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Envoy: Russia, Iraq close to economic deal

From Jill Dougherty

MOSCOW, Russia (CNN) -- Iraq's ambassador to Russia, Abbas Khalaf, said Saturday that Russia and Iraq are planning to sign a five-year, $40 billion economic cooperation agreement.

The news comes as the United States decides whether to attack Iraq, contending it is a threat to the United States under the rule of President Saddam Hussein.

Khalaf said the agreement was proposed by Iraq's vice president, who visited Moscow last year. Khalaf said it is in the "last stages of agreement."

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Russian government officials either refused or were unavailable for comment about the ambassador's statement.

Ambassador Khalaf said the agreement includes new projects in the field of oil, irrigation, electrical energy, railroads and transportation. He said the accord could be signed in the beginning of September.

Khalaf denied the agreement would violate United Nations sanctions on Iraq, which were imposed after Iraq's invasion of Kuwait and the 1991 Persian Gulf War.

Under the U.N. Oil for Food program, Iraq can sell a limited amount of oil to pay for food and medicine. The ambassador said Iraq receives $9 billion per year through the program.

Asked about potential repercussions from the United States over the pending agreement, the ambassador said, "We couldn't care less what the U.S. thinks about it ... let America bring its own house into order."

Russia has long-standing economic interests in Iraq. Iraq still owes Russia $7 billion to $8 billion in Soviet-era debt.

As the agreement is finalized, there has been a flurry of activity between Russia and nations that U.S. President Bush has called the "axis of evil" -- Iraq, Iran and North Korea.

Last month, Moscow announced it was developing a 10-year cooperation agreement with Iran to build civilian nuclear reactors. This week, the Kremlin announced that Russian President Vladimir Putin will meet with North Korean leader Kim Jong Il during the third week of August.




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