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News for 10 July '00 to 16 July '00

News for 10 July '00 to 16 July '00

Sources: AP, BBC, Newsday, Reuters, Telegraph, United Nations, Washington
Post, Washington Times

 Ben Ali Calls for End to Iraq Embargo (Washington Times)
 Iraq Orders Russian Anti-Aircraft Missiles (Telegraph)
 Iran, Iraq Team Up in Smuggling (AP)
 Jordan and Iraq Seek Better Ties (Reuters)
 U.N. Suspends Work of Iraq Staff (AP)
 Latest Figures Released on UN Oil-for-Food Programme for Iraq (United
 UN Body on Iraq Trains Inspectors -- Just in Case (Reuters)
 Another Dry Year Means Bad Harvest for Iraq (Reuters)
 Iraq Tightens Grip on Upstream Assets (Reuters)
 6 Americans Sample Iraqi Lifestyle (AP)

Only links provided for the following reports:

 Iraq Says Exports Returning to Normal Level (Reuters)
 A Generation of Iraq's Children Growing Up Embittered (Newsday)
 U.N. Embargo Falls Prey to Iraqi Smugglers (Newsday)
 Iraqi Rebel: Where Are the Arms? (Washington Post)
 Kurdish Groups Clash in Northern Iraq (BBC)
 US-Backed Iraqi Group Forms New Secretariat (AP)

 Ben Ali Calls for End to Iraq Embargo, Washington Times, 11 July '00

By Arnaud de Borchgrave

HAMMAMET, Tunisia - President Zine El Abidine Ben Ali said in an interview
that all Arab nations except one now favor lifting economic sanctions
against Iraq.

The exception is Kuwait, where Iraqi forces were driven out by a U.S.-led
29-nation coalition in 1991.

In an exclusive interview conducted at his weekend retreat near Tunis, Mr.
Ben Ali said: "Embargoes do not work. They are counterproductive and simply
perpetuate dictators in power. . . . You are hurting the people, not the
regime, and Saddam Hussein can keep blaming their inhuman plight on the

President Ben Ali said "every Iraqi family has lost someone to war or
deprivation as a result of the embargo. Iraq used to be the most advanced
country in the Arab world. Now the country is finished in its present state.
And Saddam continues to dream of revenge. This has been going on for 10
years. So prudence and foresight would seem to dictate an end to sanctions
that the regime circumvents anyway."

Mr. Ben Ali was preparing for his state visit to the United States,
beginning July 13, when he received a 20-minute call from President Clinton
asking him to postpone his trip until September because he wanted to give
the Camp David talks between Yasser Arafat and Prime Minister Ehud Barak "my
undivided attention."

The Tunisian president, in a 90-minute interview conducted in French, said
Mr. Arafat had called to say he was not going to Camp David.

"He said on the phone that first Israel had to implement the accords already
reached," Mr. Ben Ali explained. "I said to Arafat, 'never say never.' If
something breaks down, it must not be perceived as Arafat's fault."

Mr. Arafat is now planning to join Mr. Clinton and Israeli Prime Minister
Ehud Barak for a summit meeting starting today at Camp David.

Mr. Ben Ali went on to say "the two sides are condemned to live together.
Israel will have to accept a Palestinian administrative capital in East
Jerusalem. As for the return of Palestinian refugees, clearly the principle
has to be accepted of open borders and freedom of movement.

"The two sides must raise their sights and look at their futures in the
context of the ever-faster pace of technological change. And here Israel's
tremendous advances can play the role of locomotive for the region."

He warned that if some Israelis believe they might be better off waiting for
Mr. Arafat's political demise, "that would be playing with fire . . . this
new Palestinian leader could well be a less moderate figure."

Mr. Ben Ali said nations trying to find counterweights to American power
should not waste their resources, as "that kind of balance is dead. There is
no way Russia can replace the U.S.S.R. as a global power. India and China .
. . are a long way from being part of any global balance of power. The EU
[European Union] is probably the closest, but it remains to be seen whether
the Europeans are prepared to spend what it takes to be a global power
capable of assuming the role of an emergency response number for the whole

In Mr. Ben Ali's view, people should not worry whether globalization and
Americanization are one and the same.

