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Bert Gedin, Birmingham, U.K.

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 Little by Little, Iraq Shows Signs of Economic Life

 By Howard Schneider
  BAGHDAD, Iraq -- It was a breezy Monday night, and the mood in Horreya Square was festive as a 
crowd that included college students, old men and shy young girls gathered outside the Faqma ice 
cream shop to indulge.

  In the Iraq of the mid-1990s, such a scene would have been impossible. People were penniless and 
the government strictly rationed milk and sugar to ensure that the country's embargoed food 
supplies covered necessities.

  But those days are past. Step by step, economic and social life is rebounding and the country is 
breaking out of limits imposed on it by the United States and other Western powers after the 
Persian Gulf War a decade ago.

  Iraq is now sufficiently flush to independently launch an oil embargo, as it did last month, 
suspending exports of crude as a protest against Israeli occupation of Palestinian cities in the 
West Bank. That won Iraq admiration in many Arab countries, as have its payments of $25,000 that 
U.S. officials said have been made to the families of each Palestinian suicide bomber.

  Many Iraqis and foreign diplomats here said the country's resurgence will make the U.S. goal of 
unseating President Saddam Hussein all the more difficult to achieve. And, in the meantime, the 
growing prosperity is allowing Hussein's political apparatus to proclaim that Iraq was the ultimate 
victor in the Persian Gulf conflict.

  "Many people predicted that Iraq would collapse in 1991, but we have reconstructed our country," 
Oil Minister Amir Mohammad Rasheed said recently at a news conference in Baghdad. "We know it is 
difficult for those without thousands of years of history to understand, but oil is not the only 
resource of the Iraqi people."

  Oil, however, is what's driving the rebound. Iraq is allowed to sell as much petroleum as it 
wants under U.N. sanctions to buy food, medicine and other necessities. But money is also entering 
the country illegally through oil smuggling and a complicated surcharge scheme that a Wall Street 
Journal analysis recently estimated provides around $2.5 billion annually outside the control of 

  While U.S. officials contend that much of the money is being spent to refit the Iraqi military, 
develop long-range missiles and possibly assemble nuclear, biological or chemical weapons, clearly 
some of it is improving the lives of Iraqi citizens.

  Per capita income now stands at around $2,500 annually -- double that of Egypt, according to the 
CIA World Factbook. Iraq's gross domestic product grew about 15 percent in the year 2000.

  "Little by little, things are getting better. You can find everything," said Sinan Abdul Hamid, 
20, an engineering student whose chief complaint about life is that the lasers used in his classes 
are out of date.

  Entrepreneurs are bringing shiploads of computers, televisions, stereos, appliances and other 
goods from Dubai to stock the the shelves of Baghdad's shops. Wealthy Iraqis can arrange 
long-distance special deliveries of their favorite foods from grocery stores in Amman, Jordan, 12 
hours by car and a few bribes away from the Iraqi capital.

  Farmers are buying new trucks; new double-decker buses are moving about the capital. A few 
privately owned luxury cars are breaking the previous monotony of wobbly taxis and private cars 
with shattered windshields.

  Even such areas as an impoverished corner of Saddam City south of Baghdad are feeling gains. 
There, vegetable seller Rabbia Jassim at first pointed to his 6-year-old son's dilapidated sneakers 
and said that for the poorest in Iraq, many basics remain out of reach. But later he conceded there 
was some improvement: His family can now afford an occasional chicken.

  As part of the upturn, Iraq has again become a major force in the regional economy. Much of its 
$13 billion in annual imports come from Turkey, Egypt, Saudi Arabia, Syria and Jordan, Iraqi 
officials said, helping bolster economies in the region. They added that Turkey's sales to Iraq 
doubled in the past year, to nearly $1 billion, while Egypt, starved for hard currency, now gets $2 
billion a year from goods its sells to Iraq.

  Iraqis are traveling abroad more easily, too, on the expanding network of flights available since 
Saddam International Airport reopened a year ago. Royal Jordanian Airlines offers four flights a 
week between Amman and Baghdad, and service is also available to the Syrian capital, Damascus, and 
to Moscow.

  Iraqi diplomats circle the globe pressing their nation's case, while business leaders from the 
Arab world, Russia and Europe fill Iraq's version of a five-star hotel, the Al Rasheed.

  The future of Iraq and Hussein has been a chief preoccupation of the region, as well as of world 
powers, for more than a decade now. While there is agreement that Iraq's isolation as a nation 
should end, there is disagreement over whether that should happen while Hussein is still in power.

  To Washington, he remains a global menace, intent on developing weapons of mass destruction and 
likely to use them against Israel, Arab neighbors or even the United States. At a recent U.N. 
Security Council briefing, U.S. officials presented evidence of new long-range missile sites, and 
foreign diplomats in Baghdad cite suspicions that Iraqi officials have stepped up efforts to 
acquire material for a nuclear device.

