DAMASCUS: The Iraqi taxi driver works the Baghdad-to-Damascus route, filling his car with passengers and his trunk with sweets to sell on the streets of the Syrian capital.

“I have the best honey in Iraq,” Halim, who declined to give his full name because of the doubtful legality of his peddler status, proclaimed on a recent day to passersby. Occasionally, someone would peer into the open trunk, taste a spoonful of honey and haggle over the price. Halim would almost always capitulate to make a sale.

Hundreds of Iraqis sell clothes, toys, perfumes and other goods on the streets of Damascus. They compete with Syrian vendors hawking their wares from rickety pushcarts. The Iraqis’ presence here is a signal of how dramatically relations have improved since Syria backed the US-led coalition that drove Iraq out of Kuwait 11 years ago.

Today, Iraqi tourists are among the crowds enjoying ice cream and haggling with carpet merchants in Damascus’ winding souks. Trade is booming after border controls were eased two years ago. Syrian exports to Iraq reached $1 billion last year. Western officials and oil analysts say Syria is importing about 150,000 barrels a day of Iraqi oil in contravention of United Nations sanctions — a charge Syria denies.

The improved ties highlight Iraq’s success in recent years in winning over old Arab rivals to help it overcome UN sanctions and blunt US threats to topple Iraqi President Saddam Hussein. Syria has staunchly opposed an American military attack on Iraq. But in a sign of the limits to its support of Saddam, Syria voted this month for a tough new resolution that requires Iraq to disarm or face “serious consequences.”

“Syria and Iraq are two brother countries. We speak the same language, we share the same history and ambitions,” said Bouthaina Shaaban, a senior official at the Syrian Foreign Ministry. “We’ve always had great sympathy for each other, no matter what our governments might have done.”

Analysts interpreted Syria’s recent UN vote as a sign that President Bashar Assad did not want to antagonize the United States and that he would curtail his support for Iraq. But few expect Syria to actively support a US attack.

Since Assad assumed power after the death of his father, Hafez Assad, in June 2000, he has worked to improve relations with Iraq. But the two neighbours still have a complicated and distrustful relationship that is largely built on economic interests. Syrian animosity toward Iraq dates to the 1960s, when bitter divisions emerged between the Syrian and Iraqi wings of the Baath party, which rules both nations. And Syria has long allowed all the major Iraqi opposition groups to operate here.

By developing closer ties with its old rival, Syria has been accused of undermining UN sanctions on Iraq. Western officials say the arrangement under which Syria imports oil from Iraq is channelling up to $1 billion a year into Saddam’s coffers and diverting funds from the UN-sponsored “oil-for-food” programme.

Under that programme, Iraq can export unlimited amounts of crude oil, but the proceeds must be placed in UN-controlled bank accounts and spent on nonmilitary uses.

Oil analysts say they first realized the pipeline had been reopened when Syria’s oil exports soared without any commensurate increase in its domestic production. Western officials say breaking the sanctions works well for both sides: Iraq gets money that is beyond UN oversight and, because it sells Syria its oil at a steep discount, Syria also makes money by using the Iraqi oil to replace its domestic supply. Syria then sells its own crude to other countries at market prices.

“The Syrians say that it’s entirely an economic relationship, and that they’re still suspicious of Iraq politically and militarily,” said a Western diplomat in Damascus. “The Syrian calculation was made at a different time, when governments in the region thought that the sanctions against Iraq had fallen apart, and they had to position themselves to take advantage of Iraqi oil.”

Officials in Damascus say the United States ignores the smuggling of Iraqi oil to other neighbours. Syrian Deputy Foreign Minister Walid al-Mouallem argued that the United States and Britain are singling out Syria for its economic relations with Iraq. Al-Mouallem said all trade between the two nations is conducted under the UN programme.—Dawn/LAT-WP News Service (c) Newsday