  Supersymmetric flavor models for the radiative generation of fermion masses
offer an alternative way to solve the SUSY-CP problem. We assume that the
supersymmetric theory is flavor and CP conserving. CP violating phases are
associated to the vacuum expectation values of flavor violating susy-breaking
fields. As a consequence, phases appear at tree level only in the soft
supersymmetry breaking matrices. Using a U(2) flavor model as an example we
show that it is possible to generate radiatively the first and second
generation of quark masses and mixings as well as the CKM CP phase. The
one-loop supersymmetric contributions to EDMs are automatically zero since all
the relevant parameters in the lagrangian are flavor conserving and as a
consequence real. The size of the flavor and CP mixing in the susy breaking
sector is mostly determined by the fermion mass ratios and CKM elements. We
calculate the contributions to epsilon, epsilon^{prime} and to the CP
asymmetries in the B decays to psi Ks, phi Ks, eta^{\prime} Ks and Xs gamma. We
analyze a case study with maximal predictivity in the fermion sector. For this
worst case scenario the measurements of Delta mK, Delta mB and epsilon
constrain the model requiring extremely heavy squark spectra.