"We cannot escape it," he said. "Don't fight it, but use it to leverage
yourself into the global economy. Globalization is more than McDonald's,
baseball caps and Hollywood movies. It is a constant spur to do more - and
better. We have to prepare for the New World Order. Our Tunisian primary
schools are on the Internet. . . . I myself spend three hours a night on the
Internet. I download documents from universities, major libraries in Europe
and America and send them to my ministers, asking whether they're on to this
or that. When I am looking for someone worthy for a high-ranking government
job, I check my own database for the best qualified."

Mr. Ben Ali believes the widening gap between rich and poor and between
computer literate and computer illiterate is "the overarching problem that
dominates all others - from ethnic conflict to fundamentalist extremism."

America's impressive technological lead makes it "the locomotive for the
rest of the world," he said. Nevertheless, he said, "it cannot be a
winner-take-all kind of world" because this would be a recipe for the
resurrection of recently buried totalitarian dogma."

He reiterated his call for a World Solidarity Fund aimed at bridging the
still-widening gap "that has become a universal phenomenon that affects
primarily developing nations. The kind of solidarity, both between nations
and peoples, is a humanitarian duty and obligation. Failure to tackle global
poverty with a universal plan of action can only lead to more wars."

Mr. Ben Ali returned several times to the menace of Islamist extremists that
he said can only be circumscribed with social and economic reforms, "which
is what we have done with our totally open society. Youth everywhere is
demanding transparency. The Internet is eroding all taboos."

 Latest Figures Released on UN Oil-for-Food Programme for Iraq, United
Nations, 11 July '00

During the period 1 to 7 July Iraq exported 4.8 million barrels of oil for
revenue estimated around $116 million. The revenue generated from the
beginning of Phase VIII on 9 June is now estimated around $1.094 billion.
Since the inception of the programme on 10 December 1996, Iraq has exported
more than 1.875 billion barrels with a value of more than $30 billion.

Last week the Security Council's 661 Committee approved 22 new contracts for
the sale of Iraqi oil under phase VIII. This brings the total of approved
contracts to 41 with a volume of nearly 244 million barrels (149.121m Basrah
Light and 94.566m Kirkuk).

Since the accelerated procedures for the approval of contracts for
humanitarian supplies for Iraq came into force on 1 March 2000, the Office
of the Iraq Programme (OIP) has notified the 661 Committee of 521
applications, worth $1.062 billion. These contracts are for items on the
lists approved by the Committee in the food, health, education and
agriculture sectors.

Over the past week OIP has received seven contracts deemed to include
possible dual-use items affected by the provisions of resolution 1051
(1996). The total of applications under this category in phases IV through
VII is now 148.

The 661 Committee has approved $6.978 billion dollars worth of contracts for
humanitarian supplies in phases IV to VII and put $1.225 billion on hold for
the same period. In phases IV to VII, OIP has received a total of 2,772
contracts worth $1.550 billion for the supply of oil industry spare parts
and equipment. Of these contracts, the 661 Committee has approved 1,865
worth $960.022 million and put 486, worth $276.323 million, on hold. The
total value of contracts on hold in all sectors is now around $1.502

Humanitarian supplies and equipment for the oil industry continued to arrive
normally during this period through the three land border points and at the
Iraqi port of Umm Qasr. Arrivals included: 110,410 tonnes of wheat, 13,424
tonnes of rice, 1,109 tonnes of tea, 13,474 tonnes of cooking oil, 1,437
tonnes of pulses, more than 1,000 tonnes of baby food, plus a range of
medicines and pharmaceutical products. Other arrivals included tires,
electrical equipment, street lighting poles, spare parts for engines,
tractors and a mobile x-ray unit.

 Another Dry Year Means Bad Harvest for Iraq, Reuters, 13 July '00

Haditha, Iraq -- The highway from Baghdad to the farming land of Haditha,
northwest of the capital, bears testimony to the destruction of Iraq's
agricultural sector.

