Iraq set to buy Russian satellite, communications system

MOSCOW — Iraq and Russia are negotiating for Baghdad's purchase of a space-based communications system as well as a satellite.

The sale must be approved by the United Nations, which is examining the project. Britain and the United States are said to be concerned that the communications system and satellite would be used for military purposes. Industry sources said Russia is prepared to sell a satellite for up to $100 million that would provide communications and broadcasting. Both Western and Russian satellite manufacturers have been approached to join the project.

Under the proposal, Iraq would pay for the project through the sale of crude oil. Iraq exports more than 2.1 million barrels a day and the United Nations said that in the week of April 14-20 oil sales generated 370 million euros.

Iraq and Russia are also close to concluding a contract to repair and upgrade Baghdad's damaged satellite communications system, industry sources said. The prospective contractors are Alfa Eko and Intersputnik.

Viktor Veshchunov, an Intersputnik executive, acknowledged that the UN is suspicious of the satellite program for Iraq. The UN is concerned that it would be used for the military.

"The people need at least some access to information, to television, to communication with the outer world, so that's why we believe that such cooperation in no way contradicts the sanctions," Veshchunov said.

Under the proposed deal, Alfa Eko will deal with finances and try to win approval from the UN oil-for-food program. The company has already been granted rights to develop Iraqi gas and oil reserves.

Baghdad is expected to lease Intersputnik's satellite for communications that would link Iraq with the former Soviet Union. The second stage is to repair or replace Iraqi facilities destroyed during the 1991 Gulf war.

Intersputnik has extensive business in the Middle East. With eight satellites in orbit, the company provides broadcasting capabilities to such countries as Yemen and Syria.

So far, the deal has not won UN approval. Iraq has accused the United States of blocking 22 contracts signed with companies from Austria, Britain, Egypt, France, Italy, Lebanon, Russia, Saudi Arabia, Switzerland, Tunisia, Turkey and the United Arab Emirates.

UN officials said the Security Council sanctions committee has held up 1,703 contracts worth $3.59 billion. The contracts include oil industry spare parts and equipment.