December 4, 2003	Thursday	Shawwal 9, 1424

BAGHDAD, Dec 3: Iraq is preparing to demand repatriation of three billion dollars of cash assets held in Syrian state banks under deals struck with the government of Saddam Hussein, Iraq’s finance minister said on Wednesday.

In Damascus, an official Syrian source said the figure was not accurate, saying it amounted to hundreds of millions of dollars, not billions.

The move by the US-installed Iraqi government will put Syria under more financial pressure after the United States imposed sanctions on the country for backing the Hezbollah and a number of Palestinian groups.

“All of the money belongs to Iraq. An Iraqi delegation will travel in the next few weeks to Damascus,” Kamel al Gilani, finance minister in Iraq’s provisional government, said.

The three billion dollars amounts to 20 to 30 per cent of Syria’s gross domestic product and is slightly less than Iraq’s self-generated liquid funds, which are controlled by the United States.

Mr Gilani said Syria accumulated the money by selling oil on behalf of Iraq in contravention of UN sanctions and selling non-military goods to the Iraqi Military Industrialization Organization, which was under the direct control of former Iraqi leader Saddam Hussein.

“We do not recognize these deals,” he said.

SYRIA DISAGREES: But Syria questioned the figure.

“The amount (Iraqi assets) is in hundreds of millions of dollars. This has been made clear to an Iraqi delegation who visited for talks on the assets,” the official source said in Damascus.

“There is an ongoing clearing process...there are amounts owed to Syrian businessmen who had business transactions with Iraq and have not been paid,” the source added.

Iraq started pumping oil to Syria through a pipeline in recent years, border movement was eased and Syrian consumer products flooded the Iraqi market. Syria has argued that the pipeline that had been shut for two decades was being tested and not used commercially.

Iraq’s banking, however, was still mainly conducted through Jordan and Lebanon. Mr Gilani said the first instalments of one billion dollars of Iraqi government and central bank assets held in Jordan and Lebanon would start flowing to the Iraqi central bank in a matter of weeks.

“We agreed to transfer the money in instalments to help preserve our neighbours’ banking strength,” Mr Gilani said.

Syria keeps a careful watch over Lebanese politics and Beirut’s readiness to hand over Iraqi assets could indicate willingness by the Syrian authorities to cooperate when the Iraqi financial delegation visits.

The Iraqi elite, such as Saddam’s family and their agents, also deposited money in regional banks, Mr Gilani said.

“These private deposits belong to Iraq and must be recovered. They are certainly in the millions and possibly billions,” he said.

He said privatization in Iraq has been ruled out until a constitution was adopted and elections held at the end of 2005, in contrast to US policy of subjecting Iraq to laissez faire immediately. —Reuters