For miles on end, both sides of the road have turned into junkyards, with
rusty tractors, trucks and farm equipment rotting away in the swamps.
Farmers have abandoned their farms in this town and the surrounding
district, once known for its high crop yield. For two consecutive years, the
area has witnessed very dry weather with almost no rain at all.

Dlaiyan Ibrahim, like many farmers in Haditha, used to plant wheat each
winter. Now he has started trading in sheep to feed his family of eight.
Each week he takes the sheep 260 km (160 miles) to Baghdad. "There has been
no rain this year and the last. The land is so dry that it is impossible to
plant anything," Dlaiyan said.

"I started buying sheep from other farmers and I take them to Baghdad to
sell them in order to make a living for my family," he added. One
consequence of the drought, that has depleted fodder supplies and grazing
land, is that Iraqi farmers are selling cattle and sheep in large numbers,
bringing down the prices of beef and mutton.

A kilo of mutton has dropped to 2,000 dinars (about $1) from nearly 3,000
dinars three months ago. Beef is selling at 2,250 dinars a kilo against
3,250 dinars. Dlaiyan said that he now sells a sheep for 26,000 dinars, just
over half of what it would have fetched in April.

A group of farmers from the northern province of Mosul, Iraq's main cereal
production area, appealed to the government earlier this month to lend them
money to pay accumulated loans they took out from local banks earlier this
year to finance their wheat and barley planting. The poor harvest means they
cannot pay these loans back.

Their appeal, published by the influential newspaper Babel, said that they
would have to sell their houses in order to pay back the banks if the
government did not help them. Iraqi and UN officials predict Iraq will
suffer an even worse drought this year than last. They say the situation is
exacerbated by international sanctions imposed after Baghdad's 1990 invasion
of Kuwait.

They said the drought would have a devastating impact on crops and animal
production. "Iraq has been hit by the most severe drought ever recorded in
the past 100 years," said Amir Khalil, the UN Food and Agriculture
Organisation (FAO) representative in Iraq.

Khalil said the drought was expected to destroy 75 per cent of Iraq's
harvest this year. Statistics on crop production are a closely guarded
secret in Iraq. No forecast is available for this year's harvest but it is
expected to be very low as there was little rain during the winter.

A recent report by the FAO said Iraqi wheat production had decreased to 1.06
million tonnes in 1997 from 1.24 million tonnes in 1995. Iraq needs more
than three million tonnes of wheat to feed its population of 23 million each
year. It imports the rest of its wheat needs under an oil-for-food deal with
the United Nations.

Khalil said drought this year had even affected the water levels in the
country's two twin rivers, the Tigris and Euphrates. "The total water flow
into all Iraqi rivers recorded during 1998-99 and 1999-2000 was as low as 40
per cent of the normal annual average before the drought," he said.

The Iraqi government says the water situation has been exacerbated by
upstream dams built by neighbouring Turkey, which have reduced the flow of
the two rivers. Agriculture Ministry Undersecretary Basil Dalali said last
month that lack of equipment and fertilisers would also contribute to a poor
harvest this year.

Dalali accused a UN sanctions committee of delaying contracts to buy 3,700
water-spraying machines that his country sought to obtain under the
oil-for-food deal, under which the world body allows Iraq to sell oil for
humanitarian aid such as food and medicine. The FAO says the committee has
released $143 million worth of agricultural equipment out of $449 million
allocated by the government for the irrigation sector.

Before the sanctions, Iraq imported 70 per cent of its food needs. Under the
UN embargo it launched a big drive for self-sufficiency, rehabilitating
rural infrastructure, cultivating more land, digging giant canals and
increasing farm prices.

A rationing system under the oil-for-food programme has staved off mass
famine, but provides little more than a half a family's food needs. The
drought has been a further blow to Iraqi livestock already hit by foot and
mouth disease.

Dalali said nearly one million head of livestock hit by foot and mouth
disease had died last year because of a lack of vaccines and fodder. The FAO
says that 60 per cent of Iraq's chicken farms were affected by various
diseases. It says that only 527 poultry farms out of 8,500 are operational
at present.

