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From the news

*       Spanish companies discuss cooperation with Iraq (Arabic News)
*       Security Council meets about Iraq plans (Associated Press)
*       US hopes for oil deals in Iraq (Associated News)
*       US warplanes bomb Iraq (Associated Press)
*       Military "summer camps" in Iraq (Associated Press)
*       Iraq lifts ban on owning currency (Associated Press)
*       Global Intelligence Update: Iraq Tests Russian and Chinese Resolve
*       Annan speaks about UNSCOM spying for Washington (Deutsche Welle,
English Service News)

[Apologies for the gap in CASI news updates over the last two weeks, this
due to illness, but I'm back on the job - Harriet]

Spanish companies discuss cooperation with Iraq
Arabic News, Iraq, Economics, 6/30/99

A Spanish official said his country is ready to cooperate with Iraq and
carry out joint transactions to meet the needs of the Iraqi commercial,
agricultural and industrial sectors. Gil Khozeh, the chairman of the Spanish
Flodex group, said during his visit to Iraq that Iraq had large financial
losses due to the continuation of economic sanctions, which negatively
reflect on the Spanish economy because Iraq had formed an important market
for Spanish goods and cargo. Khozeh urged the governments and international
humanitarian organizations to uplift the sanctions, adding that Iraq has
great economic potentials.

Sec. Council Meets About Iraq Plans 
By Edith M. Ledere, Associated Press Writer, Monday, June 28, 1999; 7:34
p.m. EDT 

UNITED NATIONS (AP) -- The Security Council held its first discussion on
three rival proposals to restart relations with Iraq Monday, still deeply
divided more than six months after U.N. inspectors pulled out of Baghdad.
Despite weeks of behind-the-scenes negotiations, the five veto-wielding
permanent members of the council remain split in two camps with no immediate
prospect of bridging their differences.

All 15 council members agree on the need to resume weapons monitoring and to
suspend at least some U.N. sanctions in an effort to improve living
conditions for the 22 million Iraqis who have lived under sanctions since
Iraq invaded Kuwait in 1990. But the five permanent members remain divided
on key issues -- when and how to suspend sanctions and what kind of
financial controls to impose on Iraq after sanctions are suspended.

France, Russia and China, Iraq's closest allies on the council, want to
suspend all sanctions if Iraq cooperates with a new commission that would
monitor its banned weapons programs. Britain and the United States would
suspend only the oil embargo if Iraq answers key remaining questions about
its weapons programs -- a proposal already rejected by Iraq. U.N. inspectors
left Iraq in mid-December just before the United States and Britain launched
airstrikes on Baghdad because of its failure to cooperate with the
inspectors. Baghdad has barred inspectors from the U.N. Special Commission
from returning.

Iraq's Deputy Prime Minister Tariq Aziz rejected the British-Dutch draft in
an interview carried Monday by the Qatari al-Jazeera satellite channel. He
was quoted as saying it imposed restrictions which aren't in existing
council resolutions and paved the way ``for a new aggression on Iraq.''
Before Monday's meeting, Russia's U.N. Ambassador Sergei Lavrov said he
didn't expect much -- and he left without commenting further. ``I don't
think the issue is ready for discussion,'' he said.

Britain's U.N. Ambassador Jeremy Greenstock said there was ``clear support''
for the British-Dutch draft. For the British and Americans, Iraqi compliance
with key disarmament demands is essential. 
Council members agreed to continue the talks early next month. 

U.S. Hopes for Oil Deals in Iraq 
By Leon Barkho, Associated Press Writer, Monday, June 28, 1999; 3:10 p.m.

BAGHDAD, Iraq (AP) -- American and British oil giants are among many Western
companies looking into oil development deals in Iraq now that the U.N.
Security Council is indicating a willingness to suspend its oil embargo, Oil
Ministry officials said Monday. But these companies haven't a chance at the
best deals, Iraqi officials say, refusing to identify them. Agreements to
explore the most abundant fields are in the works or completed with
companies from France, Russia and China -- key Security Council nations Iraq
considers friendly.

The Security Council has three rival proposals on the table that attempt to
resume U.N. monitoring of Iraqi weapons programs. All involve suspending the
9-year-old oil embargo on Iraq as an incentive to secure Baghdad's
cooperation.  There has been no arms monitoring for more than six months.
The U.N. inspectors left Iraq ahead of December U.S.-British airstrikes,
which were meant to punish Baghdad for an alleged lack of cooperation. Iraq
has refused to let the inspectors return until sanctions are lifted.

