23 June 2000
Iraq’s trade relations with its Arab neighbors are flourishing. Businessmen from around the region are flocking to Baghdad. Bustling trade fairs reminiscent of the days before sanctions are back. Viewed regionally, economic sanctions seem to be crumbling, as Iraq wends its way back into the Arab economic – although not yet the diplomatic – arena.
Since the inauguration of the United Nations oil-for-Food program in 1996 first allowed Iraq to buy food, medicine, and other humanitarian goods with the revenue from oil exports, Arab traders and businessmen have been wheeling and dealing in what used to be the largest market in the Middle East. But the level has picked up sharply of late, in line with both export volumes and oil prices.
Egypt, Syria, Jordan, and the UAE count among the biggest exporters of goods to Iraq. Even Saudi Arabian businessmen are in for a piece of the action.
“Baghdad is buzzing with new restaurants to cater for those visitors,” says one Jordanian pharmaceutical industry executive whose company has been exporting medicine to Iraq for years. “There’s more active night life, as well as more law and accountancy firms offering services for foreign companies seeking to open offices there.”
Last month, Iraqi Trade Minister Mohammad Mahdi Saleh held talks in Damascus with Syrian ministers of industry, health, economy and foreign trade, and transportation.
At that time, it was agreed that Baghdad would increase by $20 million imports of Syrian-produced medicine and food currently estimated to be worth $300 million a year. They also agreed that Iraq would double imports of sugar, rice, wheat, and other foodstuff via Syrian ports to 1 million tons this year.
Egyptian Minister of Economy and Foreign Trade Yousef Butrus Ghali, a regular visitor to Baghdad, headed a delegation of 40 business representatives and three heads of Egyptian holding companies that went to Baghdad in April to discuss increasing Egypt’s share in the oil-for-food contracts.
More recently, the Arab press has been reporting increased pressure by Saudi businessmen on Riyadh to allow the transit of goods via the Arar border crossing between Saudi Arabia and Iraq, which is currently limited to the passage of pilgrims. Saudi businessmen’s share of oil-for-food contracts is estimated at $300 million for the last 18 months.
But competition from outside the region is strong. In May, a group of 75 German executives led by Ludolf von Wartenberg, the director general of the Federation of German Industries, held talks with Iraq’s industry, trade, oil, agriculture, electricity, and health ministries. Wartenberg did not disguise Germany’s ambition, which is “to restore trade and industry relations with Iraq to the level before the imposition of the sanctions.”
The awarding of contracts by Baghdad is not straightforward and usually entails a political price. Arab states that publicly support the lifting of sanctions or seek closer diplomatic relations tend to be favored in food and medicine supply deals.
“Baghdad realized it cannot fight the sanctions head on, so the Iraqi strategy is to force itself out of its pariah status by rendering those sanctions irrelevant,” explains one London-based Iraq analyst.
Yet, diplomatically speaking, Baghdad’s complete rehabilitation is still far away. True, Iraq has managed to re-establish normal diplomatic relations with several countries, including four out of the six Gulf Cooperation Council (GCC) members. It receives regular solidarity visits by Arab parliamentarians. And more and more criticism is being voiced at the sanctions system and its effectiveness compared to the price paid by Iraqi civilians.
But even so, the latest Arab initiative to lift the embargo – proposed by Qatar two weeks ago – collapsed before it could take off. Doha made its proposal to other GCC members and also to Egypt and Syria in a meeting in Cairo of the eight nations which joined US-led Gulf War coalition against Iraq.
Egyptian Foreign Minister Amr Musa recently told reporters that Arab countries “cannot stand idle in front of the suffering of our brotherly Iraqi people.” Yet, Doha says that Egypt and Syria blocked even a discussion of the proposals. Baghdad accused Saudi Arabia and Kuwait of blocking the initiative.
By Ruba Husari, Amman
(Published in Energy Compass, 23 June 2000)