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Trade With Baghdad Skirting U.N. Sanctions
by Emad Mekay
CAIRO, Feb 20 (IslamOnline) - With or without U.S. approval, Arab countries are racing to accept a call by Iraq's President Saddam Hussein's to sign free trade agreements with the sanctions-hit nation, a move that would effectively end all customs barriers imposed by a U.N. oil-for-food agreement that has metamorphosed into an oil-for-business program.
Egypt, a key member of the international alliance that kicked Iraqi forces out of Kuwait in 1991, said Tuesday it was sending another delegation of numerous businessmen to Baghdad, the second in less than a week, to activate a free trade agreement signed in mid-January.
Syria followed suit a few weeks back, while Jordan, Oman, Lebanon and the oil-rich United Arab Emirates are reportedly drafting similar accords soon to be finalized with Iraq, stricken by U.N. sanctions since its invasion of Kuwait in 1990.
"Sanctions will not last forever," said Sayed Bouss, foreign trade official at Egypt's economics ministry. "And when they come to an end, we would have already reserved some legroom for ourselves."
Iraq has been luring Arab states into trade agreements as a way to mitigate the effects of a decade-long U.N. embargo and penalize Western countries sympathetic to maintaining the sanctions regime.
Feeling its economic potential, Baghdad announced Tuesday it was boycotting all imports from both Canada and Poland in retaliation for their backing of Friday's U.S. strikes against Iraq that Baghdad says left three dead and dozens injured.
The Iraqi News Agency said the ban would include Canadian wheat, whether it comes to Iraq directly or through third parties. Iraqi officials said they would replace the imports with those from Arab neighbors but did not give details.
Iraqi Trade Minister Mohammed Mehdi Saleh said in Cairo last week that Saddam Hussein has called for "free trade zones" that would be "open to all Arab countries without exception."
"Iraq has to move now to resist the embargo and continue wearing it down," Saleh said.
Western diplomats in Cairo say that thousands of non-oil sector contracts have been requested in recent months from the U.N. sanctions committee and that Iraq was tempting neighboring countries with already stagnant economies.
Egypt, under an economic liberalization program and in need of foreign currency, became the fourth largest trade partner with Baghdad - after Russia, China and France - after the start of the oil-for-food program.
Trade between the two countries reached $1.2 billion in 2000, and Iraq says the amount will jump to $2 billion this year as both countries set off the their FTA 9free trade agreements).
Egypt's emerging economy, under a recession for nearly a year, hopes also to open the Iraqi market up for consumer products, including foodstuffs, medicine and school stationary.
Egypt's Leatsco/Uralaz Port Said grouping has secured three large contracts - worth $45.86 million - for agricultural vehicles and spare parts that Egyptian officials say were approved by the U.N.
In the pipeline are contracts with another Egyptian firm, Ghabbour Group's Interland Motors, for orders of trucks worth $44.47 million and spare parts worth $13.87 million. The U.S. has objected to a $59.22 million deal for water tankers and parts citing dual-use potential.
Iraq said Tuesday it has also signed 39 contracts with Egyptian companies worth $157 million to build railways, bridges, provide maritime transport items and construct new berths at the Iraqi ports of Um Qasr and Khor al-Zubair.
Fearing to lose business to other competitors, a Jordanian cabinet minister and 150 business executives were in Baghdad earlier this month to try and recoup trade strained by the formally strict sanctions.
Lebanese businessmen rebuked their government also this month for "doing too little" to catch up with the trade bonanza. Late last year, 22 Omani companies organized their first ever trade exhibition in Iraq for foodstuffs, detergents and oil industry products.
Iraq says trade with its Arab neighbors - who often ask for the lifting of sanctions - reached $6.2 billion in 2000, or 47% of Iraq's total trade with the outside world. This is likely to increase as more countries show interest in doing business with Saddam Hussein under the U.N. oil-for-food program.
Under the Iraq-U.N. program, revenues from Iraqi oil exports go into a New York escrow account where the U.N. sanctions committee can monitor the money's use. Part of the fund is used to pay reparations for Iraq's 1990 invasion of Kuwait.
Iraq says the program is a failure, as it has not fulfilled its purpose. Baghdad says it has exported more than $38 billion worth of oil and that $8.5 billion worth of contracts have arrived. Iraqi officials maintain that about $3.5 billion worth of contracts are on hold while there is $14-15 billion frozen in banks."
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