WARSAW, AUG. 11 -- The world trade embargo against Iraq has come at a particularly bad time for countries of Eastern Europe already short of oil and strapped for hard currency.
In the past year, before Iraq's invasion of Kuwait and the subsequent U.N.-sanctioned boycott of Baghdad, the countries of Eastern Europe have been forced to absorb an unexpected reduction in oil supplies from the Soviet Union.
Supplies were cut as much as 30 percent. In addition, Moscow told its democratizing former satellites that beginning next year they will have to start buying all their oil with hard currency.
To fill the gap, several East European countries saw Iraq as the supplier of choice. The government of President Saddam Hussein is one of the few in the world that owes lots of money to East European governments, mostly for arms purchases.
Baghdad had been paying off many of those debts with oil. In recent months, as much as 565,000 barrels of crude oil a day were being exported to Eastern Europe. It was a deal that suited both Iraq and Eastern Europe.
Poland, for example, saw its 1990 Soviet oil supply slashed 31 percent, from 1.1 million tons to 760,000 tons. That cut was made less painful by a deal in which Iraq promised to supply 1 million tons of oil this year as partial payment on a $500 million debt.
When Iraq invaded Kuwait, only about one-quarter of that oil had been delivered in Poland. The Polish government this past week estimated its loss at about $250 million.
That loss is a major blow for a country struggling to implement a "shock therapy" economic reform program that in the short run has triggered a severe recession and pushed unemployment above 700,000.
The Polish foreign minister began looking for ways this past week to ease the loss, possibly by asking the United Nations for a hardship exemption from the embargo. Press reports here said the government also was considering asking wealthy blockade supporters -- such as the United States -- to offset some of the losses.
The embargo also is proving painful for debt-ridden Hungary and Bulgaria.
Hungary, suffering from a 13 percent cutback in Soviet oil supplies this year, received about 200,000 tons of Iraqi oil in January, partially as a payoff for outstanding debt. Baghdad still owes $16.5 million to Budapest, which, in turn, owes its foreign creditors $20 billion.
The tightest oil squeeze appears to be in Bulgaria. There, in a nearly bankrupt country that has stopped payments on its $10.2 billion foreign debt, the Soviets cut oil deliveries for 1990 by 16 percent.
Iraq owes Bulgaria an estimated $1 billion, part of which the Sofia government had planned to claim in crude oil for Bulgarian refineries. Reuter news agency reported this past week that Sofia recently went to Baghdad with a guns-for-oil barter offer. The U.N. embargo apparently will nix that deal. Bulgarian Prime Minister Andrei Lukanov traveled to Paris this past week. Diplomats said he was likely to ask France and the European Community for help in riding out the trade ban with Iraq.
Yugoslavia also buys a large portion of its oil from Iraq. In addition, Belgrade has major investments in the country, with about $900 million in Iraqi debts outstanding on arms and construction deals.