 UN Body on Iraq Trains Inspectors -- Just in Case, Reuters, 14 July '00

United Nations -- The new UN arms agency on Iraq has started training 44
weapons inspectors from 19 countries who could be sent to Baghdad should the
Iraqi government let them in again, officials said yesterday.

A four-week course began on Tuesday covering lectures on legal,
administrative, political and "cultural sensitivity" issues as well as
safety procedures if the inspectors encounter dangerous weapons, Ewen
Buchanan, a spokesman for the agency, said. After that, the potential
inspectors break into small groups to study Iraq's banned weapons -
long-range ballistic missiles, chemical and biological arms, depending on
their expertise, Buchanan said.

About half the group will be employed by the new UN arms body, the UN
Monitoring, Verification and Inspection Commission (UNMOVIC), which replaced
the UN Special Commission (UNSCOM) whose inspectors left Iraq in December
1998 on the eve of a U.S.-British bombing campaign.

Buchanan said the remainder of the new inspectors would be on call should
Iraq allow them into the country again. Hans Blix, executive chairman of
UNMOVIC and the former director of the International Atomic Energy Agency,
has said a small team would be ready to go to Iraq by the end of August.

"That is Blix's job, to be ready, just in case the political circumstances
change," Buchanan said. "It is for the council to see the resolution is
enacted." Those instructing the new inspectors include Rolf Ekeus, the first
UNSCOM chairman and now Sweden's ambassador to Washington, American Charles
Duelfer, who was deputy director under Ekeus' successor, Australian Richard

In charge of the training is Nikita Smidovich, a Russian ballistic missile
expert, who served in UNSCOM during its most intrusive inspections. Russia,
Iraq's biggest supporter on the council, has made no secret it wants Blix to
dismiss him, but so far has had no success.

 Iraq Tightens Grip on Upstream Assets, Reuters, 14 July '00

London -- Iraq's new model for upstream development deals allows Baghdad a
tighter grip on its prized oil assets without scaring off potential foreign
investors queueing for the time when United Nations sanctions are lifted.

A development production contract (DPC), more akin to the buy-back terms
offered in neighbouring Iran, will replace Iraq's former production
development contract, which in all but name was a generous production
sharing contract.

"We've described the new model to various companies and they say they can
live with it," a senior Iraqi oil official said. "Iraq already has a
developed and sophisticated oil sector. We may lack cutting-edge technology
because of sanctions, but otherwise we have the manpower to operate

The new DPC, unveiled last Friday, cuts the foreign company's life span to
12 years versus 23 years in Iraq's previous development contract. Its scope
has an explicit commitment to achieving target production within a set

"Entrusting the difficult part - the ground-breaking - with the
International Oil Co (IOC) is better for now," said an Iraqi oil industry
official. "The first five-six years of the project are very important, and
the IOCs are better-equipped to take over this aspect of the development."
Iraq already has boosted its production to just over three million barrels
per day (bpd), despite nearly a decade of UN trade sanctions which have
strained its oil sector.

Companies will have to wait for the United Nations to lift the embargo
before they can start work when Baghdad will need foreign assistance to
achieve its ambitious output goal of six million bpd within 10 years. Before
the new DPC was conceived, production sharing deals for 11 of Iraq's most
coveted oilfields had been the centrepiece of an ambitious $20 billion
upstream development programme.

Iraqi industry officials concede that major oil companies would prefer
conventional production sharing deals which would let them into the country
for the long haul. But on that front, Western oil executives may be fighting
a losing battle. "Buy-backs are fashionable these days," admits one. "But
companies want the long-term access to reserves and flexibility in
operations offered by a production sharing contract."

While Iraq's shorter contract terms may be a bit of a deterrent for some
foreign investors, they are higher than the five to seven year period now on
offer in Iran. "By comparison, Iraq's terms are not so bad because they are
in excess of 10 years," said a Western industry source.

