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#8 - JRL 7218
Business Week
April 7, 2003
U.S.-Russian Ties: A Casualty of Combat?
There is much to be lost on both sides
By Paul Starobin in Moscow

As U.S. hopes for a quick triumph over Saddam Hussein vanish in the mud rains sweeping the Iraqi desert, there's mounting strain on relations between America and Russia. One point of dispute is the Kremlin's continuing opposition to the U.S.-led preemptive strike on Iraq -- which Russian President Vladimir V. Putin on Mar. 20 called "unjustified" and "a threat to international security." And now comes a fresh accusation from the White House that Russian companies are supplying Iraq with sensitive military equipment capable of being used against coalition forces.

So far, relations have not been ruptured. But as the conflict gets bloodier, the potential grows for lasting harm to the partnership Putin and President George W. Bush have forged in the past two years -- a partnership that progressed despite resistance from their national security bureaucracies. "We may be in a spiral in which relations are undermined," warns Moscow political analyst Andrei A. Piontkovsky. There is much to be lost on both sides. For Washington, Russia's help is needed in the anti-terror war. For Moscow, the U.S. is a key source of investment and knowhow, and it can boost Putin aims such as Russia's entry into the World Trade Organization

Putin's opposition to the U.S.-led war reflects a measure of post-superpower resentment. But the Kremlin also believes the U.S. action diminishes one of its few remaining sources of global influence -- its status as a U.N. Security Council permanent member. After all, Russia's veto in that forum is worth little if Bush makes war without its approval. Now Russia, along with France and China -- permanent Security Council members opposing the war -- are likely to call for the U.N. to resolve questions such as Iraq's postwar governance. The Kremlin may also seek the Security Council's legal recognition of Russia's economic interests in Iraq, including oil contracts and the $8 billion in Soviet-era debt owed to Russia. But Washington is reluctant to return to a forum it sees as having failed to disarm Saddam.

Then there is the touchy dispute over weapon sales. In a Mar. 24 phone call, Bush confronted Putin with U.S. intelligence indicating the presence in Iraq, in violation of U.N. sanctions, of antitank missiles and electronic jamming devices. Moscow's Aviaconversiya, one alleged seller of the equipment, denies direct sales to Iraq. One possibility is that a third country such as Syria or Belarus sold Russian equipment to Saddam. Putin vowed to look into the matter.

Washington could slap sanctions on Russian arms suppliers to Iraq. But even if the issue is resolved, more such quarrels can be expected. Russia views its arms exports, totaling $4.8 billion last year, as a crucial source of revenue. Russian officials are seeking weapons sales to Syria and Iran, both viewed by Washington as terrorism sponsors. Meanwhile, U.S. State Dept. officials worry that planned Russian shipments of enriched uranium to Iran's new Bushehr nuclear reactor could be converted to nuclear-arms materials. Yet another flash point is a recent offer by the former Soviet republic of Georgia for the U.S. to use Georgian bases for operations in Iraq. Moscow is unlikely to view that offer positively.

As the conflict intensifies, Washington insiders hope Putin's antiwar rhetoric is partly intended to play to receptive audiences. A pragmatist, Putin has no relish for a confrontation -- and he's still planning to host Bush at a May summit. But Bush's decision to go to war without U.N. backing put the U.S.-Russia relationship on new, and frostier, terrain. Unless the two reconcile their differences, there's no apparent brake to this worrisome deterioration of ties.

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