France, Germany protect Iraq ties
By David R. Sands
THE WASHINGTON TIMES
France and Germany, the two countries at the forefront of opposition to the U.S. hard line against Iraq, have a long history of commercial and other contacts with the regime of Saddam Hussein.
TotalFinaElf, France's huge oil firm, holds the contract to develop Iraq's southern Majnoon and Nahr Umar oil fields, which could contain as much as 25 percent of the country's reserves.
German firms were the market leaders in supplying sensitive dual-use technology to Iraq in the years before the 1991 Persian Gulf war, and they have been trying to boost civilian commercial contracts in more recent times.
Khidir Hamza, an Iraqi defector who once headed Saddam's nuclear weapons program, recently called Germany "the hub of Iraq's military purchases in the 1980s."
Iraq analyst Kelly Nugent Motz, in a recent analysis of Iraqi dual-use purchases that have helped build the country's arsenal of biological, chemical and possibly nuclear weapons, noted that many of the materials U.N. weapons inspectors are now seeking are "things the West supplied."
"The real targets in Iraq — whether of inspectors now or of soldiers later — are the West's own exports," said Ms. Motz, editor of IraqWatch.org, published by the Wisconsin Project on Nuclear Arms Control, a Washington-based research group.
The issue of Western economic interests in Iraq has sparked an angry trans-Atlantic debate over motives of those supporting or opposing a potential U.S.-led military strike against Iraq.
European critics — and many of the hundreds of thousands of protesters in the United States and Europe in recent days — contend Bush administration policy is driven not by Iraq's weapons but by its oil.
U.S. energy firms largely frozen out by Saddam's regime could get priority deals to develop huge new Iraqi fields under a new regime in debt to Washington, they contend.
But France and Germany are vulnerable on the same score, according to those who support the Bush administration tack.
Sen. Joseph R. Biden Jr., Delaware Democrat, at a recent Senate hearing on the future of a post-Saddam Iraq, recalled being told repeatedly during a recent European trip by skeptics that the debate about an Iraq war was "really about oil."
"And I agreed with them," Mr. Biden recalled. "It is about oil — French oil and Russian oil."
Richard Perle, a leading supporter of war with Iraq and head of an influential civilian Pentagon advisory board, last week said that TotalFinaElf was given a highly favorable deal on exploration rights in Iraq as part of an effort by Baghdad to buy allies against the United States.
"The French interest in the propagation of contracts that will only go forward with this regime is perfectly obvious," Mr. Perle said in a speech in New York.
Iraq has not been shy about dangling threats and rewards to its trading partners in order to bolster its international support and end the diplomatic and economic sanctions it has endured since the end of the Gulf war.
In December 1999, the Iraqi newspaper Babel, edited by Saddam's elder son, Uday, warned France that its support for a U.S.-backed U.N. resolution toughening the existing trade sanctions could directly hurt French interests in Iraq.
French oil firms might be forced to close their Baghdad offices and "lose the immense concessions which they have won but not yet exploited," wrote Abdel Razzak Hashemi, a former Iraqi ambassador to Paris. "The numerous advantages which French companies enjoy on the Iraqi market could also be halted."
Baghdad followed through on the threat in July 2001, announcing that French firms would no longer be given preferential treatment in oil-development deals, citing Paris' support for the "smart sanctions" program then being pushed by the Bush administration.
At the annual Baghdad international trade fair in November, the Iraqi Information Ministry reported that Saddam himself had ordered domestic buyers to "give priority" to German companies as a reward for "the firm positive stand of Germany in rejecting the launching of a military attack against Iraq by the U.S."
Some 101 German companies were represented at the Baghdad exposition, including companies offering air-conditioning equipment, energy and transportation services, cosmetics, textiles and other products.
Direct two-way trade between Germany and Iraq amounts to about $350 million annually, while another $1 billion is sold via third countries, according to Iraqi authorities.