And the new model might draw interest for Iraq's smaller oilfields which are
not expected to cost much more than a couple million dollars to develop.
"Iraq will get some companies to bite, especially for its partly-developed
oilfield projects," a western oil executive said.

On larger fields which require huge investments, oil companies will want to
book the reserves. "There are certain drivers that western companies require
and booking reserves is one of them," an oil executive said. "Otherwise they
will be accused of wasting corporate money." But an Iraqi oil official said
the new model does not allow companies to do that. "We have never discussed
this," he said.

Since Baghdad began negotiating upstream oil contracts eight years ago,
Iraq's neighbours have become more assertive in courting foreign investment
with terms which were more restrictive than Iraq's former development
contract. Mindful of this, Iraqi oil officials have been internally
discussing the merits of buy-backs versus production-sharing deals over the
past year. The end result is the new DPC.

But Baghdad's new contract terms are not set in stone. "We are willing to be
flexible," an Iraqi negotiator said. "We could yet change some of the
terms." Iraq has already signed production sharing contracts with companies
from Russia and China. But Baghdad has grown frustrated with the companies'
failure to start work on the ground. The limitations of the new DPC could
also apply to companies which have already negotiated deals under the former
development terms - such as TotalFina Elf, Repsol and ENI.

TotalFinaElf enjoys exclusive negotiating rights for the huge Majnoon and
Bin Umar fields and has been close to signing deals for some time. Repsol
and Agip are angling for Nassiryah. A Russian-led Lukoil consortium has
already signed up for West Qurna, while China's CNPC-Norinco has inked Al
Ahdab. Their deals will remain under the previous production sharing terms.

 Iran, Iraq Team Up in Smuggling, AP, 15 July '00

Iranian Hard-Liners Profiting From Oil Sale

By George Gedda

WASHINGTON -- Iraq is using an obscure Iranian island in the Persian Gulf as
a transfer point in an operation that has substantially increased revenues
from oil smuggling in recent months, U.S. officials say.

The officials, speaking on condition of anonymity, say the Iraqis have
earned between $25 million and $40 million a month, perhaps twice the amount
the illicit transactions yielded two years ago.

Meanwhile, Iran's Revolutionary Guards, with minimal sacrifice, are netting
an estimated $20 million a month for their role in allowing the vessels to
pass through Iranian waters.

The Iranians don't have to do anything but ensure safe passage," one
official said.

The recent increases in the price of oil make the contraband activity all
the more profitable.

An average of about seven small oil-laden vessels a day depart Iraq and
rendezvous with larger vessels off tiny Qais Island, a tourist center just
off the Iranian mainland in the Persian Gulf, the officials said.

Once the transfer of cargo takes place, these vessels can head for almost
any destination in need of oil.

Evading U.N. Sanctions

The activity is illegal under U.N. resolutions. Sanctions imposed on Iraq in
1990 after its invasion of Kuwait remain in place.

Iraqi commercial activity is largely banned except for an "oil-for-food"
program that is designed to meet the humanitarian needs of the Iraqi people.
Oil exports under the program are expected to reach $18 billion this year.

A U.N. interdiction force has operated in the Persian Gulf for some time to
enforce the embargo. But often, there is little that it can do because it
can operate only in the relatively small area of the Persian Gulf in
international waters. Vessels carrying Iraqi oil can elude the force simply
by staying within Iran's 12-mile territorial limit.

Strange Cooperation

The Iran-Iraq collusion adds up to a mutually beneficial enterprise for two
countries which fought a bloody war during the 1980's and remain extremely
wary of one another.

Iraq allows a deadly Iranian opposition group use of Iraqi territory for
training and other activities directed against the Islamic government in
Tehran. Indeed, a base constructed by Iraq for these rebels can accommodate
up to 5,000 militants.

There is no reason Iraq cannot use its windfall from smuggled oil to rebuild
its weapons arsenal, perhaps for use some day against Iran, the officials
say. But Iran nonetheless has been a willing partner in the forbidden

At times, the cooperation between the two neighbors breaks down for reasons
which are not entirely clear. For example, no smuggling operations were
detected for a lengthy period this past spring, according to the officials.