The ``crown jewels'' of Iraq's untapped fields either are in the hands of
``our friends or are about to be given to them,'' said Abdulillah
al-Tikriti, head of the ministry's economics department. Al-Tikriti was
referring to Al-Majnoon, Nahr Umar, West Qurna and Halfaya fields in
southern Iraq, which have reserves estimated at 50 billion barrels and a
projected production capacity of more than 2.1 million barrels a day.
Shamkhi Huwait, a consultant at the ministry, said deals on all four have
been struck -- or are near completion -- with companies from Russia, France
and China as a reward for the three nations' efforts to get U.N. trade
sanctions on Iraq lifted.

Russia, France and China are three of the council's permanent, veto-wielding
members. They generally have held closer positions to Iraq than the other
two permanent members: Britain and the United States. 
The deals, known in the industry as Development and Production Sharing
Agreements or DPSAs, reportedly are extremely lucrative. The Iraqis have not
made the details public yet.

Russia's Lukoil is tied to West Qurna, and France's Elf Aquitaine and Total
are ``just waiting for the right moment'' to sign their deals for Al-Majnoon
and Nahr Umar, Al-Tikriti said. The Chinese National Petroleum Company has
struck a deal to develop al-Ahdab, where reserves are estimated at a billion
barrels, and is in talks on Halfaya, according to Huwait. Iraq is not
willing to grant DPSAs to companies from countries other than France, Russia
and China. Those visiting Baghdad lately -- including U.S., British,
Italian, Dutch, Australian, Canadian and Brazilian companies -- have been
told to present offers for buy-back deals or other contracts believed to be
much less profitable than DPSAs.

Baghdad diplomats, however, said Italy's Agip was in talks on the nearly
three-billion-barrel Nasiriya oil field. Australia's Broken Hill Proprietary
was competing with CNPC on Halfaya and Brazil's Petrobras, which discovered
Iraq's largest oil field of Al-Majnoon in 1975, was testing the waters. 
Canada's Ranger, they said, was interested to obtain an exploration block in
Iraq's Western Desert. 
But these Western firms do not fall within Iraq's category of ``friendly
countries.'' Therefore, Huwait said, they stand little chance against
companies from India, Malaysia, Vietnam, Algeria, Jordan and Indonesia --
nations Baghdad has pledged to grant preferential treatment for political
support during the years of sanctions.

U.S. Warplanes Bomb Iraq 
Monday, June 28, 1999; 2:25 p.m. EDT 

ANKARA, Turkey (AP) -- U.S. fighter planes bombed a military command center
in northern Iraq on Monday after being fired on by Iraqi forces while
patrolling the northern no-fly zone, the U.S. military said. The attack was
the 56th time U.S. planes struck at Iraqi defense sites since mid-December,
when Iraq began challenging allied planes in the no-fly zone, said Capt.
Manning Brown, a spokesman for Incirlik air base in southern Turkey.

The Air Force F-16s and F-15s dropped precision-guided bombs at a military
command and control site southwest of Mosul, a city 250 miles north of
Baghdad, the U.S. European Command said. The attack came after the warplanes
were fired on by anti-aircraft artillery, the European Command said. All
U.S. planes left the area safely. Damage to the Iraqi site was being
assessed, the U.S. military said. The Iraqi army confirmed the attack, and
reported no damage or casualties.

U.S. and British warplanes based at Incirlik, in southern Turkey, have been
patrolling the northern no-fly zone since the 1991 Gulf War to protect Iraqi
Kurds against Iraqi forces. Another no-fly zone was set up in southern Iraq
to protect Shiite Muslims. Baghdad does not recognize the no-fly zones. 

Saddam Sends Boys to Military Camps 
By Waiel Faleh, Associated Press Writer, Monday, June 28, 1999; 3:06 a.m.

BAGHDAD, Iraq (AP) -- With patriotic music blaring in the background, Iraqi
boys nationwide said goodbye to their parents and boarded buses for summer
military camps where they'll learn to defend their country. An estimated
60,000 boys, ages 12 to 17, were joining up, many of them excited to be
going off for three weeks of light-weapons training, physical conditioning
and lectures on religion, politics, culture and society.

