- The Washington Times - Monday, April 16, 2001

NICOSIA, Cyprus In a new twist to his policy of defying the world, Saddam Hussein has started subsidizing extreme Palestinian groups and is urging Palestinian Authority President Yasser Arafat to move to Baghdad, diplomats say.

The developments are regarded as serious by moderate Arab countries that fear an escalation of the violence between the Palestinians and Israel.

The disclosures of Saddam's apparently growing involvement in the crisis in the Gaza Strip and the West Bank followed the recent trip to the Middle East by Secretary of State Colin Powell.

According to Arab diplomats, the trip revealed the weakness of U.S. policy in the area, including the Bush administration's inability to influence the Arab-Israeli crisis and Iraq's defiance of U.N. sanctions.

Consequently, they say, it increased Saddam's prestige among Arab leaders, many of whom admire his tenacity.

But Saddam, who claims that "we have 80 percent of Arab masses on our side," feels the Arab world is not doing enough for the Palestinians and has launched a massive, albeit symbolic, "recruitment" to encourage the intifada.

"The army of Jerusalem boasts 6 million Iraqi volunteers," wrote the Baghdad Babil, published by Saddam's son, Udai.

Another Iraqi publication, Al Tsaura, or Revolution, complained that the recent Arab League summit "refrained" from adopting any practical decision to meet the minimum requirements of "resisting the occupation, oppression, and crimes" against the Palestinians.

"They ignored Iraq's call to take up arms, sided with those who speak on Washington's behalf," the newspaper said.

Saddam has invited Mr. Arafat and his Palestinian Authority to relocate from Gaza to Baghdad promising $1 billion, including $10,000 to the family of each Palestinian killed in the intifada.

While the investigation is generally regarded as a publicity gesture of the kind favored by Saddam, diplomats believe the offer to compensate the victims' families might be considered as tempting.

Above all, Saddam's recent statements show that despite the sanctions and because of the porous frontiers, Saddam is not short of cash while the Palestinians are. Arab Gulf nations have promised $1 billion to the Palestinian Authority, but so far only $400,000 has been paid.

Perhaps more alarming than Saddam's contact with the Palestinian Authority is his support for several organizations regarded by Israel as terrorist and committed to inciting violence. It is not known how much money they have received from Iraq.

According to Arab estimates, Saddam is earning about $1 billion annually from oil smuggled out of the country with the tacit cooperation of Jordan, Syria and Turkey.

These illegal earnings are in addition to money from oil exports allowed by the United Nations and held in an escrow account. The funds obtained through smuggling are considered to be Saddam's private "slush fund," which he can spend on building more palaces and conducting biological, chemical and nuclear programs.

International inspectors have not visited Iraq for two years, and the Iraqi delegation at the United Nations has said they will never return.

According to Iraqi Trade Minister Mohammed Saleh, over the past four years Iraq oil exports totaled $40 billion, while it received goods allowed under the sanctions worth $3 billion.

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