At the time, Iran's Islamic Revolution Guard Corps detained a tanker for
allegedly smuggling Iraqi oil. An Iranian Foreign Ministry spokesman said,
"Iran's policy is to counter oil smuggling and to observe United Nations
sanctions against Iraq.0

Stepping Up Sanctions

Despite obstacles, the U.N. force has been stepping up enforcement of the

In all of 1999, oil from 17 ships was confiscated but that figure was
exceeded during the first few months of this year, according to officials.
They said the increase reflected the sharp rise in smuggling activities this
year. The confiscated oil is sold partly to offset the costs of maintaining
the anti-smuggling problem.

 Jordan and Iraq Seek Better Ties, Reuters, 15 July '00

AMMAN -- Jordan"s King Abdullah met visiting Iraqi Vice President Taha
Yassin Ramadan on Saturday for talks aimed at improving ties after years of
gradual drift, officials said.

The monarch, who has kept his distance from Iraq"s ruling Baath leadership
since he assumed the throne early in 1999, conveyed to Ramadan rare
greetings to Iraqi President Saddam Hussein, the state news agency Petra

"His Majesty conveyed to his excellency Iraqi President Saddam Hussein his
greetings and his wishes of prosperity for the Iraqi people and the end of
their suffering," it said.

Officials said that during the talks -- which focused on expanding trade and
business ties -- the monarch also expressed his country"s hope for an end to
U.N. sanctions on Iraq, imposed after Iraq invaded Kuwait. Jordan,
sympathetic to Iraq in the 1990-91 Gulf Crisis, turned against Baghdad in
1995 and gave shelter to senior Iraqi defectors.

Earlier on Saturday, Prime Minister Ali Abu al-Ragheb met Ramadan, the first
high-level Jordanian meeting with a senior Iraqi official in over a year.

The newly appointed Jordanian government recently put out feelers to
Baghdad, hinting that it sought better ties. Officials pointed to strong
personal relations with Iraq"s leadership, cultivated during Ragheb"s tenure
as a long serving energy and industry minister negotiating oil supply
accords linked to barter exports of Jordanian goods.

Diplomats said Jordan, struggling with modest growth rates, was under
economic pressure to build good ties with Iraq, even though it was firmly
entrenched in the Western camp.

Baghdad remains Jordan"s main energy supplier, under which it delivers over
$600 million worth of crude and products to the kingdom under undisclosed
concessionary terms that ease the burden on the kingdom"s deficit-ridden

Officials were concerned that Baghdad might discontinue the arrangement, due
for renewal in less than five months, or at least drop the terms that made
the oil deal lucrative.

Diplomats also said Iraq has been deliberately sidelining Jordanian firms
under an oil-for-food deal between Iraq and the United Nations, further
hurting already shrinking exports.

Jordanian officials have expressed worry about an apparent decision since
last year by Iraq to stop using Jordan as a exit route for top officials on
official trips abroad. Iraqi ministers now use Syria, bypassing Jordan as a

The execution last June of a Jordanian on charges of taking part in a plot
against the Iraqi regime also upset officials who feared it might be a
prelude to a campaign against the kingdom.

Previously Iraq had been angry with Jordan over its detention last May of an
Italian pilot who flew a light plane to Baghdad in defiance of a
10-year-long U.N. ban on flights to Iraq.

Pro-Iraqi deputies have called on the government to resume direct flights on
the Amman-Baghdad route.

 6 Americans Sample Iraqi Lifestyle, AP, 15 July '00


BAGHDAD -- Six American opponents of U.N. sanctions on Iraq set out Saturday
to live in a southern city for two months and experience the hardships
ordinary Iraqis face every day -- food rations, power shutoffs and sewage

Activists from the Chicago-based group, Voices in the Wilderness, picked
al-Jumhoriya district in Basra, 340 miles south of Baghdad. Allied forces
pounded Basra during the 1991 Gulf War that drove Iraqi troops out of
Kuwait. U.S. and British jets still carry out airstrikes on the area during
patrols over southern Iraq.