All Western countries — including the United States — have long involved economic ties to Saddam's regime. American firms were among the many suppliers of dual-use equipment and support that built up Iraq's conventional and unconventional military arsenals in the 1970s and 1980s.
Even now, despite the extreme hostility between Washington and Baghdad, the United States buys nearly 5 percent of Iraq's oil exports under the U.N.-administered oil-for-food program.
German firms were particularly active in striking deals with Iraq. Their relationships with Saddam's regime date back to the 1970s.
The German daily Tageszeitung reported recently that it had seen portions of Iraq's 12,000-page arms declaration to U.N. weapons inspectors in December showing that German firms were the market leaders in supplying Iraq, even in the decade after the Gulf war.
The paper reported that 80 German firms were named as suppliers in the Iraqi declaration.
Even before the latest escalation of tensions, U.N. weapons inspectors had filed numerous reports of German firms complicit in aiding Iraq's covert programs in weapons of mass destruction.
One April 2000 U.N. "activity memo" regarding the German firm Water Engineering Trading, found that between 1984 and late 1988 the company had, among other violations:
• Sold, without license, $10 million worth of machinery and equipment, and tons of chemicals.
•Supplied parts of the Samarra chemical weapons complex (identified by U.S. intelligence as Iraq's prime production site for mustard gas and nerve agents).
•Supplied machine tools for converting conventional 122 mm artillery shells and rocket-propelled grenades into chemical munitions, exported as cooling containers for powdered milk.
•After March 1987, sold most of the components for the $20 million Falluja chemical weapons plant to Iraq's Ministry of Industry and Military Industrialization.
French firms show up far less frequently among the companies cited by the U.N. inspectors, although Iraq did acquire French Mirage jet fighters and French-made Exocet missiles during the 1980s.
It was a French firm that won the contract to help build Iraq's nuclear power plant at Osirak, which was bombed by Israeli jets in 1981 shortly before it was to come on line.
Mr. Hamza, the former Iraqi nuclear engineer, recalled in a recent Wall Street Journal opinion piece that many of the French projects in Iraq enjoyed huge profit markups.
Saddam's regime paid $200 million for a small French research reactor in the mid-1970s that had a then-market price of about $50 million, Mr. Hamza recalled.
"With these kinds of deals, is it any surprise that the French are so desperate to save Saddam's regime?" he asked.
But it is French oil interests in Iraq that have attracted the most attention as the debate over war intensifies.
Iraq has the world's second-largest proven oil reserves after Saudi Arabia's, and many of its most promising fields have been largely unexplored since the economic freeze imposed after the Gulf war.
Russia and France have the largest contracts, while the major U.S. energy giants, including ChevronTexaco and ExxonMobil, have been largely shut out.
Iraqi exile groups, including the U.S.-backed Iraqi National Congress (INC), have only increased speculation by issuing conflicting signals about the future of the energy concessions negotiated by Saddam.
"American companies will have a big shot at Iraqi oil," INC Chairman Ahmed Chalabi said last year.
But a senior leader of one of Iraq's two Kurdish opposition groups said the future of Iraq's oil wealth remains an exceedingly sensitive subject in the discussions with U.S. officials about a post-Saddam Iraq.
"We know there are countries such as France and Russia with very important issues, but our first priority will be to ensure that our country's oil wealth is used to benefit Iraqis," the Kurdish official said.
The Coalition for International Justice, a Washington-based human rights group, released an extensive study of foreign economic interests in Iraq on the brink of a likely new war.
French, Russian and Chinese oil concessions, with an estimated top value of $38 billion, are the biggest interests in play.
Russian President Vladimir Putin and Chinese President Jiang Zemin, in a phone call yesterday, reportedly agreed they continue to oppose military action while U.N. weapons inspections proceed, a day after Chinese Foreign Minister Tang Jiaxuan and French Foreign Minister Dominique de Villepin agreed on the need to continue the inspections process.