Ukraine takes steps toward expanding relations with Iraq (06/18/00)

Ukraine takes steps toward expanding relations with Iraq

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Ukraine has taken initial steps toward expanded trade relations with the embargoed Iraqi government, Ukraine's first vice minister for foreign affairs announced on May 30.

Oleksander Maidannyk said that, during two days of talks in Bagdad with various Iraqi ministers, the two sides agreed in principle to accelerate the development of economic ties.

"You can say that it is the first time in 10 years of sanctions that the door has opened up in Ukraine-Iraq trade relations," said Mr. Maidannyk.

The possibility for renewed economic ties came after Iraq's strongman leader Saddam Hussein gave the go-ahead for trade talks in response to initiatives by Ukraine as a member of the United Nations Security Council, to have international sanctions against Iraq reduced. Baghdad has been diplomatically and economically ostracized by much of the international community since the Kuwait War of 1990.

Mr. Maidannyk emphasized that all trade agreements that will eventually be drawn up between the two countries will adhere strictly to U.N. sanction guidelines put into place at the war's end.

He explained that Ukraine supports the easing of international restrictions against Iraq, especially for humanitarian-related goods like medicine and food, and certain manufactured products.

"We have taken a position of positive neutrality, that is, to work to resolve the differences of the various parties," explained Mr. Maidannyk. "It is a constructive position, and we believe the only possible one in this very complex situation."

The Ukrainian first vice-minister for foreign affairs said that, in addition, Ukraine has joined Canada as a co-sponsor of U.N. Resolution 1284, which would change the way international sanctions are imposed and carried out in general.

Mr. Maidannyk explained that the Ukrainian government supported the latest U.N. resolution on lifting all sanctions against Iraq in return for U.N. oversight and regulation of certain Iraqi government facilities and laboratories. Iraq has rejected negotiations on such an agreement because it maintains that it has fulfilled all U.N. demands placed before it after its defeat in 1990.

Although development of trade with Iraq will be no easy task, Ukraine has moved to resume contacts with the country for obvious reasons: it is almost wholly dependent on Russia for its oil and gas needs, and would like to diversify.

Ukraine is not looking at Iraqi oil as a quick-fix solution to its energy dependence problem, but it does see a place for Ukraine's businessmen in the lucrative oil commodities market.

"Currently it is unprofitable to purchase Iraqi oil, since it is expensive to bring to Ukraine," explained Mr. Maidannyk, "but it is profitable to conclude contracts and then sell them to third countries.

Today France and Russia are major players in commodity trading in Iraqi oil. Up to 40 percent of the limited amount of oil that Iraq is allowed to export is bought up by Russian middlemen. Mr. Maidannyk estimated that about 30 percent of that amount eventually ends up in the United States. He said that indirectly about 8 percent of total U.S. oil imports are from Iraq. Meanwhile, in Ukraine there are currently half a dozen or so firms that have expressed interest and are ready to attempt to grab a share of that market.

Mr. Maidannyk explained that, if certain restrictions were eased, Ukraine also could benefit from the sale of drilling and excavation equipment, electrical parts and turbines that the Iraqi oil industry desperately needs. In addition he saw a market for Ukrainian sugar, wheat and other food commodities.

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