Iraqi Trade Minister: I Would Rather Resign than Sign Trade Agreements with Iran

07/09/2012 RUDAW By HEVIDAR AHMED – In this interview with Rudaw, Iraq’s Minister of Trade Khairallah Hassan Babaker says he refused to sign a number of trade agreements with Iran during his last visit to the country. Babaker insists he will not sign anything until the Iranian side agrees to release the Iraqi share of water — referring to the blocked Alwand River, affecting regions such as Khanaqin. Babaker also said that, even though Turkey is cooperating with Iraq on the water issue, his ministry is still looking for an alternative source for trade, particularly for importing food items.

Rudaw: The Iraqi Ministry of Trade was one of the most corrupt ministries in the country. Is corruption still an issue in the ministry?

Khairallah Babaker: We have managed to control the issue of corruption in the ministry. There is no corruption in the ministry any longer.

The corruption was more to do with imported food ration items, which are in fact irrelevant to the Ministry of Trade. Ration food imports are not part of the ministry’s laws, nor are they the responsibility of the ministry, but they were imposed on the ministry.

“There is a large population in Iraq that lives under the poverty line.”

There is a large population in Iraq that lives under the poverty line. In the south, middle and some areas of northern Iraq there has been no economic development. This has led to poverty in these areas. Even provinces like Musana have dropped below the poverty line; in some provinces, poverty has reached 48 percent. But in the Kurdistan Region, poverty is 12 to 13 percent.

These statistics show how the Iraqi economy has been ruined by the multiple wars and needs to be reconstructed. Until an economic infrastructure is built, the government has to support people in their daily lives.

Rudaw: During the mandate of Falah Sudani, the former trade minister, it was claimed that US$5 billion went missing. Is this true?

Khairallah Babaker: There has been corruption, but it was not $5 billion. The corruption was in the contracts. The exact statistics related to the corruption have been recorded by the Iraqi committee for financial supervision. It is not $5 billion, but regardless of the amount, even if it is one dollar, corruption is corruption.

Rudaw: It is said that the Iraqi government is planning to end food ration distribution. Is there any such plan?

Khairallah Babaker: On an annual basis, US$4 trillion is allocated for food rations. But this amount of money is not sufficient to provide food for 34.5 million people. In some southern Iraqi provinces, if people were not provided with sugar, rice and flour every month, they would be in very bad shape. The people in these provinces are not like the people of Kurdistan; their economy is very bad. Therefore, ending the food ration program would be disastrous to Iraq.

Rudaw: But people complain about the low quality of all the food ration items.

Khairallah Babaker: No, that is not true. The food items we distribute are of the best quality. We buy 500 million kilos of food on a monthly basis and distribute it to people. All these food items go through quality control before they are distributed.

As for wheat, we buy 3 million tons of wheat from Australia, America, Canada and Russia. For the current year, we have also bought Romanian wheat. We send the wheat to the mills for processing, and then we distribute it in the form of flour to the people.

“Ending the food ration program would be disastrous to Iraq.”

We never distribute old wheat. The problem is between the mills and the distribution agents. They change the flour, and another issue is that ration recipients do not pick their share up in time. The agents sell the flour back to the mills, and because it remains in the mills and in the agents’ stores, the flour gets old. This problem exists all over Iraq, including the Kurdistan Region.  We buy good quality flour to distribute to people, but it ends up being fed to the fish.

Rudaw: Before the Eid of Ramadan, a delegation from the economy and commerce committee, headed by Dr. Roj Nuri Shaways, visited Iran to sign a trade agreement. You were supposed to sign the agreement as the Iraqi minister of trade, but you did not. Why?

Khairallah Babaker: Yes, the delegation was on an official visit to strengthen trade and economic ties with Iran. Iran is currently going through an economic crisis due to the embargoes on the country. Therefore, Iran has to open a new trade door, and Iraq is its only option. The Iran-Iraq border stretches 1,480 kilometers, and we are a good neighbor to Iran.

However, there are 49 water sources coming into Iraq from Iran. Iran has dried all these rivers. It has redirected the water in Iran and on some rivers it has built dams. I told the Iranian trade minister that if Iran didn’t solve the water problem, I would not sign the agreement. He said that it was a different package, and that the problem was for the Iraqi and Iranian resources ministries to solve, not us. But I said no, and that if the problem was not solved, I would not sign the agreement.

Alwand River is now completely dry and the water at the Dukan Dam has significantly lowered. If Iran does not solve the water issue, we will use other ways to pressure them. We will restrict imports of Iranian goods.

This subject now lies in the hands of the Iraqi Trade Ministry. We should take advantage of the Iranian embargo, and get Iran to solve the water problem. I told Dr. Shaways that I would not sign the agreement because we cannot offer Iran flowers and in return have them ignore the water problem.

Iraqi Parliament would not tolerate the signing of such an agreement either. However, Dr. Shaways had a different opinion. During the visit, we told Iran that that was it. We also told them that not signing the agreement was not the end of the matter, it was just a start. 

Rudaw: Did you face any trouble after your return from Iran?

“I will not sign the agreement and I will not accept any pressure.”

Khairallah Babaker: No, to the contrary.  I am planning to frankly address this issue at the Iraqi Council of Ministers meeting. I will ask for the government’s support, and the government has to support me with this step. However, when we returned, there were some individuals who asked me to take it easy on the issue and sign the agreement.

Rudaw: Who were they?

Khairallah Babaker: I will leave that to history. I do not want to further deepen political conflicts.

Rudaw: Will you sign the agreement under pressure?

Khairallah Babaker: I will not sign the agreement and I will not accept any pressure.

Rudaw: Are you willing to resign over this issue?

Khairallah Babaker: Yes, I would resign before signing the agreement.

Rudaw: You have also threatened to cancel economic and trade contracts with Turkey. Was this threat to create a balance between Iran and Turkey?

Khairallah Babaker: With Turkey, we have a number of memorandums of understandings and a free market. However, if Turkey also does not release Iraq’s share of water, I will annul all agreements. I have started researching an alternative to Turkey for providing Iraqi needs. For example, we have a $670 million annual contract with Turkey for cooking oil. But the Turkish response to the water issue has been much better than that of Iran.