UN takes over economy - for now

04 April 2003
The UN has seized control of the last independent elements of the Iraqi economy through Security Council resolution 1472, which was passed without dissent on 28 March. UN Secretary-General Kofi Annan, already in charge of Iraqi oil exports, has been given complete control until 12 May over the purchase and distribution of most of the food and humanitarian supplies entering Iraq. The UN is now seeking to re-open secure points of entry into Iraq and officials are assessing the security situation at Umm Qasr, where access to the port has been restricted by mines.

The new resolution has displaced the role of the Iraqi government in the supply chain of the UN oil-for-food programme, giving the UN full authority to approve purchases under the programme and to ensure the delivery of goods to Iraq. The UN Office of the Iraq Programme (OIP) announced on 1 April that it had identified more than $1,000 million worth of goods and supplies - comprising more than 450 authorised contracts - which would be prioritised for delivery within the mandated 45-day period.

For the moment, there is no lack of money to finance these orders. The OIP says that there is a total of $2,900 million in uncommitted funds in the escrow account. The principal task is to identify who is executing contracts previously authorised under the programme and the precise status of deliveries. As of 1 April, a total of $10,100 million worth of goods and supplies had been authorised and contracted.

It is probable that the UN's new powers will be extended in view of the fact that a functioning and internationally-recognised Iraqi government is unlikely to be established within 45 days. The next challenge for the UN will be to get oil flowing again to pay for the humanitarian goods that most of the 27.1 million inhabitants of Iraq have come to depend on. On 17 March, Annan suspended the oil-for-food programme and deliveries of crude oil to Mina al-Bakr on the Shatt al-Arab were halted. Oil continued to be pumped by pipeline to the second authorised oil lifting point in Ceyhan in Turkey, but the last crude shipment from the port was reported on 20 March. A total of 8.3 million barrels of crude oil worth nearly $200 million are being held in storage at the port.

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