Friday, May 30, 2008

STOCKHOLM - An American pitch to get more countries to invest in Iraq got a positive response yesterday - but from an unwelcome source.

Iranian Foreign Minister Manouchehr Mottaki told participants at an international conference attended by Secretary of State Condoleezza Rice that companies from the Islamic republic were outpacing most others in the region in their contributions to Iraq’s economic development.

The boast prompted a sour warning from a U.S. official that Iraq should take care that Iranian business activities on its territory do not violate U.N. sanctions against Tehran.

“Iranian companies have undertaken some economic projects and public works in Iraq to contribute to the economic development of this country, both in the south and in the north,” Mr. Mottaki said at the Stockholm conference.

He did not elaborate on private investment, but he offered more details on Iranian government-funded undertakings in Iraq’s railroad, electricity and oil sectors.

“To meet Iraq’s intense need for electricity, a contract for construction of nine power transmission lines from Iran to Iraq with a capacity of 2,000 megawatts has been signed,” he said.

Earlier yesterday, Miss Rice and Iraqi Prime Minister Nouri al-Maliki had urged foreign countries to invest in Iraq and help it build a modern infrastructure now that there have been “significant improvements in security.”

“The Iraqis don’t need large sums of money,” Miss Rice said. “They do need large infusions of technical assistance, project support, helping to build adequate police forces … an adequate justice system [and] the capacity to execute their large budgets down to the provincial and the local levels.”

Mr. Mottaki also took a jab at the United States, causing Miss Rice to roll her eyes and smirk.

“Due to the mistaken policies pursued by the occupiers in Iraq, the situation of security in Iraq is now so grave that it has cast its shadow on other areas of life in this country,” he said.

The U.S. has accused Iran of providing weapons and support to Shi’ite Muslim extremists in Iraq.

Deputy Treasury Secretary Robert Kimmitt, who accompanied Miss Rice, told reporters that he was not familiar with the investment Mr. Mottaki described but urged Mr. al-Maliki’s government to make sure Iraq is not violating U.N. sanctions by doing business with Iran.

“Any activity anywhere in the world, including in Iraq, that could have in any way a facilitating effect on the Iranian proliferation program would be prohibited by the Security Council resolutions, and Iraq is a member-state of the U.N.,” Mr. Kimmitt said.

The Security Council has imposed three sanctions resolutions on Tehran for failing to come clean on its nuclear program, which Iran insists is peaceful but the West suspects is an undercover military effort.

The sanctions affect individuals, companies and institutions, and Mr. Kimmitt said the Iraqi government has the right to accept foreign investment that “contributes to the Iraqi economy” as long as it has no dealings with targeted entities.

But Miss Rice said that, even if a company is not on the blacklist, anyone who does business with Iran takes “reputational risks.”

She said a stable, democratic Iraq “will be a block against Iranian influence in the region.”

U.N. Secretary-General Ban Ki-moon and Swedish Prime Minister Fredrik Reinfeldt co-hosted yesterday’s conference, the first annual review of the so-called International Compact with Iraq.

Miss Rice and Mr. al-Maliki pressed Sunni Arabs to cancel billions of dollars in Iraqi debt and reopen embassies in the war-torn country, which they promised a year ago but have yet to deliver.

The meeting of nearly 100 countries and international organization ended with no commitments from Iraq’s biggest creditors. About $65 billion of Iraq’s debt has been canceled, but as much as $80 billion still remains, Mr. Kimmitt said.

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