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Baghdad trade deals seen hindrance to US By Anthony Shadid, Globe Staff, 9/19/2002 WASHINGTON - Iraq has dramatically broadened its business ties with Russia and Arab countries over the past year, generating economic interests that could discourage Baghdad's new trade partners from supporting a US attack, officials and analysts say. Iraq has signed free-trade agreements with 10 Arab states, including key Persian Gulf countries such as Qatar. It has deepened its ties with Syria and channeled substantial business to US allies such as Egypt and Jordan. With Russia, its biggest trading partner, it is negotiating a sweeping agreement that envisions cooperation in oil, agriculture, and transportation that Iraqi officials say is worth $40 billion. Moscow's interests there are so broad that a Russian diplomat met with Iraqi opposition officials earlier this month in Washington to gauge whether it would respect commitments if President Saddam Hussein were toppled, a US official said. The Iraqis ''have used the economic lever quite skillfully to build a vested economic interest in the continuation of the Iraqi regime,'' said James Placke, a former US diplomat and director of Middle East research at Cambridge Energy Research Associates. The potential economic repercussions of military action could complicate the administration's efforts to get Iraq's new trading partners on board, and could influence this week's discussions at the UN Security Council over a resolution against Iraq. While many of the agreements mean little until after UN sanctions are lifted, they add to the anxiety about a possible US invasion and its aftermath - concerns most deeply felt in Iraq's own neighborhood. Opposition to US action in Iraq, ranging from hostility to pleas for a diplomatic solution, stand in contrast to the support the United States received in the 1991 Gulf War, when Egypt, Syria, and other Arab states sent troops to join the fight. Much of the opposition is motivated by politics - sympathy for the plight of Iraqis whose livelihood has deteriorated since sanctions were imposed after Iraq's 1990 invasion of Kuwait. But money matters, too. Since the Gulf War, many of Iraq's neighbors and former allies say the conflict and sanctions have cost them dearly - Turkey has put its losses at $35 billion, Russia $30 billion. Even though analysts say Iraq is an economic mess, with high unemployment and inflation at 60 percent, it is still home to the world's second-largest oil reserves - 112 billion barrels of reserves and at least twice that many in potential fields. If chaos and instability ensued after a US attack, those reserves would stay undeveloped, depriving countries like Russia of a windfall from deals they have already signed, analysts say. ''The opposition comes from the fact that nobody understands what kind of Iraq will be left behind and what kind of destabilizing impact it will have on the rest of the region,'' said Vahan Zanoyan, president and chief executive of the Petroleum Finance Co., a consulting firm in Washington. ''Are we going to leave something viable behind, or are we going to leave a mess behind?'' The country with arguably the most to lose is Russia, a Security Council member that US officials acknowledge will be a pivotal player in gaining UN support - or, at least acquiescence - for an attack on Iraq. In addition to the $40 billion cooperation agreement, Russian firms buy the lion's share of Iraq's oil exports and remain Baghdad's biggest trading partner. Iraq still owes Russia at least $7 billion in Soviet-era debts, perhaps as much as $11 billion. Russian oil firms - along with companies from France and China, Security Council members - have wrapped up multibillion dollar deals, though most of the work awaits the lifting of sanctions. Some administration officials expressed cynicism over the agreements, which position the trade partners to hedge their bets on the outcome of the US-Iraq conflict. ''None of these deals have any impact right now,'' one official said. ''It's all designed so they can throw their hat in the ring in a post-Saddam environment.'' Other officials acknowledge that Russia's economic interests will have a bearing on the course President Vladimir V. Putin takes. Some in Congress already have suggested that the United States guarantee a portion of the deals and the repayment of Iraq's debts to Russia to mollify its opposition to a US attack. A senior administration official said last week it was still ''premature to talk about that kind of thing.'' Iraq has been relentless in making overtures to the Arab world. Foreign Minister Naji Sabri has taken the lead. In the past two years, it has wrapped up free-trade deals and other agreements with countries from Algeria to the United Arab Emirates. It has toned down the anti-Arab rhetoric that was a fixture after the Gulf War, and even relations with Kuwait and Saudi Arabia have thawed. The moves helped produce a rapprochement that culminated in the Arab summit in Beirut in March, when delegates urged an end to sanctions and rejected any attack on Iraq. ''It has been the policy of the government to use whatever kind of economic leverage it has to strengthen its position in the Arab world, and so far it has been successful,'' said Abbas Alnasrawi, a specialist on Iraq at the University of Vermont. Placke, the energy analyst, calls it an attempt ''to present itself as a normal state with whom you can do normal business.'' That normal business has had its most profound impact on Syria and Jordan. Jordan, the most vulnerable neighbor, is dependent on Iraqi oil that is delivered for free or reduced rates. For years, it has protested to US officials about the impact of sanctions and, more recently, the effects of a possible war on its precarious economy, US officials say. The State Department, with mixed results, has sought alternatives to Iraqi oil for Jordan and other markets for its agricultural products, particularly in Kuwait, Saudi Arabia, and the United Arab Emirates. ''There's been some progress. I'd be hard pressed to point to a firm agreement,'' a US official said. That lack of an agreement has produced anxiety among Jordan's businessmen, who have strong ties with King Abdullah II. Syria has a substantial stake, too, analysts say. After siding with Iran during the 1980-88 Iran-Iraq war and the United States in the Gulf War, it has largely reconciled with Iraq. Better ties have been helped by an estimated 150,000 barrels of oil a day that Iraq smuggles through Syria, mirroring networks Iraq has fostered elsewhere through Turkey, Jordan, Iran, and Arab Gulf states. The two also have wrapped up agreements on health, trade, the environment, and education, and Syria has become a new entrepot for goods into Iraq. There has been talk lately of reviving plans to build a railroad from Baghdad to Aleppo, in northwestern Syria. How much economics will deter US military action remains a point of debate. But analysts say the trade contributes to the substantial opposition to a US attack. Paul Sullivan, a Middle East specialist at the National Defense University in Washington, said that beyond the popular opposition to a US invasion, the web of economic ties that Iraq has built in the region ''is bringing many of these countries closer to Iraq.'' Anthony Shadid can be reached at [EMAIL PROTECTED] This story ran on page A1 of the Boston Globe on 9/19/2002. © Copyright 2002 Globe Newspaper Company. <A HREF="http://www.ctrl.org/";>www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, mis- directions and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. 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