The great hope for the future of Iraq, crippled by sanctions since the 1991 Gulf War, is that its main natural resource, oil, will one day restore its people to prosperity. However, the United Nations oil-for-food programme not only fails to meet the nutritional and medical requirements of the Iraqi people but also harms the long-term economic interests of the country, an expert analysis claims. The damage being done by the programme has been described in a report presented to the Security Council by the UN Secretary-General, Mr Kofi Annan, who commissioned the investigation last year. The report, published in the Nicosia-based Middle East Economic Survey (MEES), was prepared by a four-man team of experts from the Dutch firm of Saybolt following a visit to Iraq last December. The team reported that the country's oil industry is "in a lamentable state" and production capacity is declining at an annual "rate of 4-8 per cent". Current production averages 2.5 million barrels a day, of which 1.88 million barrels are exported. During the last six months of the oil-for-food scheme, Iraq earned only $3.04 billion in revenues rather than the $5.2 billion permitted.
As a result, it has not been able to purchase the volume of foodstuffs and medicines needed by its citizens, who are increasingly vulnerable to malnutrition and disease after 81/2 years of punitive sanctions. UN experts estimate 1.5 million Iraqis have died from deprivations inflicted by sanctions, and the fatality rate among young children has risen to 5,000 a month.
Dr Walid Khadduri, the executive editor of MEES, told The Irish Times that Iraq's "high production policy has already damaged a number of fields . . . and this could become worse" unless its oilfields are repaired.
The Saybolt team estimated that 20 per cent of Iraq's wells had been "irreparably damaged . . . due to the lack of water-removal facilities", while the rest could be returned to production if replacement parts were "made available on a timely basis".
The first $300 million consignment of replacements and other equipment ordered last year was delivered only last week, Dr Khadduri said. Mr Annan blamed the delays on "slow" processing of applications by the UN committee appointed by the Security Council, where the US has blocked certain types of equipment, particularly that destined for refineries. "Unless Iraq is expeditiously provided with essential oil spare parts and equipment, it may be difficult to sustain even the current level of production and export of oil," the Saybolt report stated, predicting that any increase in production was unlikely until March 2000.
However, Dr Khadduri revealed that the Iraqi authorities intend to increase exports to three million barrels a day and have, over the past three weeks, raised capacity to two million barrels a day, risking further water-damage to the already damaged fields. He said Baghdad seems to be motivated by a desire to earn as much money as quickly as possible, although increased production could drive still lower the already rock bottom price of oil.
Other analysts have suggested that Baghdad is determined to punish Saudi Arabia and Kuwait, the main beneficiaries of Iraq's exclusion from the oil market, for supporting Washington's continuing air campaign against Iraq.
Iraq's long-term economic prospects are bleak. For even if Baghdad is permitted to purchase the replacement parts needed to repair production facilities before they deteriorate to the point of no return, capacity is likely to continue its decline. Iraq's industry relies on obsolete equipment and what the Sybolt engineers called "outdated field development concepts".
To keep pumping and exporting its oil, Iraq must upgrade and update its entire production sector. But Washington has refused to entertain such a possibility, just as it has rejected efforts to bring new fields into production using state-of-the-art technology. In particular, the US has turned down requests from the Oil Exploration Company to conduct preliminary work for the development of the two new "giant" West Qurna and Ahdab fields, which could increase Iraq's already massive reserves by as much as 40 per cent. AFP adds from Washington: There are signs that Iraq is failing to avail itself of food and medicine supplies under the UN's oil-for-food programme, despite its complaints that UN sanctions are killing Iraqi children, the New York Times reported yesterday.
Some $25 million were budgeted last year for high-protein biscuits and fortified milk for children under five and nursing mothers, but Iraq has not placed any orders for the goods despite urgings by UN officials.