The voluntary summer training, begun in 1994, is meant to keep boys off the
streets during the school holiday and to acquaint them with war conditions.
``I insisted my parents let me go because all my friends are going, too,''
said Mohammed Rafid, 13, as he headed to the bus departing from the ruling
Baath Party headquarters in Baghdad on Sunday. Others left for local camps
from party offices throughout Iraq.

President Saddam Hussein has urged Iraqis to start military training and be
ready to combat the American ``enemy,'' the official media reported. ``We
have no other option but to train the men and to continue training,'' Saddam
was quoted by the ruling Baath Party newspaper Al-Thawra as saying earlier
this month.

The United States has vowed to help bring about a change in the Iraqi
government. Last year, the U.S. Congress endorsed a plan to provide $95
million to Iraqi opposition groups and $2 million for anti-Saddam radio
broadcasts into Iraq.

Al-Thawra quoted Saddam as saying the training goes beyond preparing boys
for combat, giving them ``the impetus to face difficulties.'' The training
takes place in military camps, some set up specifically for the boys, called
Saddam's Youth. The boys are considered future prospects for Saddam's
Fedayeen, who are trained to face riots and enemies from abroad. The boys
get light weapons training with AK-47s, pistols and hand grenades. 

Iraq Lifts Ban on Owning Currency 
By Waiel Faleh, Associated Press Writer, Sunday, June 27, 1999; 3:54 p.m.

BAGHDAD, Iraq (AP) -- Iraq has lifted a ban on owning and exchanging hard
currency, a move intended to halt the deterioration of its national
currency, Al-Jumhuriya daily reported Sunday. 
The Revolutionary Command Council's decree, announced Saturday, allows
Iraqis and foreigners to use hard currency only for dealings within the
country. The decree, which takes effect immediately, also allows
nonresidents with foreign-currency accounts to take all their money and
interest out of the country when they close their accounts.

It was previously against the law for both Iraqis and foreigners to own and
trade foreign money except when dealing through the Central Bank of Iraq.
The ban was imposed to protect the country's hard currency reserve, which
has dwindled due to sanctions imposed on Iraq after its 1990 invasion of

The government was initially against revoking the ban, but announced its
acceptance in early June after the Iraqi currency dropped to 2,250 dinars to
the dollar. In response, the government allowed its two banks, Al-Rafidain
and Al-Rashid, to sell the dollar at 2,000 dinars, and the price has
remained constant for the last three weeks. The Central Bank's official rate
still stands at the pre-Gulf War level of $3.20 to the dinar, and hard
currency revenues collected by government offices must be turned to the
Central Bank for depositing at the official rate, which has remained
constant for 30 years. 

Global Intelligence Update
June 23, 1999

Iraq Tests Russian and Chinese Resolve

Now that Russia and China have demonstrated their willingness to 
oppose the U.S. and NATO in Kosovo, Baghdad has decided to try to 
force their hand in Iraq.  The Iraqi oil minister has threatened 
that if Russian and Chinese oil companies do not begin work on 
developing Iraqi oil fields -- a move that would violate UN 
sanctions against Iraq -- they will have their contracts revoked. 
While Iraq may be assuming too much with regard to Russia and 
China's willingness to deepen their rift with the West at just 
this moment, it is only the first of many countries that will 
begin to position themselves between the U.S. and NATO on one 
hand and Russia and China on the other in the coming months.

According the Iraqi government run newspaper Al-Iqtisadi and 
Iraqi legislators, Iraqi Oil Minister Lt. Gen. Amer Mohammed 
Rashid has given Russian and Chinese companies "a few weeks" to 
begin work on developing Iraqi oil fields, despite the current UN 
embargo, or have their contracts terminated.  Rashid reportedly 
issued the ultimatum when he was questioned in parliament about 
the companies' failure to meet their contract obligations.   

In 1997, Baghdad signed a contract with a consortium of Russian 
oil companies led by Lukoil for the development of the Qurna oil 
field in southern Iraq, and another with China National Petroleum 
Company for the development of the Ahdad field, also in southern 
Iraq.  Additionally, a Russian delegation is scheduled to visit 
Baghdad this month to discuss a number of other contracts signed 
before the imposition of UN sanctions.  Iraq has also signed 
letters of intent with the French oil companies Total and Elf, 
though Rashid refrained from making similar threats toward them.

