-Caveat Lector- >From Wash (DC) Post Sanctions a Boon for Iraq Merchants By Louis Meixler Associated Press Writer Wednesday, February 3, 1999; 1:51 p.m. EST BAGHDAD, Iraq (AP) -- Yellow stone mansions with courtyards filled with orange trees dot Baghdad neighborhoods, evidence of a merchant class that has grown rich under sanctions and is a new source of support for Saddam Hussein's regime. In the countryside, newly wealthy farmers drive Mercedes sedans smuggled from Jordan in defiance of U.N. economic sanctions that have left most Iraqis so poor that buying food has become a struggle. The U.N. embargo imposed after Iraq's 1990 invasion of Kuwait has isolated Iraq and crushed its middle class. But it has also created a boom for merchants who import or smuggle goods across the porous borders. In some cases, the newly rich merchants are simple war profiteers, supplying a country in desperate need. But in others, Saddam's besieged regime has encouraged merchants from key families and tribes to help cement their backing, diplomats and analysts say. The patronage is clearest in rural areas, where the government gives land, seed, fertilizers and farm machinery to tribal leaders, who in turn patrol the countryside for the government. The farmers also get government price supports. ``The regime is trying to co-opt those who are not openly opposed to it and get them under their fold,'' said Moraiwid Tell, a professor at the University of Jordan. ``The families know they can't do anything about the regime, so they live with it.'' Some say Saddam's closest associates have profited from the cross-border trade, including his son Odai, who is widely believed to have made millions of dollars. It is estimated thousands of merchants -- if not tens of thousands -- are involved in the cross-border trade. In Baghdad, hundreds of new mansions have been built since the sanctions were imposed. In the Doura neighborhood, many of the spacious new homes have courtyards filled with olive and orange trees, and tile mosaics depicting birds and trees grace the outer walls of some. Mohammed Abdul Kareem al-Madani is typical of the new merchant class. The scion of a prominent Shiite Muslim family from the holy city of Nejaf, al-Madani grew wealthy from government contracts during the 1980-88 Iran-Iraq war. But his construction business collapsed after the U.N. sanctions cut back government investment in infrastructure. So, al-Madani sold his concrete mixers, dump trucks, graders and shovels, and began importing needed items like sugar, cooking oil, rice and tea. His business again faded after December 1996, when the U.N. oil-for-food deal began, allowing Iraq to export some oil to buy food and medicine. The agreement brought heavily subsidized rice, flour and cooking oil, sending prices plummeting. So, al-Madani switched to importing tires and car batteries, which are in short supply and can be sold at a high profit. He said he has U.N. certificates for the imports, although he admits that sometimes his Jordanian suppliers had to pay ``tips'' for those permits. ``We have friends in Jordan,'' he said. ``They get some benefits and so do we.'' Al-Madani's four-story yellow brick house in the wealthy Yarmouk neighborhood mimics an ancient Babylonian fortress. It has a sheer stone facade topped with light- and dark-colored bricks that give the appearance of battlements. In the living room, a picture of Saddam greeting al-Madani's father, a leading Shiite cleric, sits atop the television set. Iraq, land of the legendary Sinbad the sailor, has a long tradition of trading. But its merchant class was destroyed after the Arab Socialist Baath Party took power in 1963, nationalizing industries and driving many wealthy traders from the country. Under Saddam, the party began to relax its control over trade during the Iran-Iraq war, when the government desperately needed imports. After the U.N. sanctions were imposed, the government, again hard-pressed to provide for its people, further eased its restrictions on trade. Al-Madani says that if the sanctions are lifted, the new merchants will soar. ``The hard conditions have made good businessmen,'' he said. ``It is good training for us.'' Labib Kamhawi of the University of Jordan disagrees, saying the new merchants are simply war profiteers. ``The business class which invested in infrastructure and industry has been destroyed,'' he said. The new merchants are ``parasites ... 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