Preparing to do business with Iraq

Traders are active, but many want to get into exports

Traders both inside and outside Iraq are preparing for a possible end to sanctions as Barbara Plett discovers.

Bassam de Gerab is not a sanctions-buster, he is investing in the future.

The Swiss businessman displaying his computers at yet another trade fair in Baghdad is one of many foreigners who have been flocking to Iraq, encouraged by growing gaps in the United Nations sanctions.

Plastic shoes are widely available - computers could follow

"Doing business is one thing, preparing for the future is another," he says. "We're not violating the embargo because we're just getting ready for when it's over."

But if he is not doing business, many others are. So much so that the US, strongly encouraged by Britain, is talking about revising the sanctions to fit reality - lifting the ban on consumer goods and focusing more on possible military imports.

Sanctions busting

The issue topped the agenda during a recent visit to the region by US Secretary of state Colin Powell, who consulted frontline states with porous borders such as Jordan and Syria. Turkey and Iran are the other main conduits of goods that are not approved by the UN.

Colin Powell wants to build a new coalition against Iraq

Observers say so-called smart sanctions aim to improve US and UK relations with disgruntled Arabs chafing at bureaucratic restrictions on trade. For that the Western powers would expect greater efforts by frontline states to stop any military exports to Iraq.

"Why are we focusing on Mercedes?" says one western diplomat in the region. "Saddam and his crew already have them.

"We need to target what we're trying to control, weapons components.

"It's like looking for a needle in a haystack, but if we just say haystacks are allowed we'll be far more likely to find the needles."

The scale of sanctions busting has been common knowledge in the Middle East for some time, although diplomats say no-one knows exactly what or how much is crossing the borders.

That is because there is virtually no monitoring.

UN humanitarian staff in Baghdad administer a relief programme - they do not police sanctions. That leaves an independent customs broker to examine trucks and ships carrying goods bought under the oil for food programme, but nothing else.

Only one out of 20 trucks are checked at the Jordanian border, at the Turkish border it is one in 200.

Export dreams

Mr Powell will have difficulty convincing US hard liners that a massive increase in goods is the answer. Getting consensus for a new policy in the divided security council will also be a formidable challenge.

Women and children are trying to earn money for their families too

As for Iraqis, entrepreneur Faris al Hadi, who talks freely about smuggling microwave ovens from Dubai, says people do not need more goods.

"The real embargo on Iraq which really hurts is not on imports, it's on exports," he said. "What is the use of having whatever you want to import if you don't have enough money to buy?"

Those who do have enough money to buy are the well-connected merchants who have grown rich on the embargo.

But smart sanctions might also release blocks on so-called dual-use items, those with a possible military application, which are badly needed to repair damaged infrastructure affecting the entire population.

Long-suffering Iraqis will probably have to postpone hopes of fully shaking off the embargo though, as the regime in Baghdad is almost certain to reject any policy that does not give it full control of its oil revenues.