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Iraq adds fuel to the fire.

Dr Safa al Habobi's appointment as Iraq's new oil minister could seriously set back Iraq's hopes of persuading the UN to ease trade sanctions, according to well-placed official sources in Washington.

Pointing to his history as the head of Saddam Hussain's secret military procurement network, and to his indictment for fraud in the US, they have told 7he Middle East that Habobi could be prevented from entering American territory on his way to the UN headquarters in New York.

Talks have been under way at the UN headquarters aimed at a deal under which Iraq would be allowed to sell an initial $1.6bn worth of oil in a six-month period. The UN would supervise the sales, and ensure that the revenues were spent on humanitarian imports. Some of the oil sale proceeds would be earmarked to compensate Kuwait for its war losses.

Dr Habobi headed Iraq's clandestine military procurement network in the West, and was chairman of the controversial British machine tool company Matrix Churchill.

His elevation to the Iraqi cabinet in September will be seen as calculated slap in the face of Western governments who are still deeply embarrassed by their role in arming Saddam in the run-up to the Gulf crisis. In Britain, Dr Habobi's name has figured prominently in the official enquiry established by Prime Minister John Major into the UK's so-called Iraqgate scandal.

In the US, Habobi has been charged with fraud in connection with a scandal surrounding the Atlanta branch of Italy's Banca Nationale del Lavoro (BNL), which provided Iraq with over $4bn in illicit loans to fund its military build-up.

Habobi was excluded from Britain after the invasion of Kuwait and has been officially designated an Iraqi agent by the US government. Also back in Saddam's new team is the Iraqi leader's cousin and son-in-law, Hussain Kamal al Majid, who has become industry and minerals minister. He held the same post before the invasion of Kuwait, when he supervised Iraq's non-conventional weapons programmes.

Habobi headed Iraq's key front company in the West, London-based Technology and Development Group (TDG), which was controlled by Iraqs intelligence services.

In the late 1980s TDG arranged a succession of deals under which European and US firms supplied Iraq with equipment and materials for its weapons programmes, including its atomic bomb project.

With supergun designer Dr Gerald Bull's Space Research Corporation, TDG in 1989 formed a joint venture in Belfast which purchased the former Leafan aircraft factory. The venture collapsed after the Foreign Office intervened to block official industrial development grants. It was feared that the Iraqis planned to use the factory to acquire technology for use in their missile projects.

In 1987 TDG took over Coventry-based Matrix Churchill, which supplied millions of pounds worth of machine tools for Iraqi weapons factories. After the takeover, Habobi became Matrix Churchchill's Chairman.

Last November the trial of three senior Matrix Churdchill executives charged with violating export controls collapsed when it emerged that the government had known all about the transactions.

During the trial it was disclosed that one of the accused, Paul Henderson, the company's former managing director, had been an informer for Britain's foreign intelligence service, M16. It was also revealed that Mark Gutteridge, another former senior company executive (who had not been charged), had been an agent for the UK's domestic intelligence agency M15.
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Title Annotation:appointment of Safa al Habobi as Iraq's Oil Minister may cause problems for Iraq
Author:George, Alan
Publication:The Middle East
Date:Oct 1, 1993
Previous Article:Khartoum looks to Cairo.
Next Article:Smooth operators.

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