In Basra, the activists would ''live simply, study Arabic and, as best as we
can, become voices on behalf of people whom we believe are innocent victims
of a pitiless siege enforced by military might,'' Kathy Kelly of Chicago
said Saturday before setting out from Baghdad.

Voices in the Wilderness, which has a branch in London, seeks an end to U.N.
sanctions imposed on Iraq for its 1990 invasion of Kuwait, which led to the
Gulf War.

The sanctions have crippled the Iraqi economy, and health and education
systems and have left residents dependent on U.N. food rations. They also
are blamed for countless deaths of Iraqi citizens, especially the very young
and elderly.

The group was planning to live on the same amount of food rations Iraqis
receive and deal with the power cuts, bad water and damaged sewer system in
the Basra neighborhood. They planned weekly reports detailing their

''We would like for people of the United States and the world to know what
really is going on, otherwise they may remain unaffected by sufferings Iraqi
people endure,'' Kelly said.

Kelly, 47, has visited Iraq 13 times since December 1990, when she was among
hundreds of foreigners to camp out in the Iraqi desert for 10 days in an
attempt to dissuade allied forces from attacking.

In 1996, she established Voices in the Wilderness, which has brought
delegations of U.S. citizens to Iraq to see for themselves how the sanctions
hurt ordinary Iraqi citizens.

While not a humanitarian aid organization, Voices has delivered more than $1
million worth of medicines for Iraqi hospitals and other humanitarian

 Iraq Orders Russian Anti-Aircraft Missiles, Telegraph, 16 July '00

By Con Coughlin

IRAQ has renewed efforts to negotiate a controversial multi-million-pound
arms deal with Russia that would enable it to re-equip its air defence
systems, The Telegraph can reveal.

The move will pose a serious threat to British and American aircraft
enforcing the United Nation's no-fly zone. According to Western defence
experts, the Iraqis earlier this month ordered 150 advanced Russian IGLA
mobile air defence systems which would be capable of destroying Allied

In an initial deal worth an estimated 5 million, they have asked the
Russians to provide launching devices and maintenance kits for the missiles.
They are also exploring setting up their own production line. Defence
experts believe the IGLA deal will be the first of many military agreements
which could be worth hundreds of millions of pounds to the Russians.

It is the second time the Iraqis have attempted to negotiate a military pact
with Moscow since the imposition of wide-ranging UN sanctions after the
invasion of Kuwait. Early last year, the Iraqis negotiated a 100 million
arms package with Yevgeny Primakov, the former Russian prime minister,
shortly after the UN authorised air strikes by Britain and the US in
retaliation for Saddam Hussein's refusal to cooperate with weapons

That deal was abandoned after details were revealed exclusively by The
Telegraph, provoking anger from the US which accused the Russians of a
flagrant breach of the sanctions. Relations between Iraq and the West have
reached stalemate, with little prospect of weapons inspectors returning to

While British and American warplanes regularly patrol the no-fly zones in
northern and southern Iraq, often engaging the Iraqis, the conflict is on
the margins of international diplomacy.

Many Western diplomats believe Iraq is using the lull in hostilities to
re-equip and upgrade its arsenal in anticipation of future escalation. Only
last week the Iraqis were reported to have launched a short-range ballistic
missile, confirming fears that Baghdad has rebuilt many of the factories
destroyed by the Allies.

The latest attempt by Saddam to restore military trade links with Russia -
Iraq's major military supplier prior to the Gulf war - follows a visit by a
high-level team of Iraqi defence experts earlier this month to a
demonstration of Russia's up-graded missiles.

The Iraqis were invited by Rosvooruzheniye, the state-owned company
responsible for military exports, which arranged the test at the Kolomna
Machine-Building Design Bureau, near Moscow.

Assuming the latest deal goes ahead, the Russians will ship the missiles to
Lebanon once an Iraqi deposit reaches a Beirut bank account. The missiles
will then be taken overland to Iraq. The agreement represents a significant
breakthrough for Saddam who has diverted hundreds of millions of pounds to
rebuilding his air defences while claiming at the UN that he cannot afford
basic foods and medicines.

