Nations Sign Commercial Cooperation Deal

U.S. Commerce Secretary Carlos Gutierrez listens during a press conference held jointly with Iraqi Trade Minister Abed Falah al-Sudani, not seen, in Baghdad, Iraq, Monday, July 17, 2006. The two signed a commercial cooperation agreement in an effort to bring Iraq towards a free market economy. (AP Photo/Jacob Silberberg, Pool) (Jacob Silberberg - AP)

BAGHDAD, Iraq -- Iraq and the United States signed a commercial cooperation agreement Monday to move the country toward a market economy after decades of state planning.

U.S. Commerce Secretary Carlos Gutierrez said at the signing that progress in Iraq's economy hinged on improved security.

"We are convinced that Iraq is ready for recovery," Gutierrez said. Security is still the No. 1 challenge."

Iraq's economy was devastated by the 1980-88 Iran-Iraq war, the 1991 Gulf war and 13 years of crippling international sanctions, historically,

Oil is the biggest source of income for the Iraqi government, which is struggling to curb violence and restore the supply of electricity and water.

Iraqi Trade Minister Abed Falah al-Sudani hailed the pact as a milestone.

"This agreement will be one of the important agreements that encourages the Iraqi economy to move from centralized economy to free economy," he said. "Today we will start a new chapter in Iraq."

Al-Sudani said he hoped the benefits of a free market would help people see hope.

Reprisal killings between Sunnis and Shiites have overtaken the insurgency as the major threat to the country, pushing Iraq to the brink of all-out civil war.

Hundreds of thousands of Iraqis, many of them from the middle class, have fled the country. Business progress has been largely limited to smallscale commerce.

But a structure for recovery is in place. Two years ago, Iraq created an independent stock exchange. Cell phone subscribers have grown to more than 7 million, and the airport in Baghdad offers commercial flights, though with limited destinations.

"Iraq is not a poor country," Gutierrez said. "Iraq was made poor by tyranny. It can grow prosperous through freedom."