"Iraq's interest in doing business with Russia is not only confined to conventional weapons," the Telegraph reports from London. "Ahmed Murtada Ahmed Khalil, Iraq's transport and communications minister, who negotiated the deals [with Russia] disclosed last week in The Telegraph [see Russia Reform Monitor No. 593], served from 1987 to 1990 as director of the Technical Research Centre at the secret Salman Pak facility on the outskirts of Baghdad. In other words, Dr. Murtada is a former head of Iraq's biological weapons program, and knows only too well how Moscow can help Baghdad to rebuild its chemical and biological weapons arsenal."

After Moscow denied reports that it was planning to sell new air-defense weapons to Iraq, Russian military experts now confirm them. The Telegraph reports, "Indignant Russian foreign ministry officials condemned our report as 'a provocation,' which smacked of 'cold war disinformation devices,' and said Moscow 'fully and meticulously' observed United Nations sanctions against Iraq.

"They were particularly incensed that Yevgeny Primakov . . . had been identified as a key figure in the deals. But a very different picture of Moscow's military ties with Iraq has emerged from Russian military experts, who have confirmed that most Russian arms firms enjoy a close and lucrative relationship with Baghdad. The deals are "handled by banks and front companies in Turkey, Jordan and the Balkans. One of the more favored conduits is Bulgaria. . . . contacts between high-level military delegations from Russia and Iraq have been taking place . . . in countries such as Bulgaria and Turkey since the mid-nineties, when the Russians first started to support the idea of relaxing U.N. sanctions against Baghdad."

The former KGB intelligence service, when it was led by Yevgeny Primakov, penetrated key financial institutions in London, a former MI6 officer tells the Sunday Times . MI6 "uncovered at least one full-time agent of the SVR, the KGB's successor, working in the London commodities market," and an undercover agent told MI6 in 1995 "that the SVR had a full-time spy reporting on the activities of the Moscow office of Barclays," according to the report. "MI6 officers fear the spy may have influenced the bank's disastrous loss on Russian bonds, said to amount to 250 [million pounds sterling], during the economic crisis last year."

"MI6 first learned of the extent of Soviet economic espionage operations in the early 1990s," according to the Sunday Times , when it received intelligence that "senior staff" at the Bank of England, the European Bank for Reconstruction and Development (EBRD) and other London-based institutions were targeted for penetration by the KGB and its re-named foreign intelligence spinoff, the SVR. The officer who set up the new operations is reported to be Col. Andrei Arsenyev.