NICOSIA, Cyprus -- Iraq reached agreement yesterday with Iran to restore full diplomatic relations, thereby easing Iraq's international isolation and giving it new hope of undermining the economic sanctions blocking imports of arms and food.
And in a televised message broadcast in his name, Saddam Hussein offered to supply oil free of charge to Third World countries, to demonstrate what Mr. Hussein said was Iraq's solidarity with the poor.
The Iraqi president's spokesman said that since the oil was being offered at no cost, it should not be subject to the United Nations sanctions prohibiting trade with Iraq. The countries wanting the oil could take delivery, he said, only if they found a way around the naval blockade organized by the United States and the shutdown of Iraq's oil pipelines.
Mr. Hussein said he was willing to give away oil because of his concern about the impact of higher oil prices, but he made no mention of Iraq's seemingly desperate search for allies. "We are brothers and sisters, and we share the same fate," he said.
The announcement about therestoration of ties with Iran came one day after Iraq lost any realistic hope of winning public TTC support from the Soviet Union, its chief arms supplier. At their summit in Helsinki Sunday, Soviet President Mikhail S. Gorbachev and President Bush issued a joint declaration repeating their demand that Iraq withdraw its forces from Kuwait.
That meeting made clear that for Iraq, Iran represents perhaps the last short-term hope of circumventing the trade embargo.
But Iranian President Hashemi Rafsanjani said nothing publicly to soften his criticism of the occupation of Kuwait while saying he wanted to move closer toward a formal peace with Iraq. He was quoted by state radio as saying Iran, which has supported United Nations sanctions against Iraq but hinted it might offer "humanitarian" food aid, was "keeping with its position toward the region and Kuwait."
The two countries, which fought an eight-year war to a standoff, share a 750-mile border that is a potential port of entry for Iraq and one that might be impossible for Western powers to police. If Iran agreed, Iraq could rely on border crossings to obtain whatever it managed to buy.
Iran made no mention of any discussion of economic sanctions or of any offer to help Iraq, but diplomats in Tehran were reported as saying the embargo was the main topic of discussion during the two-day visit of Iraqi Foreign Minister Tariq Aziz.
The Aziz visit was the first by an Iraqi official since the Iranian revolution of 1979, when Ayatollah Ruhollah Khomeini came to power. From 1979 until the invasion of Kuwait, Iraq regarded Iran as its most dangerous rival for dominance of the Persian Gulf.
Iran's official news agency IRNAsaid Mr. Aziz met with Mr. Rafsanjani and Foreign Minister Ali Akbar Velayati.
When Mr. Aziz asked Dr. Velayati for restoration of formal relations, Iranian officials "announced their consent," the news agency said.Technically, the two counties closed their embassies in 1986 and their diplomats returned home, but there was no formal declaration breaking relations.
It quoted Mr. Aziz as describing the talks as "positive, serious, practical and friendly," and as having invited Dr. Velayati to Baghdad.
President Hussein has gambled that he can make sufficient gains through good relations with Iran to make up for some of his losses from sanctions spurred by his action against Kuwait.
Within days of the invasion, Mr. Hussein accepted all of Iran's peace conditions, including border lines that he had cited in 1980 as among the reasons for starting the war.
In Baghdad, protesters responded to the Helsinki summit by stepping up their demonstrations against the United States. In the largest demonstrations so far, several thousand Iraqis marched to the U.S and British embassies and burned effigies of Mr. Bush and British Prime Minister Margaret Thatcher.