18-05-02 In addition to a thaw in their political relationships during an Arab summit held in the Lebanese capital of Beirut late March, Saudi Arabia and Iraq, the two Gulf War foes, have recently stepped up efforts to boost bilateral trade ties. Iraqi Industry and Minerals Minister Mayssar Raja Shlah travelled to the Saudi capital of Riyadh to attend a conference of Arab industry ministers at the invitation of Saudi Minister of Industry and Electricity Hashim Ben Abdullah Bin Hashim Yamani.

It is the first time that an Iraqi minister has led an official delegation to the oil-rich kingdom since the 1991 Gulf War, sparked off by Iraq's invasion of Kuwait. Shlah met in Riyadh with some 25 Saudi investors and industrialists with the aim of boosting trade volume and investments between the two countries. The Iraqi minister has also reportedly held talks with Saudi officials over a request by Baghdad to establish a free trade zone between the two countries.
"Iraq seeks to open new avenues of cooperation with sisterly Saudi Arabia and build bridges to boost economic ties, including through the establishment of a free trade zone," Iraqi Finance Minister Hekmat Ibrahim Al-Azzawi was also quoted as saying.

Chairman of the Saudi Export Development Centre Abdulrahman Al-Zamil made an announcement after his meeting with Shlah that Saudi businessmen have been allowed to re-export non-Saudi products to Iraq, a step expected to benefit both Saudi importers and the Iraqi market. Also last February, Zamil urged local businesses to maximize their presence in Iraq to avoid losing their market shares to competitors.
Ties between Riyadh and Baghdad have been severed since Iraq's 1990 invasion of Kuwait and the ensuing Gulf War when Saudi Arabia was a launch pad for the US-led military coalition that ended Iraq's seven-month occupation of Kuwait. Saudi Arabia cut off its diplomatic ties with Iraq since then and has refused to restore them.

For its part, Iraq has repeatedly criticized Saudi Arabia for allowing US and British aircraft to use its bases to enforce a UN-sanctioned no-fly zone over southern Iraq. However, last January, Saudi Crown Prince Abdullah Ibn Abdul- Aziz, the de facto ruler of the kingdom, was quoted as saying that "Iraq is an Arab country and it has the right, just as every Arab has the right, to call for Arab reconciliation, especially with the kingdom and Kuwait."
At the Beirut summit late March, Iraqi and Saudi leaders shook hands and embraced each other, a gesture of reconciliation between the two countries.

Even before the thaw in political relationships, Saudi Arabia, the world's largest oil producer and exporter, has been tentatively restoring trade since 1999 with Iraq under the UN oil-for-food program. Recently, trade sources were quoted as saying that Iraq has awarded Saudi firms trade contracts worth $ 64.7 mm since the start of the year under the oil-for-food program, which was in force since December 1996.
Iraqi Trade Minister Mohammad Mehdi Salah also said that Baghdad hadimported more that $ 1 bn worth of goods from Saudi Arabia within the framework of the program. In 2001, Saudi firms signed contracts worth $ 298 mm for the export of miscellaneous goods to Iraq after securing the UN approval.

Iraq has been under UN sanctions since its invasion of Kuwait. The oil-for-food deal allows Baghdad to sell oil to buy food, medicine and other humanitarian needs to soften the impact of sanctions on the Iraqi people. In addition, Iraq and Saudi Arabia are also preparing for the reopening of a border post between the two Arab neighbours, which was closed since Iraq's invasion of Kuwait.
In 2000, the Saudi government gave its approval for the reopening of the Arar border crossing to provide Saudi exporters with direct access to the Iraqi market. The Saudi businessmen have earlier complained about the long delays by the United Nations in completing the bureaucratic procedure required by the world body along the Saudi-Iraqi border, saying that the delay will "hamper the flow of Saudi exports, preventing them from competing with other products in the Iraqi market."
The reopening of the post is expected to save Saudi businessmen between eight and 10 % of the cost of exporting to Iraq via Jordan. During the past few years, the post has been used only for the entry of Iraqi pilgrims into the kingdom.