Iraq May Find Ways to Ease Embargo's Grip, Experts Say : Economy: Despite this, the Baghdad government appears vulnerable to the international sanctions.

TIMES STAFF WRITER

The international embargo against Iraq could be an economic boon to at least one group of entrepreneurs: thousands of Turkish truck drivers who make their livings on the back roads of the Middle East and Europe.

"Some of them are practiced smugglers" who would have no trouble slipping across mountainous, isolated borders for quick profits, said Patrick Clawson, resident scholar at the Foreign Policy Research Institute in Philadelphia.

Nor are the ethnic Kurds along the border likely to be deterred by the official declaration of an embargo, Clawson said.

He explained: "Remember that international trade is conducted by businessmen, not governments. These aren't multinationals we're talking about. It's a guy with a truck."

Experts say that Iraq may find thousands of such small ways to loosen the grip of the embargo--an economic weapon on which countries around the world are relying to help persuade Iraq to withdraw from Kuwait without using military force.

Even so, Iraq appears vulnerable to the sanctions, if only because countries around the world have demonstrated virtually unprecedented cooperation in the effort to put an economic stranglehold on Iraqi President Saddam Hussein.

Iraq imports most of its grain, edible oils and sugar. It relies on overseas suppliers for three-quarters of its wheat, for example, and as much as 95% of its rice.

Analysts say it will be relatively easy to stop Iraq's oil sales, depriving it of the income it needs to buy these products.

Oil is a particularly difficult commodity to smuggle out of a country without detection, and Iraq has only a limited number of outlets, including pipelines and the Persian Gulf. Western countries are imposing a blockade to ensure that no oil moves out.

In fact, the embargo already has had an effect. In an action reminiscent of their country's eight-year war with Iran, Iraqis rushed to food stores late last week to stock up on essential supplies. During the hostilities with Iran, food lines often stretched for blocks.

Nonetheless, even in ideal circumstances, imposing economic sanctions means engaging in a waiting game--a test of political nerve in which neither side can really exercise complete control.

For Americans, the tactic goes back as far as the Boston Tea Party, but over the years it has produced vastly different results.

When oil companies embargoed Iranian oil, in 1951, after Tehran nationalized its oil production, the move was so successful that only one tanker of Iranian crude managed to get through.

Still, it took two years for the government to fall, and even that occurred only after some quiet help from the CIA.

In other cases, however, countries subjected to embargoes have been remarkably resourceful in getting around them.

U.N. sanctions against the white government of the breakaway British colony of Rhodesia, now independent, black-led Zimbabwe, were officially in place for 11 years, but they never really worked.

South Africa helped Rhodesia by relabeling and shipping its neighbors' products as its own. Many countries--including the United States--were widely accused of secretly buying from Rhodesia.

Over time, Rhodesia became almost entirely self-sufficient in most products, even developing its own Scotch and a version of the board game Monopoly (called 'Round Rhodesia).

Embargoes often have backfired on the countries that imposed them. When the Confederacy began withholding its cotton from England and France in an effort to enlist their aid in the Civil War, the two countries created their own suppliers--in Egypt.

Analysts say the major requirement for making an embargo work is patience. "Embargoes do break down over time," said Richard Ellings, executive director of the National Bureau of Asian and Soviet Research in Seattle and author of a book, "Embargoes and World Power."

"The longer it goes, the greater the chance of leakage," added Andrew Bellingham, vice president of World Perspectives, Inc., a Washington consulting firm that specializes in agricultural issues.

The broad embargo that the United States and Britain organized against the Soviet Union in 1949 is a classic example of how such efforts can deteriorate. Officially, it still is in place today, but it now covers only a few strategic items such as high-technology goods, arms and other sensitive materials.

The effort worked well, at first, because the United States had plenty of leverage over the war-ravaged countries that needed its economic help. Eventually, however, self-interest took over, and the other countries began selling to the Soviets.

Making sanctions work against Iraq will take months--and possibly even longer--analysts say. Although precise information is hard to get, Iraq is believed to have several months' supply of food stockpiled. It also may be able to substitute local barley for part of its imported wheat.

Experts say that Iraq's industries carry large inventories--a necessity for operating with few interruptions in the unpredictable Third World--enabling many of them to get by for as long as a year on the spare parts they have on hand, plus others they can smuggle in.

Although most major exporters are cooperating in the sanctions, Iraq still may find some suppliers. South Africa, for example, is a corn exporter that has proven itself "a bit of an opportunist, taking markets that others have shunned," Bellingham noted.

And in a region where much commerce is conducted under the table, Iraq may be able to raise funds from its neighbors, even those who have taken a public stand in favor of sanctions. Such payments helped finance its war with Iran, experts say.

"There's all sorts of cross-subsidies in that part of the world, so it wouldn't surprise me if eventually a resolution is reached among the Arab countries that involve payments in cash or kind," said Jeffrey J. Schott of the Institute for International Economics.

If the sanctions do fully take hold, many analysts question how long countries around the world will have the political will to continue them--especially if pictures of starving children start flickering across their television screens.

When the U.N. Security Council approved its resolution imposing sanctions last Monday, it included a provision allowing the shipment of food and medical supplies for humanitarian reasons.

And while other oil-producing countries have promised to increase their output to make up for the lack of Iraqi petroleum on world markets, the sanctions won't be entirely painless for the countries imposing them.

Australia, for example, will be losing the market for about 15% of its wheat exports. Countries such as Jordan and Egypt may suffer significantly if the workers they have sent to work in Iraq and Kuwait no longer are allowed to send payments home.

Some analysts question the basic premise of the sanctions--that by inflicting severe economic pain on Iraq, the international community can force Saddam Hussein to relent and withdraw from his invasion of Kuwait.

"He strikes me as a man who strikes back when he is hit," said Clawson of the Foreign Policy Research Institute. "I'm not going to say the sanctions aren't going to work. I'm saying we need to have a backup plan."

Times staff writers Douglas Jehl and John M. Broder contributed to this article.

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