UN sanctions, in place since Iraq's 1990 invasion of Kuwait, ban 
investment in Iraq.  And while both Lukoil and China National 
Petroleum Company initially agreed to carry out their contracts 
regardless of the embargo, they have since decided to abide by 
the sanctions until Russia and China succeed in convincing the UN 
Security Council to lift the embargo.  However, it is not simply 
a matter of independent companies trying to avoid overstepping 
their respective governments' foreign policies.  Both Lukoil and 
China National Petroleum Company -- with controlling interest 
held by their respective governments -- are willing agents of 
their governments' foreign policy.  In April of this year, Russia 
used Lukoil to pressure Lithuania, which has been moving to free 
itself from dependence on Russia for energy.  Rashid's comments, 
therefore, were not directed at Russian and Chinese businessmen, 
but at the Russian and Chinese governments -- ostensibly Iraq's 
supporters in the UN Security Council but apparently, in 
Baghdad's view, insufficiently enthusiastic backers.

The UN Security Council met June 21 to discuss the embargo 
against Iraq, though it made little progress on the issue.  
Russia and China have submitted a draft proposal, calling for all 
sanctions against Iraq to be lifted if Iraq submits to a new arms 
monitoring commission.  France, which initially backed the 
Russian-Chinese proposal, has submitted a variation on the plan.  
Talks are deadlocked, however, as the U.S. and Britain support a 
British-Dutch draft proposal that would lift the embargo on Iraqi 
oil exports provided Iraq submits to stringent disarmament and 
revenue control measures.  Iraqi Foreign Minister Mohammed Saeed 
al-Sahhaf has rejected the British-Dutch plan, charging that it 
would effectively render Iraq a colony.

With little hope of a resolution of the Security Council's 
deadlock, Iraq has decided to test the anti-Western mettle 
demonstrated by Russia and China during the Kosovo crisis.  
Baghdad is gambling that Moscow and Beijing, having established a 
precedent by opposing U.S. and NATO action against Yugoslavia, 
are now prepared to deepen their rift with the West by opposing 
the U.S. led campaign against Iraq.  That is a big gamble.  While 
Russia and China are unequivocal in their opposition to U.S. 
global hegemony, they are not set in their strategy or timetable 
for opposing the U.S.  They will get plenty of diplomatic miles 
out of the confrontation over Kosovo, as they extract concessions 
in return for "moderating" their policies.  To force the issue in 
Iraq actually limits the options available to Moscow and Beijing, 
as it solidifies their diametrical opposition to the U.S., 
perhaps earlier than they are able to fully perform this role.

Baghdad may have assumed too much in attempting to force the 
Russian and Chinese hands, but it still has options.  First, Iraq 
is unlikely to completely lose the backing of either country, but 
particularly Russia, by presenting this ultimatum.  Moscow needs 
a portal to the Middle East, and with Iran competing with Russia 
for influence in Central Asia and the Caucasus, Iraq is a prime 
candidate.  Furthermore, Iraq still has European countries -- and 
their oil companies -- eager to do business.  France may still be 
able to cut a worthwhile deal with the UN.

Still, Baghdad's attempt to exploit the post-Kosovo political 
climate is interesting, and likely will not be the last such 
attempt.  Russia and China, who have talked about opposing the 
U.S. for the last few years, now appear nearly ready to actually 
do something about it.  Within this evolving dynamic, a host of 
peripheral countries will attempt to position themselves, build 
alliances, and extract concessions.  Let the wheeling and dealing 


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Deutsche Welle
   English Service News
   June 27th, 1999, 16:00 UTC

   U.N. Secretary-General Kofi Annan said on Sunday there was evidence
   that UN weapons inspectors in Iraq were involved in spying for
   Washington. He said that Washington never denied this. Mr. Annan
   said that this not only undermined the UNSCOM programme in Iraq, but
   it could also undermine future disarmament regimes.Earlier this
   year, Scott Ritter, a former U.N. inspector,accused Washington of
   using the U.N. Special Commission (UNSCOM), in charge of Iraqi
   disarmament, to obtain information on how Iraqi President Saddam
   Hussein could be removed rather than where he might have hidden
   weapons of mass destruction.


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