Saudi Arabia is reportedly planning to hold its first trade fair in Iraq since the 1991 Gulf War.

Firms in the medical equipment, food processing, electrical and textiles sectors will send representatives to Baghdad, a report in the Saudi-based Arab News quoted an Iraqi trade ministry official as saying.

Under United Nations sanctions, Iraq's trade is limited to goods sold under the oil for food programme, which allows the country to import humanitarian supplies.

The trade fair is being planned for early September amid growing reluctance among Arab governments to back a United States attack on Iraq.

The Saudi trade ministry could not be reached for comment.

Tension builds

Saudi Arabia has strongly opposed a US war to depose the regime of Iraqi president Saddam Hussein.

Saudi Arabia has long been the US' most important Arab ally and made military bases available to US forces in the 1991 war to dislodge Iraqi troops from Kuwait.

A Saudi boycott of US goods and lawsuits bought by Americans who allege Saudi collusion with terrorist groups has however damaged relations.

Trade with Iraq brought in 255 million riyals ($68m) for Saudi firms in the first six months of this year, according to the Saudi Export Development Centre.

Trade trickle

Trade with Iraq is a tiny proportion of sales for the Saudi food and manufacturing sectors, which play a junior role in the Saudi economy.

But the Saudi authorities is keen to promote this trade, particularly agriculture and food processing.

They want to diversify the economy, develop poor rural areas and lessen dependence on imported food, analysts say.

"Saudi Arabia has a growing domestic manufacturing and food products industry, so they're taking advantage of that" to gain from UN-backed trade, according to Brad Burland, chief economist of the Saudi American Bank in Riyadh.

Manufacturing and food production each made up about 5% of the Saudi economy in 2000.

Oil and petrochemicals dwarf all other sectors.

Oil exports were worth about 50 billion riyals ($13.3bn; $8.6bn) in 2000, compared to a mere 1.7 billion riyals for foodstuffs.