Iraq tells Australia to drop U.S. support

Iraqis are stocking up on government food rations as fears of a U.S. invasion mount

BAGHDAD, Iraq (CNN) -- Iraq's trade minister has said his country will only resume importing Australian wheat once the Australian government drops its support for a U.S. strike on Iraq.

An uncomfortable Australian Wheat Board (AWB) official could only listen as Iraqi Trade Minister Mohammed Mehdi Saleh announced Thursday plans to cut by half his country's regular purchase of Australian wheat.

Saleh told the Wheat Board delegation that Baghdad's regular order would only be restored "once the Prime Minister of Australia and the Foreign Minister of Australia change their position by declaring opposition to any military action on Iraq."

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Australia sells about 17 million tonnes of wheat to overseas markets each year, worth $2.35 billion (A$4.33 billion) in 2001.

Trade with Iraq represents $450 million (A$830 million) of that total and was already hit earlier in the week when Iraq cancelled an order for 500,000 tonnes. (Full story)

In a bid to stave off any further damage to trade with its biggest customer, the AWB sent a delegation to Baghdad for talks this week.

"I think there is growing support for a diplomatic solution," the Australian team's chairman told CNN.

"There is not support in the Australian community for military action."

While Australia has not committed itself to providing military support for any U.S. strike on Iraq, the nation has been vocal in its support for action against Iraq to allow the resumption of United Nations inspections for weapons of mass destruction.

It also supports the U.S. position on seeking a regime change in Iraq with Prime Minister John Howard saying recently: "I think everybody would like to see another more benign, more democratic ruler than Saddam Hussein."

Australian navy vessels in the Persian Gulf are also instrumental in enforcing trade sanctions against Iraq, an action which prompted a recent call from the Iraqi regime to the U.N. to halt U.S. and Australian "piracy" in the region.

Trade as bargaining tool

Prime Minister John Howard says Australia will not be blackmailed by Iraq

Iraq, with its huge market and almost endless supply of oil, has always used trade to reward and punish other countries for their political positions.

The Arab nation uses oil revenues to buy food under a United Nations oil-for-food program which is renewed each six months.

Under that arrangement, Iraq buys about two million tonnes of Australian wheat a year, the bulk of which is milled and used to make bread.

It's using trade and diplomacy more than ever to try to shore up support against a U.S. invasion.

In Australian, the approach is having some impact as pressure mounts on the government to rein in its rhetoric on Iraq.

The Grains Council of Australia questioned why the Australian government "seems to be leading the world in its criticism of Iraq at this stage."

The president of the council, Keith Perrett, told radio listeners earlier in the week the government needed to be "very considered, very responsible" in its statements and policy decisions concerning Iraq.

CNN Baghdad Bureau Chief Jane Arraf says that as the threat of war hangs over the country the streets look normal, although under the calm façade there's a real unease.

She says many Iraqis fear the U.S. will go to war against their country partly because there are no signs their own president is backing down.

And the government is preparing for it -- allowing people to stock up on government food rations two months at a time.

-- CNN Baghdad Bureau Chief Jane Arraf contributed to this report