Summary:

Reports are mounting that Iraqi President Saddam Hussein may be
preparing to step down, thus paving the way for the removal of
sanctions against Iraq.  He does not particularly need to go, as he
is quite effective at breaking UN sanctions.  However, his would-be
partners would prefer to do business above board, and may be urging
him to retire.  It's a win-win deal for all involved, from Russia
to Iraq to the U.S.  All that remains is for Saddam to figure out
how to frame retirement as his last great victory.
 
 
 

Analysis:

Qatar's Al-Jazeera satellite television on August 16, citing other
press reports, said that Hussein will form a new government within
the next few days composed primarily of technocrats. The television
station added that he plans to choose current Finance Minister
Hikmat al-Azzawi, who was appointed deputy prime minister two weeks
ago, as Iraq's new prime minister. It also reported that Azzawi has
held talks with a number of university professors - some of whom
are from outside the Baath Party - to seek their help in running
technology and economic ministries. The reported goal of the new
government is to solve Iraq's economic and social problems and to
improve relations with other Arab states. The most startling part
of the report, however, was the claim that most of the ministers in
the new government will be new, with veteran members, such as
Deputy Prime Ministers Tariq Aziz and Muhammad Hamzah al-Zubaydi
playing no part in the new government.

While there is no confirmation of the report out of Iraq, it does
come on top of multiple reports that Saddam has been shuffling top
security positions
[ http://www.stratfor.com/MEAF/commentary/m9908112100.htm ] and
grooming his youngest son Qusay to replace him
[ http://www.stratfor.com/MEAF/commentary/m9908062000.htm ].  This
could be nothing more than an ongoing and massive U.S. psychological
operation (PSYOP) aimed at unnerving the Iraqi leadership.  The
Qatari report did accompany a denial, by the Iraqi Culture and
Information Minister, that a recent uprising in the Iraqi military
had been forcefully put down, with a number of officers killed.
Reports that Qusay is now heir apparent were denounced by Saddam's
older son, Uday, though he was notably alone in that denial.
However, despite Uday's denials and yet another in a string of
rumored coup attempts, it seems that Saddam is pursuing a new
strategy to break the impasse in Iraq's international relations.
Evidence is building that Saddam may just be serious about stepping
aside.

In 1997, Al-Azzawi, in what even the Iraqi News Agency (INA)
described as a rare public appearance, announced a new Iraqi policy
of opening up unofficial trade channels, based on the fact that
there seemed to be no end in sight to the UN-imposed sanctions.
Apparently, this policy seems to have worked.  Since mid-1998,
there have been numerous reports of rampant sanctions busting.
Iraq has recently announced a plan to massively increase oil
exports, something impossible without substantial foreign
investment in oil production and infrastructure development.  But
Iraq has already apparently received aid on the infrastructure-
development front
[ http://www.stratfor.com/MEAF/commentary/m9908170057.htm ], and is
pushing ahead with negotiations with prospective production
partners as though the UN sanctions were already lifted.

The UN cannot lift sanctions on Iraq without the approval of the
U.S.  Washington, in turn, cannot allow the sanctions to be lifted
because - regardless of the status of Iraqi arms production - it
has so demonized Saddam Hussein that it simply cannot normalize
relations with the Iraqi leader.  As far as Saddam is concerned,
there is no problem.  He can still export all the oil he can
produce, and can import anything he needs, albeit with a surcharge.
Sure, he wants the sanctions-busting surcharge lifted, but
otherwise he really has little reason to step aside.

Iraq's would-be partners, however, would prefer to do business
without repercussions from the U.S.  India was already forced to
withdraw a loan offer to Iraq under pressure from the U.S. and its
allies, and Russia and China have had to put off open investment in
Iraq.  Saddam's allies may therefore be pushing him to take a cozy
retirement and let his son and a politically-correct cabinet take
over.  Washington might even give this one a nod, as it would
prefer to deploy its military assets in more pressing venues, such
as East Asia and the Balkans.  In return, Washington could offer to
accept Qusay and give up its support for the Iraqi opposition.  For
now, we only have rumors, but the rumors keep adding up.  The only
thing that remains is for Saddam to find a way to paint this as a
final victory over Iraq's oppressors, and not a final surrender to
sanctions.