The frequency of visits by senior Iraqi officials to Moscow also suggests
that President Putin is prepared to risk Washington's ire by re-arming an
international pariah.

 U.N. Suspends Work of Iraq Staff, AP, 16 July '00


BAGHDAD -- The United Nations has suspended the work of its international
observers in southern Iraq for security reasons, the U.N. spokesman for the
oil-for-food program in Iraq said Sunday.

The decision, effective Sunday, came less than three weeks after an armed
Iraqi took hostages inside the Food and Agriculture Organization office in
Baghdad, leading to a shootout with Iraqi guards that killed two people and
injured seven.

U.N. spokesman George Somerwill was emphatic, however, that ``there was no
specific incident that triggered this decision.''

``The suspension was decided upon advice from other sources,'' he said
without being any more specific.

Somerwill, who described the suspension as temporary, would not say how long
the international observers would stay out of southern Iraq or how many
people were being pulled from the provinces of Basra, Dhi Qar, Maisan and

The suspension, he said, affects all U.N. international observers in the
four southern provinces. That would include international employees
monitoring food distribution for the oil-for-food program as well as those
affiliated with the Rome-based FAO and other U.N. agencies.

``The (oil-for-food) program will continue unaffected all over the
country,'' Somerwill said, adding that Iraqi employees will continue
monitoring the arrival and quality of items being distributed in the south
under the program.

International staff would continue their work in the central and northern
parts of the country, aided by those who were pulled from the four southern

The oil-for-food program was set up in 1996 as a way to ease the pain the
strict U.N. sanctions aimed at the government were having on Iraqi citizens.
It allows Iraq to use the proceeds from oil sales to buy humanitarian goods,
including food and medicine, under close U.N. scrutiny.

The sanctions, which have crippled the economy and driven millions of Iraqis
into poverty, were imposed after Iraq's 1990 invasion of Kuwait, which led
to the Gulf War. They are not to be removed until U.N. inspectors verify
Iraq is rid of all weapons of mass destruction and the capability to rebuild
its arsenal.

The Iraqi government tightened security around U.N. offices in Baghdad after
the June 28 attack by Fowad Hussein Haydar, 38, who said he was fed up with
the sanctions.

Iraq and the United Nations, meanwhile, could be headed for another flare-up
over a new U.N. weapons inspection team that is to begin work in Iraq in
August after a 11/2-year inspections hiatus.

In an interview with the government's official newspaper, al-Jumhuriya, Vice
President Taha Yassin Ramadan again rejected a December U.N. Security
Council resolution that paved the way for the new inspections regime.

``We totally reject the resolution ... reject negotiating about it and any
correction for the resolution because it is an example of American
intentions to prolong sanctions,'' Ramadan was quoted as saying.

Ramadan did not say whether Iraq would allow members of the new agency into

Mistrust and a lack of cooperation between Iraq and U.N. weapons inspectors
led to the eventual dissolution of the last U.N. inspections regime. In late
1998, the United Nations pulled its inspectors just before four days of
unyielding airstrikes on Baghdad meant to punish the Iraqi government for
not cooperating with inspectors. Iraq barred the inspection team's return
after the strikes.

Although he said Iraq does not trust the Security Council and called its
members ``liars,''
Ramadan said Iraq rejects only anything to do with the December resolution.
``We do not reject talks with the Security Council,'' he said.

Iraq long has demanded the sanctions be lifted immediately. The December
resolution still ties any chance of easing the sanctions to Iraqi

Only links provided for the following reports:

 A Generation of Iraq's Children Growing Up Embittered, Newsday, 9 July '00

 Kurdish Groups Clash in Northern Iraq, BBC, 11 July '00

 US-Backed Iraqi Group Forms New Secretariat, AP, 11 July '00

 Iraqi Rebel: Where Are the Arms?, Washington Post, 14 July '00

 Iraq Says Exports Returning to Normal Level, Reuters, 15 July '00

 U.N. Embargo Falls Prey to Iraqi Smugglers, Newsday, 15 July '00

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