Few Goods Enter Iraq As US Pushes Sanctions And Saddam Hits Traders

AMID growing signs that the two-year-old United Nations trade embargo against Iraq is beginning to hurt President Saddam Hussein's government, traffic at this desolate desert border post has slowed to a trickle.

Barely 10 percent of the trucks that passed through the key border post at Ruweished six weeks ago are still making the journey, according to the Jordanian customs chief here, Aziz Absul. "We used to see up to 500 loaded trucks here every day," he says, surveying the almost empty parking lot outside his office one day last week. "Now only between 60 and 80 come through."

Diplomats and traders in Amman say the sharp drop is a result of both United States pressure on Jordan to tighten up its customs controls to ensure that only goods exempted from the UN sanctions enter Iraq, and merchants' fear of importing foodstuffs after the reported execution of 42 traders in Baghdad late last month for profiteering.

The flow even of food and medicine, which is permitted under the embargo, has almost stopped in the past 10 days, freight operators in Amman say. "Ninety percent of my business was with private Iraqi traders," says Yussuf Nadr, one of Jordan's largest exporters of tea, sugar, and cooking oil. "Now it has virtually stopped."

At the same time, "we have seen very few ships recently docking at Aqaba [Jordan's only port] carrying goods consigned to the Iraqi government," says Tawfiq Kawar, president of the Jordanian Shipping Agents Association.

This may suggest, according to Jordanian exporters and diplomats, that the Iraqi government may be running short of foreign currency to buy goods that private traders do not import.

While the multinational maritime interception force that searches every ship bound for Aqaba has stepped up the intensity of its inspections since the beginning of this month, according to Mr. Kawar, sanctions enforcement at the Ruweished border post was tightened in early July, diplomats say.

On one recent morning here, 12 trucks carrying cigarettes, allowed under sanctions, were parked alongside a ramp while workers removed all the boxes loaded along the middle of the trailer. Customs officials broke them open. Even trucks whose containers have been sealed upon leaving the free-trade zone at Zarka, a bonded warehouse complex 180 miles west of here, are sometimes opened again, according to Mr. Absul.

These strict procedures were instituted following heavy pressure from Washington, with US officials claiming earlier this year that as many as 30 percent of the goods entering Iraq through Ruweished violated the UN sanctions. The US Congress has frozen $40 million in military aid to Jordan as punishment, and talks over $65 million in economic aid are still under way.

Although Jordan's King Hussein rejected a proposal for UN monitors at the border, suggested by Central Intelligence Agency (CIA) chief Robert Gates during a visit at the end of June, diplomats in Amman say sanctions violations have all but ended since the visit.

Indeed, the crackdown has been so strong that even food and medicine sent by the UN and charitable organizations have been held up, according to relief workers and shipping agents.

Iraq's trade difficulties have been compounded in recent days by the panic that has gripped private Iraqi merchants based in Jordan since reports reached Amman that traders had been executed for profiteering. Another 500 merchants were arrested in the same sweep, according to diplomats in the Iraqi capital, and in a speech last Wednesday, Saddam warned he would continue to use "the hammer of the law" against profiteers and inefficient officials.

Though the crackdown is seen here as a sign that the UN sanctions are hurting Iraq, Jordanian traders who used to sell to their Iraqi counterparts say the fall in the value of the Iraqi dinar, not price gouging, explains the high prices of food in Baghdad shops. The dinar fell from 14 to the US dollar to 24 last month, partly as a result of rumors that the CIA was flooding Iraq with false dinar notes. Merchants selling their goods in Baghdad price them at what they predict their replacement value to be i n Jordan, in expectation of a further drop in the Iraqi currency.

Although the Iraqi government provides heavily subsidized food rations to its people, these cover only about 50 percent of normal needs, and Saddam has until now relied on private traders to bring in the rest. Their refusal to do so since last month's killings prompted an Iraqi trade official, Ahmed al-Zubeidi, to visit Iraqi traders in Amman last week, hoping to persuade them to resume their business.

But Saddam's tough speech last Wednesday has only deepened their fears, according to traders here. "This has certainly shaken the confidence of Iraqi businessmen in continuing to supply the market," says one merchant. "This will be a big turning point."

While Iraq is reported to have had a bumper crop of wheat this year, reducing its need to import flour, it relies exclusively on imports for such essential goods as sugar, cooking oil, and tea. Iraqis are the biggest per-capita tea consumers in the world.

If the private merchants cannot be persuaded to resume their business, the Iraqi government will be forced to import more foodstuffs itself. But after two years of the trade embargo that has halted all exports, it is not clear whether Saddam still has the foreign currency he would need to make such purchases.

"The Iraqi government has approached me to buy sugar and other goods, but I insist that they pay world prices, and they are not prepared to do so," said Mr. Nadr, the Jordanian exporter. "In the past three months, the government has not been buying anything, and we attribute that to a lack of money. Sanctions seem to be starting to bite now for the first time."

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