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Minister Samer Al Tawil says: Trade contracts with Iraq will be honored

Minister of National Economy Samer Al Tawil is optimistic that Jordanís trade ties with Iraq will resume soon. But he knows that these ties will not be the same as they were before the war.

Despite the growing international interest in Iraq, cabinet officials and economists agree that Jordan is still upholding its business ties with Iraq.

Al Tawil told The Star all the trade contracts that were signed between the private sector and the former Iraqi regime under the UN Food-for-Oil program will be set in motion soon.

"The government is working with the UN Secretary General Kofi Anan on suitable mechanisms to put these contracts into action within the coming few weeks," Al Tawil added. He didnít elaborate on what kind of mechanisms the UN will work on, but stressed that all the concerned trade contracts will go ahead as planned.

The minister underplayed doubts by some Jordanian businessmen who fear their businesses will go bankrupt because of their long-drawn-out projects in Iraq. "These contracts were made officially under the UN authority and have liabilities that must be honored. The Food-for-Oil program will have to continue to serve the Iraqis with their needs," Al Tawil explained.

A recent study made by the Economic Department in the Arab League noted that Jordan was the second largest Arab trade partner with Iraq before the war, with contracts prepared under the Food-for-Oil program worth $1 billion. Egypt was Iraqís biggest Arab trade partner with $3 billion in pre-war trading.

The study noted Jordanís economy would endure a setback in growth this year due to the war repercussions. Minister of Trade and Industry Salah Eddin Al Bashir said the government is assessing the losses of the private sector, which are estimated in hundreds of millions of dinars.

Al Bashir pointed out the government will support the private sector in its endeavor to take part in the reconstruction of Iraq. "The government is working closely with the UN over the issue and hopes to reach an agreement soon," Al Bashir said. He maintained, however, the government canít take any step forward in anticipation of the measures that the UN will take on this regard.

Dr Ibrahim Seif, economic researcher at the University of Jordanís Center for Strategic Studies, disagrees with the notion that previous trade contracts between Jordan and Iraq are still binding for the UN. "The contracts that were signed with the former Iraqi government before the war are no longer valid," Seif explained. "I think the UN will have to consider of new rules for the Food-for-Oil program in a way that serves the Iraqi interests rather than others." Seif pointed that what really matters for Jordan is how to maintain its position as a vital trade partner for Iraq.

The $680 million deal between the US administration and Bechtel Corp last month opened the door for American companies and firms to take the lionís share in the reconstruction process of Iraq. And the calls for lifting the UN sanctions on Iraq also stirred controversy between the US and its European allies, who refused to support the US in its plans before creating new government in Iraq.

"Any new Iraqi government will follow the US instructions," said economist Mazen Marji. "Jordanian exports to Iraq before the war totaled $400 million, and had easy access to the Iraqi markets due to the strong bilateral trade relations between the two countries," he added.

Under the Food-for-Oil program, which was launched by the UN in December 1996, Iraqis used to choose the country they want to deal with pending the Security Council approval. Now, economists believe, the situation will be much different whereby new mechanisms will be applied to deal with the whole world freely and directly. Al Tawil stressed that trade between Jordan and Iraq has never stopped during the war, but was limited to the daily supplies of basic needs for the Iraqi private sector. "Jordan enjoys strong and historical trade relations with Iraq. These relations canít be broken overnight.

The government will have first to strengthen its ties with the new Iraqi regime if it wants to maintain its strong presence in the Iraqi market," Marji said. "And the private sector must upgrade its products to keep pace with the fierce competition it will face from its international counterparts."

"The Americans wonít allow any other country to take part in reconstructing Iraq as a major contender," Seif stressed. "The only way Jordanians can go to Iraq is through subcontracts. And it is better for local companies, especially those related to the services sector to introduce their bids as soon as possible."

On the other hand, some companies like Jordan Telecom, Jordan Cement Factories and Jordan Steel have better chances than others.

"Services like health, education, telecommunications and banking are essential for Iraqis and they need to rebuild these facilities fast. Here lies the potential for Jordan to make the most through subcontracts," Seif added.

Last week, Chief Economist Henry Azzam highlighted the opportunities the private sector will have in Iraq. "The private sector in Jordan knows the Iraqi market very well. This will help the major companies to compete with their international counterparts and set their feet in there," Azzam said in a seminar held in Amman.

"Other companies that were relying mostly on the Iraqi market in their businesses will fail to get there because of their limited resources."

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