Iraq Fights Back With Commerce

For a country operating under strict economic sanctions and the threat of war, Iraq is an awfully busy place. Ships carrying tons of Australian wheat and Vietnamese rice unload their cargo every week in the port of Umm al Qasr. France's giant Alcatel telecom firm is working on a $76-million project to repair the country's telephone system, heavily damaged during the Persian Gulf War.

In the face of last week's arms-control ultimatum from the United Nations and warnings that Washington is ready to use force, the government of Saddam Hussein is fighting back with old-fashioned dollar diplomacy. Using the billions it is allowed to spend under the oil-for-food program administered by the United Nations, the Iraqi regime is conspicuously doling out lucrative contracts in hopes of undermining the U.S.-led campaign to oust it from power, according to businesspeople and Middle East experts.

Those efforts were on full display at the 35th annual Baghdad International Fair, which ended Sunday with Iraqi Trade Minister Mohammed Mehdi Saleh's announcement that his government had signed more than 20 oil-for-food contracts worth $500 million with Saudi Arabia, Iran, the United Arab Emirates, France and Spain. The 10-day trade fair attracted 1,600 companies representing 49 countries, most from the Middle East and Europe, according to the official Iraqi media.

Earlier, the Iraqis declared the government's intention to also reward Germany with contracts in exchange for its opposition to the U.S. campaign.

"Iraqi-German relations have witnessed a notable improvement after the firm positive stand of Germany in rejecting the launching of a military attack against Iraq by the U.S.," the government-run newspaper Iraq Daily stated in an article on the trade fair. "Accordingly, President Saddam Hussein has ordered to give priority to German companies to enter the Iraqi market."

But with politics and business so closely intertwined, companies and countries are keenly aware that they could fall out of favor under a new regime.

Years of war and the trade sanctions imposed by the United Nations in 1990 have forced Iraq to operate on the sidelines of the global economy. However, even a shackled Iraqi government offers attractive opportunities for firms angling for a piece of the oil-for-food program. Established in 1995, the program allows Iraq to sell oil and use the funds to buy humanitarian goods such as grains and vegetable oils, medical supplies and machinery. The U.N. must approve those contracts and can deny a sale if it does not fit the program's humanitarian goals.