. 12AThe Daily Tar HeelThursday, August 30, 1990
Sanctions against Iraq prove costly for fforei
gin co
From Associated Press reports
y LONDON Tons of Irish ham
burger are stranded in Turkey. AFrench
potato cooperative stands to lose 10
' percentofitssales.AnEnglishcompany,
' stuck with four turbine generators that
haven't been paid for, is cutting 650
' jobs.
Far from the Persian Gulf, companies
are feeling the sanctions imposed on
Iraq.
The crisis has come just as Baghdad's
credit rating appeared to be recovering
following the eight-year Iran-Iraq war.
Now, say several experts interviewed
on condition of anonymity, there seems
little hope that Iraq will soon repay its
debts to Western financiers.
Iraq has the most debts of any Middle
East country up to $80 billion by
some estimates with Japan, Germany,
France and Italy standing to lose most if
Iraq defaults, banking sources say. Iraqi
debts, once relatively modest, rose
quickly to finance the 1 980-88 war with
Iran, according to banking experts.
"Very soon after the war broke out
they went into significant default and
Joans from commercial banks ... virtu
ally dried up," said one British banker.
Surcharges on some loans were as high
as IS percent above the interest rate,
and Iraq's debt spiraled out of control,
sources said.
After the war, it was hoped Iraq's
finances would improve. But the exist
ing debt proved overwhelming. The
Export Credit Guarantee Department,
the British government body that insures
loans to developing countries, said it
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stopped covering deals with Iraq in April
when Iraqi arrears started to mount.
It was this debt that helped bring on
the invasion of oil-rich Kuwait.
"Saddam was getting in a difficult
position. There were expectations of a
higher standard of living but at the same
time he was stuck under a large debt
with no signs of formal rescheduling,"
said a British banker.
Iraq refuses to join the Paris Club of
debtor nations, which sets up talks on
multilateral rescheduling agreements.
Also, says one banker, Iraq does not
hire Western experts to advise it on
debt.
"They're too proud for that," he said.
On Aug. 1, an Iraqi delegation visited
Rome for negotiations to reschedule
$900 million in overdue commercial
export credits guaranteed by the Italian
government. Iraq has refused to pay
because an order of warships and heli
copters was blocked by an Italian arms
embargo.
Nor are large multinational corpora
tions the only victims of the crisis.
Goodman International, Iraq's main
Irish beef supplier, has a consignment
of hamburger and steaks lying in a
Turkish warehouse. According to a
source close to the firm, Iraq owes it
about $100 million.
"The money was being paid accord
ing to schedule, but stopped as soon as
this fracas started out there," the source
said. At the NEI Parsons plant in
northern England, work has stopped on
four turbine generators designed for
Iraq's Al Shemal power station, and
650 jobs have been cut.
A cooperative of about 1 ,000 potato
farmers based at Quimper, Brittany,
had a contract to deliver 15,000 tons of
seed potatoes. The harvest has begun
and if shipments don't begin soon, the
spuds, worth about $8 million, will rot.
Iraq is the cooperative's main export
customer, accounting for 10 percent of
sales.
Promised
freedom
unrealized
From Associated Press reports
JORDAN U.S. officials rushed to
Jordan's border with Iraq on Wednes
day to greet Americans fleeing from
Iraq, but there was no sign that Saddam
Hussein had carried out his pledge to
free Western women and children.
No members of that hostage group
were aboard the two Iraqi Airways
flights that arrived in Amman, Jordan,
from Baghdad on Wednesday.
And although U.S. Ambassador
Roger Harrison hurried to the border
post of Ruweishid northeast of Amman
to help greet Americans, none showed
up.
"I have no evidence.-indicating that
people have been allowed to leave,"
White House spokesman Roman
Popadiuk told reporters in Washington.
On Tuesday, the State Department
said Iraq took nine more Americans
into custody in Iraq and Kuwait, bringing
the number to 70 who have been rounded
up and apparently moved to military
installations to help prevent a U.S. at
tack. Iraqs U.S. ambassador, Mohamed
Al-Mashat, officially notified the State
Department on Wednesday of Saddam's
decree the day before that all women
and children of foreign nationals would
be allowed out of Iraq.
Al-Mashat told reporters the Ameri
cans would be allowed to leave through
Jordan or Turkey, but he gave no
timetable for their departure.
"It is not possible administratively
that everybody go on the same day," Al
Mashat said. He said he did not know
whether the Iraqi government would
provide aircraft to facilitate the depar
tures. The ambassador also said that once
Washington assured Baghdad that the
U.S.-led multinational force massing in
Saudi Arabia and the Persian Gulf would
not attack Iraq "then we are going to let
even men out."
But it was not clear whether Al
Mashat's impromptu remarks repre
sented a policy change by the Iraqi
government.
Saddam previously offered to free all
21,000 Western hostages in Iraq and
Kuwait if Washington withdrew its
forces from the gulf and guaranteed that
trade sanctions against Iraq are lifted.
The United States rejected the offer.
About 3,000 Americans were trapped
in Kuwait and Iraq on Aug. 2 when Iraqi
forces overran its oil-rich neighbor, then
annexed it.
The international trade embargo de
signed to force Iraq to end its occupa
tion of Kuwait got an important boost
from OPEC and Japan on Wednesday.
OPEC oil ministers meeting in
Vienna approved a plan allowing Saudi
Arabia, Venezuela and other member
countries to pump more oil and help '
hold down crude prices during the gulf
crisis.
One OPEC minister predicted the
agreement could replace 3 million of
the 4 million barrels of oil the day that
disappeared from the world market
because of the embargo on Iraqi and
Kuwaiti crude. That shortfall caused oil
prices to skyrocket.
Iran refused to back the OPEC deal,
and Iraq and Libya did not show up for
the meeting of the 13-nation Organiza
tion of Petroleum Exporting Countries.
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