Global Policy Forum

By John Tagliabue

One day after President Bush's demand that Iraq comply with United Nations arms control resolutions, three French parliamentary deputies flew to Iraq on what they described as a personal visit to urge Baghdad to comply with the demands.

The visit set off a political storm in France, where much is riding on the outcome of the diplomatic struggle over Iraq. While a humanitarian gesture, the trip also illustrated in part how countries are positioning themselves for an end of trade penalties. One of the three legislators, Thierry Mariani, 44, of President Jacques Chirac's Union for a Presidential Majority, told French television that the purpose of the trip was to urge Iraqi compliance with the United Nations' demands. But he was also quoted in Le Monde as justifying the trip with "the defense of French economic interests in Iraq."

Last year, France ranked No. 1 among European countries doing business with Iraq, with $1.5 billion in trade, followed by Italy, with $1 billion. Among the countries that trade with Iraq under the oil-for-food program, France ranked third, with $3.1 billion in trade since the program's start 1996. French trade under the program was surpassed only by Russia, with $4.3 billion, and Egypt, according to United Nations diplomats.

The French oil giant TotalFinaElf has the largest position in Iraq, with exclusive negotiating rights to develop Majnoon, a field on the Iranian border with estimated reserves of 10 billion barrels, and Bin Umar, with an estimated production potential of 440,000 barrels a day, according to oil industry executives.

The biggest deals after that were expected to go to ENI of Italy, to develop the Nassiriyah field at a cost of $1.9 billion. Moscow has a $3.5 billion, 23-year agreement with Baghdad to rehabilitate several Iraqi fields that would vastly benefit a Russian oil consortium led by LukOil, they said.

At the United Nations, France has sought to buffer Iraq from American ire. Baghdad's recent pledge to accept United Nations inspectors won praise from French diplomats, who have been insistent on a two-stage approach to resolutions that would delay a military threat. The preferred French outcome would be a resolution demanding unfettered inspections, followed by a measure backing the use of force, depending on Iraq's response.

Mr. Mariani and the other two deputies, Didier Julia, 68, and Eric Diard, 37, are from the Gaullist wing of Mr. Chirac's party. The minister for the environment in Mr. Chirac's government, Roselyne Bachelot-Narquin, is the founder of a French-Iraqi friendship society.

Many experts contend out when a government is brought down by trade penalties, the bureaucracy is likely to be left intact. While those close to power do not survive, the trade bureaucracy consists of technicians, not politicians, and the calculation is that they will continue doing business with past trade partners.

"A lot of countries are already positioning themselves," said Barbara Oegg, a trade expert at the Institute for International Economics in Washington.

Russia has made no secret of its desire to cultivate Iraq. Baghdad owes Moscow $8 billion in debt incurred before the Gulf War, and has used trade under the oil-for-food program to curry Moscow's favor, dangling oil investment deals to be signed after penalties were lifted.

In Britain this month, the Middle East Association, a trade group, wrote Prime Minister Tony Blair expressing "deep misgivings" about the damage to trade that military action in Iraq could produce, according to David Lloyd, a spokesman for the group. The Middle East Association is seeking to send 10 to 15 British companies to the Baghdad trade fair in November, which would be the first time that British companies have attended the fair since 1989.

The French legislators' trip was organized by a consulting company, the French Office for the Development of Industry and Culture. According to its director, Francois Girard-Hautbout, it seeks to promote Gaullist pro-Arab policies, including economic ties with the region.

Under the six-year-old United Nations oil-for-food program, Iraq determines where it will shop using the proceeds from oil sales.

Roland Bareilles, a founder and honorary president of the French-Iraqi Association for Economic Cooperation, said France had assumed the first rank among Iraq's trade partners after the start of the oil-for-food program, but fell back recently to Russia's benefit. "Contracts are part of their political strategy," he said of Iraqi officials.

Among French companies, Peugeot sells cars in Iraq while Alcatel landed several contracts to rebuild the country's battered telephone system. Klaus Wustrack, an Alcatel spokesman, said Alcatel originally installed the telephone system in the 1980's. But he emphasized that all the contracts fell within the oil-for-food project.

At Peugeot, a spokeswoman said the company delivered 500 cars to Iraq in the first half of the year under the oil-for-food program, about the number it delivered annually before the Gulf War.

Some trade transactions have set off greater disagreement. In March, Nabel Musawi of the London-based Iraqi National Congress told ABC News that Baghdad bought seven refrigerated trucks from Renault Trucks, the French company that is owned by Volvo of Sweden, and converted them into biological arms laboratories. Bernard Lancelot, a Renault Trucks spokesman, said the deal was approved under the oil-for-food program. "What the client does with the trucks later," he said, "we don't know."