YU, Iraq to boost 'oil-for-food' trade

BELGRADE, Jul 3, 2000 -- (Reuters) Yugoslavia and Iraq on Sunday signed a protocol on economic and technological cooperation, but said they expected difficulties in boosting trade under Iraq's oil-for-food deal with the United Nations.

"Iraq will expand this cooperation as much as possible, giving the Yugoslav side special priority, according to instructions from our President (Saddam Hussein)," Iraqi Trade Minister Mohamed Mehdi Saleh told a news conference.

A UN Security Council program allows Iraq to sell oil to buy food, medicine and other humanitarian supplies, despite sanctions imposed over Baghdad's invasion of Kuwait in 1990.

Yugoslavia, under a Western oil embargo since spring 1999, hopes to eventually export farm products and machinery, construction materials, trucks and other vehicles, and electrification, water supply and sanitary equipment in exchange for Iraqi crude.

"In the past, crude from Iraq and the former Soviet Union satisfied most of Yugoslavia's needs," Yugoslav Trade Minister Borisav Vukovic said.

He said crude imports from Iraq would pick up as Yugoslav refineries, heavily damaged in NATO's 11-week bombing campaign on Yugoslavia last year, restarted.

Saleh said Iraq was interested in Yugoslav wheat, provided the country had surpluses to sell after a drought that had affected its crop.

European grain traders said this week that interest in deals with Iraq under the food-for-oil program was waning because bureaucratic delays were holding up shipment of grain.

Vukovic said prolonged decision-making and bias on behalf of "higher interests" by a UN sanctions committee, which has to approve all deals, had been a major obstacle in the past.

"Our deals are certain to be obstructed by the United States and Britain," he said, adding plans to export medicines from Hemofarm and truck tires from Tigar Pirot had been turned down several times.

"But for these same products, other countries received approval (to export to Iraq)," Saleh said.

Yugoslavia and Iraq, whose economies have both been crippled by Western-backed air strikes and international sanctions, have grown closer in recent years in what they call a "joint struggle" against United States domination.

Iraq condemned NATO's air campaign against Yugoslavia last year which Western leaders said was intended to halt Belgrade's repression of Kosovo's mostly Moslem ethnic Albanians.

Yugoslavia has criticized U.S. and British air strikes on Iraq and the continued UN sanctions.

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