Global Policy Forum

High Oil Prices May Bring


By Barbara Crossette

New York Times
August 10, 1999

United Nations -- Rising world oil prices coupled with a big increase in its production could earn Iraq a record $6.3 billion in the current six-month phase of the program that allows it to sell oil to raise money for food, medicines and other civilian goods, officials and diplomats said on Monday.

But despite the windfall, the government refuses to spend more on childhood nutrition and maternal health, ignoring the advice of U.N. officials, the executive director of the United Nations Iraq program, Benon Sevan, has told the Security Council. And medical supplies remain stockpiled in warehouses.

Sevan said he had asked the Iraqi government on a recent trip there to take an inventory and explain why goods had not moved.

Unicef and the Iraqi government have recently completed a survey of children's health that is expected to show a steep deterioration since the Persian Gulf war in 1991 and the imposition of international sanctions on Iraq.

The release of the findings is being held up by the Iraqis, U.N. officials say. Some suggest that it will show greater advances in nutrition and maternal health in Kurdish areas of northern Iraq, where the United Nations has been running the program, than in the regions where Iraqis have been in charge.

By the end of July, Iraq was pumping an average of 2.84 million barrels of oil a day, according to Bridge News London, a specialist news service. That brings Iraq close to its target of 3 million barrels a day.

Excluding subsidized sales to neighboring Jordan and oil for Iraq's own use, the output leaves oil worth about $2.3 billion for export in the six-month period that ends in November. Oil prices have more than doubled in the last six months, and if they remain high, in the $19 to $20 a barrel range, Iraq could outdo even the most optimistic projections.

The prices have risen in part because the Organization of Petroleum Exporting Countries, of which Iraq is a member, has taken action to limit oil output.

Under the program, known as oil for food, Iraq is permitted to sell up to $5.2 billion in a six-month period. Until now Iraq has not been able to meet the target, and diplomats expect that previous shortfalls will be taken into account and the Iraqis will not be penalized if they exceed the limit.

A third of the money goes to compensate victims of Iraq's invasion of Kuwait in August 1990, and a fixed amount is also set aside for aid to the Kurdish regions.

The program began in 1996 -- nearly five years after it was first offered to President Saddan Hussein, who held out instead for an end to sanctions -- and more than $3.4 billion in food and $700 million in medicines and medical equipment have reached Iraq.

The Iraqis and key U.N. officials say that to raise public health standards, Iraq must also rebuild or improve electricity supplies and sanitation services. But numerous Iraqi requests to buy machinery for these programs has met resistance in the Security Council.

Last week, Sevan wrote to the chairman of the sanctions committee with a long list of items Iraq wants to buy that have been blocked by the United States and occasionally by Britain. But American officials contend that many of the items that Washington has put on hold are suspect because they have more than one potential use and could be intended for weapons programs.

More Information on Sanctions against Iraq


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