  President Bush has called Iraq part of an "axis of evil" that includes its neighbor Iran and 
North Korea. U.S. officials have not made a case linking Iraq with al Qaeda or any terrorist attack 
against U.S. interests. But they insist that Iraq is developing weapons of mass destruction and say 
action against the country, perhaps armed action, is needed.

  "The combination of a dangerous regime with such destructive weapons is not acceptable," said 
Patrick Clawson, research director at the Washington Institute for Near East Policy.

  Among Iraq's Arab neighbors, the view is less apocalyptic. Hussein is viewed as a brutal leader, 
but many say he became more cautious after seeing his army expelled from Kuwait in 1991. An 
international coalition might well retaliate against any aggressive act tied to Baghdad, spelling 
an end to the Baath Party that controls the country.

  One diplomat here, whose government has counseled the United States to avoid military action in 
the absence of clear provocation, said the risks of toppling Hussein might be as great as the risks 
of leaving him in power.

  In society here, the diplomat said, "there is a big hate for the U.S. Every malaise is attributed 
to them and not the regime. The complexity of the problem is that once Pandora's box is open, are 
we in a more difficult position than now?"

  A U.S. attack could lead to a fracturing of the country among the quasi-autonomous Kurdish region 
in the north, the Iranian-influenced Shiite populations in the south, and the Sunni Muslims who 
dominate the central region, the diplomat said.

  Some Iraqis who privately dislike the regime are also uneasy about the prospect of an attack. 
They would rather wait for the 65-year-old Hussein's natural demise than risk a war or revolution. 
"Borders are closed, brains are closed," said one businessman, who asked not to be identified. "But 
it has been 20 years. What is three or four more? This is what is in the heart of Iraqis."

  Advisers in the president's office, meanwhile, say the government's public bravado -- defiant, 
anti-American and ready for a fight -- isn't the whole story. "What are we going to say if [Bush] 
says we are the axis of evil? We fought Iran for eight years. How can you just throw us in one 
bottle?" one Iraqi official said. "We have learned lessons, and we will make use of those lessons. 
We will try to avoid our people suffering again."

  Despite the talk of war, the United States hasn't much changed the military pressure that it has 
exerted against Iraq since the end of the Gulf War. Every day a panoply of U.S. planes, including 
high-flying U-2 reconnaissance jets and RC-135 eavesdropping aircraft, course the skies of northern 
Saudi Arabia and southern Turkey, monitoring the Iraqi military. Warplanes stage periodic strikes 
against antiaircraft positions.

  But some diplomats in Baghdad and analysts in Washington say that Bush's war threats may already 
be paying off with the rise of what amounts, by Iraqi standards, to a group of pragmatists on the 
Baath Party's ruling Revolutionary Command Council.

  The diplomats said they believe Foreign Minister Naji Sabri has developed an influential voice in 
alliance with Hussein's younger son and possible successor, Qusay. Sabri is said to have pushed for 
recent efforts to mend fences with Kuwait and Saudi Arabia. At a recent Arab League summit in 
Beirut, Iraq went further than ever, promising to respect Kuwait's sovereignty.

  Iraq has also reopened talks with the United Nations on the possible return of U.N. weapons 
inspection teams, who were withdrawn from the country in 1998 hours before the United States and 
Britain launched airstrikes on Baghdad. The talks now involve Iraqi scientists and generals. Before 
Sept. 11, Iraq maintained that inspectors would never return.

  Hussein remains the ultimate arbiter, however, holding on to power despite a record of domestic 
mismanagement, political executions and atrocities against his people.

  Increasingly elaborate statues of Hussein continue to sprout throughout the capital, as do 
state-financed mosques. The Mother of All Battles Mosque opened recently. Still in progress is 
Saddam Mammoth Mosque, intended to be the largest in the world. Along one boulevard stands what 
people call The Big "La," ("No" in Arabic), a granite symbol of the country's defiance.

  Hussein is lionized in party tracts as the rightful heir of history's great Muslim leaders, such 
as the 12th-century warrior Saladin, who fought the Christian Crusaders. The revisionism has turned 
the invasion of Kuwait into a "Zionist trap" that ended with U.S. troops encircled and begging for 
a cease-fire.

  It is unclear how many people accept that account, doled out incessantly by Iraqi newspapers and 
television. But the hardships of the last decade have been real, and many ordinary Iraqis appear to 
view the recent easing as a triumph over the United States.

  In their offices in the capital, Iraqi officials tried to build on those feelings. They said that 
what is really behind Bush's talk of war is Hussein's refusal to follow the recent path of Egypt, 
Saudi Arabia, Jordan and other Arab states and submit to what they perceive as U.S. dominance.

  Bush "wants Iraqi oil. Saddam Hussein won't let him. He wants to put a stooge government in. 
Saddam Hussein won't let him," said Abdelrazak Hashimi, a semi-official government spokesman. 
"Nobody has the right to go into another country and change the system of government. . . . Nobody 
can just scratch Iraq off their calendar."

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