Commentary: Oil for food revisited

By SAM VAKNIN, UPI Senior Business Correspondent   |   March 24, 2003 at 1:52 PM

SKOPJE, Macedonia, March 24 (UPI) -- It is payback time. The United States has every intention of sidelining France, Germany and Russia from the lucrative reconstruction of a war-ravaged Iraq. U.S. Ambassador to the United Nations John Negroponte said, last Wednesday, that Washington is bent on "streamlining" the 8-year-old U.N. oil-for-food program, now on hold since last Monday.

Money from Iraqi oil sales currently flows to an escrow account, co-managed by the Security Council's Office of the Iraq Program and the Iraqi government. More than $42 billion worth of contracts for humanitarian supplies and equipment have been signed since December 1996.

The United Nations states that "supplies and equipment worth almost $26 billion have been delivered to Iraq, while another $11.2 billion worth of humanitarian supplies and equipment are in the production and delivery pipeline." Of these, reports the Washington Post, $8.9 billion in humanitarian goods, including $2.4 billion worth of food, are "ready to be imported into Iraq." The program's budget is about $10 billion a year.

The United States and Britain wish to make Kofi Annan, the secretary-general of the United Nations, the sole custodian of the program, exclusively empowered to approve applications and disburse funds -- as he has hitherto been doing in Northern Iraq. According to their proposals and the secretary-general's 8-page letter, the program's remit will be extended to cover war refugees as well.

Other novelties: Annan would be authorized to renegotiate contracts -- for instance, with Russian, French and Chinese energy behemoths -- and prioritize purchases. Additional routes and sites, both inside and outside the besieged country, would be approved for Iraq's energy exports and for the delivery and inspection of humanitarian supplies.

Stratfor, the strategic forecasting consultancy, explains why this stratagem is anti-Russian and, more so, anti-French:

"The process would greatly speed up the aid disbursement process and cut out the middlemen who profit from the contractual go-betweens ... (which) have been almost exclusively French and Russian companies ... French and Russian banks usually have channeled the funds to the appropriate places ... The contracts were bribes to Paris and Moscow to secure French and Russian support for Iraq within the United Nations."

The non-disbursed portion of the fund has ballooned to equal two or three years of Iraqi oil revenues -- more than $40 billion. Iraqi Vice President Taha Yassin Ramadan scathingly criticized Annan Sunday for seeking to expand the exclusive role of the United Nations in administering the oil-for-food program. He said the proposal was "based on a colonialist, racist and despicable illusion that pushes the despot oppressors in Washington and London toward eliminating the state of Iraq from existence."

The increasingly cantankerous Mohammed Al-Douri, Iraq's disheveled ambassador to the United Nations, invoked the inevitable conspiracy theory. Iraq, he seethed, is to be eliminated and transformed "into colonies under the control of the world American and Zionist oil mafia." It is "a great insult to the United Nations." Annan's scheme "calls for the forfeiting of the oil of the Iraqi state and implementing the colonial illusion of the removal of the State of Iraq," he thundered.

The Washington Post quotes a "confidential U.N. paper" as saying that "the U.N. image is already tarnished among the Iraqi people. It will be further damaged if the question of Iraq's oil resources is not managed in a transparent manner that clearly brings benefit to the Iraqi people."

The stalemate costs the under-nourished and disease-plagued people of Iraq dearly. More than three-fifths of them -- some 14 million souls -- rely on the program for daily necessities. Over the weekend, experts from the 15 members of the council, presided over by Germany, met to iron out the details. They were aided by Deputy Secretary-General Louise Fréchette; Benon Sevan, executive director of the OIP; U.N. Legal Counsel Hans Corell; and Under-Secretary-General for Humanitarian Affairs Kenzo Oshima.

Negroponte reiterated Washington's mantra that the United States "will ensure that Iraq's natural resources, including its oil, are used entirely for the benefit of the Iraqi people." But Annan did not sound convinced when he exhorted the United States and Britain in the letter he delivered last week to the Security Council: "The primary responsibility for ensuring that the Iraqi population is provided with adequate medicine, health supplies, foodstuffs and materials and supplies for essential civilian needs will rest with the authority exercising effective control in the country ... (But) without in any way assuming or diminishing that ultimate responsibility, we, in the United Nations, will do whatever we can to help."

Thus, continues Annan's missive, money in the U.N. account, originally earmarked for equipment and infrastructure, would be diverted to purchase food and medicine "on a reimbursable basis." Who would reimburse the fund he left unsaid. Nor did he limit the newfangled "interim" oil-for-food regime in time.

Whatever the outcome of the recent tussle, the United Nations would still have to rely on the Iraqi government to distribute goods and provide services in the southern and central parts of this California-sized polity. The U.N.'s own staff has been withdrawn upon the commencement of hostilities. Annan already conceded that "the Iraqi State Oil Marketing Organization should be allowed to continue to retain ... the authority to conclude oil contracts with national purchasers."

But Saddam Hussein's regime fails to see the urgency. Baghdad said last Monday that it had distributed food to the populace to last them through August. Even non-governmental organizations in the field claim that no shortages are to be expected until May. So, what's the hurry? -- wonder the authorities aloud, as they cower in their offices, awaiting the next, inevitable, blast.


(Send your comments to: svaknin@upi.com.)

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