the Iraqi market.