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WAR WITH IRAQ / GLOBAL TRADE

Allied Victory Could Sow the Seeds of a Trade Fight

March 30, 2003|Warren Vieth | Times Staff Writer

WASHINGTON — Some say the conflict in Iraq is all about oil. But for Mike Bouris, Paul Overby and Colin Nicholl, the stakes are measured in bushels, not barrels. The wheat they grow is pitting Americans against Australians in one of the first skirmishes over postwar business opportunities in Iraq.

Bouris, who tends 6,000 acres of winter wheat in Riverside County, and Overby, who's about to seed 580 acres of spring wheat in North Dakota, are among the 250,000 American farmers who stand to profit if Iraq is opened to U.S. wheat exports.

Their gain could come at the expense of Nicholl, who harvests grain and raises sheep on 16,000 acres in Australia's wheat belt. Australia has been Iraq's biggest wheat supplier since the 1991 Persian Gulf War, and its farmers fear the loss of sales if a pro-U.S. regime is installed in Baghdad.

The three farmers find themselves in the middle of a brewing trade dispute. Experts say it may be the first of many as U.S. businesses compete for markets in Iraq from agriculture to telecommunications. Like the debate over Iraqi oil, it is contributing to suspicions that the U.S.-led war is motivated in part by financial interests.

Those suspicions are especially high in nations such as France, Germany, Russia and China, where opposition to the war in Iraq is widespread. But even allies like Australia, one of a handful of countries contributing troops to the U.S.-led war effort, see trouble too.

U.S. farmers are backing a Bush administration initiative to ship up to 600,000 tons of U.S. wheat to Iraq as emergency food aid, a move that could pave the way for commercial exports worth at least $150 million a year.

"Any chance to regain an export market is really important," said Overby, 44, who farms with his wife, Diane, about 30 miles south of the Canadian border in Rolette County, N.D. "Iraq would certainly be a nice one to have back on the U.S. side."

Australian wheat farmers are pressuring their government to keep the Americans at bay, and have threatened to seek compensation if that fails.

"America is extremely good at looking after America," said Nicholl, who heads a federation of 9,000 western Australia farmers. "That's fair enough, I suppose. But on account of that, we're expecting the Australian government to ensure there is as level a playing field as possible."

The playing field is certain to grow more crowded. U.S. rice farmers see a similar opportunity to sell in postwar Iraq, and experts predict growers of corn, barley, beans, cotton, meat, milk powder and other farm commodities will not be far behind.

The overthrow of Saddam Hussein's regime could open Iraq's markets to a wide range of U.S. commercial transactions currently prohibited under an executive order signed in 1990 by President Bush's father. U.S. exports to Iraq in 1989 totaled $1 billion, including more than $900 million in agricultural goods, according to the U.S.-Iraq Business Council. But in recent years, there have been essentially none.

U.S. telecommunication firms, for example, including San Diego-based Qualcomm Inc., are pressing the government to ensure that the reconstruction of Iraq's phone network incorporates a wireless technology they favor, instead of a rival system backed by European firms. Their cause has been taken up by Rep. Darrell E. Issa (R-Vista), whose district is near San Diego.

Administration officials insist that the potential to expand U.S. commercial trade has no bearing on the decisions they make about Iraq. "We're not even thinking about it at this point," said Alisa Harrison, spokeswoman for Agriculture Secretary Ann M. Veneman. "The focus is purely on humanitarian assistance and having a successful outcome of the war."

But agricultural experts say the U.S. has used food aid in the past to introduce foreign markets -- such as Indonesia -- to American farm products.

"Through history we've seen examples of where food aid has helped turn a market into viable, cash-paying customers," said North Dakota Wheat Commission spokeswoman Ellen Huber. "If we see the oppression lifted and a freer economy in Iraq, we would hope they might one day become customers."

As customers go, Iraqis used to be among the best. Before the Gulf War, America's wheat farms supplied nearly half of Iraq's grain needs. It was a major market for U.S. rice exports, and an important buyer of American sugar, eggs, oil, beans and livestock feed.

All that ended with Iraq's invasion of Kuwait in August 1990. After the U.N. instituted the "oil-for-food" program in 1995, which allows Baghdad to sell oil to buy food and humanitarian goods, other countries filled the vacuum left by U.S. exporters barred by their own government from doing business in Iraq.

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