You Can't Beat the Price

Article excerpt

Russia wants to generate closer commercial and financial relations with the Arab Gulf countries, but the best it can offer is cut-price weaponry. Peter Feuilherade writes that Moscow is eagerly touting its goods and hoping for investment in Russia, but the Gulf states are not falling over one another with excitement.

Moscow is hunting for loans and investments from the Gulf states, with several visits to the region by senior Russian officials in the past two months. Russia's foreign minister, Andrei Kozyrev, has had talks with all six GCC states, while various military delegations have been seeking new markets for weapons manufactured by the former Soviet Union.

Kozyrev and Russia needed Arab loans and investment, particularly in the oil sector, to help transform its economy after 70 years of communism. Russia is ready to open its doors to Arab businesses in both the public and private sectors, he adds.

In exchange, it offers to provide raw materials as well as expertise in sectors such as water supply, medicine and aerospace research. Kozyrev does admit, however, that the Arab Gulf states might need a lot of persuading. "These countries did not trust us before and did not try to have cooperation with us."

On his return to Moscow, the Russian foreign minister was candid about the prime motive for his Gulf tour. Russia was seeking new and profitable arms markets. He said Moscow would nor rather deal with "stable, moderate regimes" rather than restricting itself to its previous clients, of whom he mentioned Libya, Iraq and Iran by name. "That was an extremely unfortunate choice," he now confesses.

Sources in Moscow suggest that the sale of Sukhoi aircraft to the UAE would be the first such deal to be announced. Currently Kuwait is the only GCC country to have brought arms from the former Soviet Union. These include surface-to-air missile systems bought before the Iraqi invasion in August 1990.

The concern felt in the Gulf capitals over Moscow's arms supplies to Tehran was raised repeatedly during Kozyrev's tour, particularly in Bahrain, with its large Shia population. Conceding that Russian military cooperation with Iran remained a stumbling block to better relations with the Gulf states, he has tried to dispel GCC fears "by assuring them that we do not sell the latest arms to Tehran".

In May news agencies reported that Iranian crews were being trained by Russia in the Baltic to take delivery of Iran's first submarines. Captain Richard Sharpe, editor of the authoritative naval reference book Jane's Fighting Ships, said Iran was hoping to acquire up to three Russian Kilo-class diesel-powered submarines, although pressure is being exerted on President Boris Yeltsin, especially by the United States, to call off the delivery.

Although Kozyrev's visit yielded few immediate or direct economic gains, he said in Moscow on his return that foreign policy success was not measured only in terms of financial credits. Russia had made a breakthrough in the Gulf which promised much for future cooperation. "A policy calculated only to secure financial assistance is worthless. We had to assert ourselves in the region and show that Russia remains a great power ready for mutually advantageous cooperation, and not just standing with hands outstretched."

In the event, Oman proved the most lucrative contact, promising to invest $600m in the development of Russia' oil and gas sectors. The Saudis and the UAE confined themselves to discussing the timing of payment of credits promised earlier.

One Arab diplomat commented that "apart from affordable weapons, the Russians don't have much to offer the GCC states". It was just such cut-price weapons that were being promoted by another Russian delegation to the Gulf, led by a tank specialist, Col-Gen Aleksandr Galkin. According to the UAE newspaper Al-Khaleej, the list of weapons for sale included MiG-29 and Sokhoi-27 fighters, T-72 and T-81 tanks and C-300 anti-missile missiles. …