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Iraq: Kurds Build Economy On Border Trade

The economy in Kurdish northern Iraq is growing after a decade of stagnation. New houses are springing up and engineers with construction experience are suddenly in high demand. RFE/RL correspondent Charles Recknagel reports the boom is being fueled mostly by illegal trading among Turkey, Iran, and sanctions-struck Iraq.

Prague, 28 September 2000 (RFE/RL) -- There are strong signs of prosperity in northern Iraq these days, at least in comparison with the rest of the country.

The region's key centers -- Arbil, Dahuk and Sulaymaniyah -- are experiencing a boom in construction in new houses and buildings. And new landmarks have begun to appear in spite of UN sanctions that for more than 10 years have kept all of Iraq in an economic straitjacket.

One of the landmarks is a recently built multiaisle supermarket in Dahuk, the first of its kind anywhere in Iraq. It is such a novelty that it attracts people from as far away as Baghdad, who make a day's drive to shop at it. Another landmark is a new first-class hotel in the same city -- said to be the most elegant erected in Iraq since the 1990 Gulf crisis.

The supermarket and hotel have been leased by Turkish investors who look forward to profits in northern Iraq as the region has begun to build a new economy based on trade among Turkey, Iran, and sanctions-bound Iraq.

The trade is largely in smuggled goods that contravene either the UN sanctions or one of the three nation's own laws. But so far the illegality of the trade has only had the effect of making it more profitable for the two Iraqi-Kurds factions which control northern Iraq's crossroads.

One trade line involves a fleet of Turkish trucks that annually ferry several million tons of oil from Iraqi refineries into Turkey. The trucks move through the part of northern Iraq that borders Turkey and is controlled by the Kurdistan Democratic Party (KDP), providing the party with a steady revenue of transit fees. At the same time, the trucks bring consumer goods into Iraq. Turkey considers the trade vital for its own impoverished southeast, and Ankara officially regulates the commerce while ignoring objections from the United States and Britain that it violates UN sanctions.

A second trade line is made up of Turkish trucks trading with Iran. They carry consumer goods -- such as washing machines and refrigerators -- which are in high demand due to the Islamic Republic's own struggling economy. And, along with Iraqi trucks, they smuggle alcohol -- a substance strictly outlawed by Tehran. The trucks pass through the part of northern Iraq that borders Iran and is controlled by the Patriotic Union of Kurdistan, or PUK, providing this area, too, with revenue from transit fees.

Fouad Hussein, an Iraqi Kurd academic who visits the region frequently, says that each year he sees signs that the border trade is fueling a spreading economic revival in both the KDP and PUK territories.

"One can see new building everywhere. The [administrative authorities] are busy [with construction] and the people themselves are busy with building. And also the infrastructure has been changed. I have been many times and each time when I am there I see the change in the infrastructure. The people are getting on with their daily lives more easily."

One sign is a suddenly high employment level among engineers who design and oversee construction of new streets, schools and hospitals. A Radio Free Iraq correspondent who recently visited northern Iraq says that as recently as last year, half the engineers with such skills were out of work. Now people who hope to build a new house complain they must wait two months to find someone to undertake their project.

This year, both the KDP and PUK have announced ambitious new development projects in their area. The KDP said it will supply some 294 villages with new school houses in the Arbil-Dahuk area. The construction, planned to be completed within seven months, aims at ending a chronic shortage of classroom space which currently sees many schools running three shifts a day to accommodate pupils.

The PUK has announced a new hospital project for Sulaymaniyah in which it hopes to cooperate with UN development agencies.

But even while the region sees a wave of new school and medical facilities, larger infrastructure projects remain at a standstill.

Iraqi-Kurds say their most pressing need is for a better electricity infrastructure. The two dams which traditionally have supplied the region with power are in disrepair after 10 years of sanctions and no longer operate at full capacity. As a result, most buildings now rely on small diesel generators which only provide a weak current.

Many in the area would like the UN to repair the dams or to build local oil-fired power stations to generate electricity for larger hospitals or even industrial activity. But so far, the UN has proved unwilling to undertake any large infrastructure development in northern Iraq because Baghdad sees that as a violation of its own sovereignty. Iraq maintains it alone has the right and responsibility to improve the region, which fell out of its control in the wake of the 1991 Gulf War.

Meanwhile, the mini-economic boom in northern Iraq has brought a surge in cultural activities -- including new buildings in Arbil, Dahuk and Sulaymaniyah for public meetings and for the use of writers' and artists' unions.

Hussein says that this cultural renaissance has created some cooperation between the PUK and KDP authorities, which now allow educators and students travel between universities in their areas. Hussein:

"We see that both authorities are cooperating about education -- even concerning the three universities which exist in Iraq Kurdistan, in Dohouk, Erbil, and Suleimaniyah -- they are cooperating and the professors and teachers from one university are going to another university. So in many fields they are cooperating with each other."

But any cooperation between the two factions still stops short when it comes to political questions. The two sides continue to maintain an armed border between them with checkpoints and there is no freedom of movement across it except by permission from both sides.

The KDP and PUK formed an early power sharing agreement after northern Iraq fell out of Baghdad's control following the Gulf War, but it soon fell apart. The two factions fought intermittently prior to signing a U.S.-brokered accord two years ago.

Both sides have agreed under their new accord to share revenue, hold elections and eventually reunite their territories. But so far, negotiations have consistently broken down amid differences.