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> there was a lot on the 10 o clock news tonight (Thursday) about > Iraq, including a report from Baghdad, by Ragy Omar, in which, > among other things they had a clip from a Baghdad market where a > market vendor talking in Arabic was said to have said that most > Iraqis could now afford all the luxury goods in the market. Thanks for the posting, Richard. I didn't see the report, and haven't seen a transcript, so can't comment on what actually was said. If any of the Baghdadis on the list could tell us their impressions of this, I would be delighted: this may be silly, but, after so many years of feeling Iraq to be such a distant country, I am so pleased that we can communicate somewhat on this list. > This was in the context of Iraq's improving trade and relations > with it's neighbours but the reporter specifically said it was > not sanctions busting goods, implying (I suppose) that oil for > food is allowing this to happen. My understanding is that without > the oil revenues entering the economy (as opposed to the escrow > account) the kind of scenario the BBC was attempting to depict > was impossible. My sense is that the existence of the escrow account itself isn't necessarily problematic. To illustrate what I mean, consider a very simple example: suppose that a child has a job and that all the income earned by the child is paid into an account managed by the child's parents. Further, suppose that, whenever the child wants something, the parents take the money from the account and give it to the child to buy the desired good. In this case, it's a bit more work for the child to buy something; this does add costs, but probably not significant costs. This example obviously differs from the Iraqi escrow account: Iraq is not a child; the Sanctions Committee is not a benevolent parent. The point is similar, though: if it's not much work for the Iraqi government or the UN agencies to get clearance for imports, then the escrow account isn't particularly problematic. The effort required to get clearance has probably dropped with the development of the 'green lists' (now two years old). These tend not to cover the larger and more complicated purchases that are essential to infrastructural reconstruction, which are often held. Here, the concern isn't so much the existence of the escrow account as it is the practices of the Sanctions Committee in conjunction with the account. In any case, whether income reaches Iraq through smuggling or through OFF, it's income. From the point of view of public welfare, both approaches have their drawbacks. Smuggled oil is often sold at a discount, the discount buying political support; OFF oil loses 25% of its revenue to the compensation fund. The revenues gained from smuggling are probably used in ways that emphasise the Iraqi government's internal security priorities over public welfare; OFF revenues may be subject to holds and other uncertainty in the Sanctions Committee. My sense is that the core of the way in which the sanctions' contribute to hardship in Iraq is not by making it more difficult for goods to cross Iraq's borders (after all, the only vehicles inspected are those that present themselves for inspection) but by restricting Iraqi income. Here, the compensation payments are very costly: while many of the non-Iraqi victims of Iraq's invasion of Kuwait were themselves poor and vulnerable, it is striking that the OFF programme has seen $13.8 billion paid in compensation (http://www.unog.ch/uncc/status.htm, 18 March 2002) and $20.2 billion in goods delivered to Iraq (http://www.un.org/Depts/oip/latest/wu020326.html, 26 March 2002). I suspect that restrictions on foreign investment are an even larger impediment to Iraqi economic growth. The same logic that drove 'oil for food' in the first place drives the argument for foreign investment: Iraq has both grave humanitarian needs and oil wealth; without substantial investment in its oil industry - which its faltering oil industry cannot fund at present - its wealth cannot be used properly to meet those needs. Best, Colin Rowat work | Room 406, Department of Economics | The University of Birmingham | Birmingham, B15 2TT, UK | web.bham.ac.uk/c.rowat | (+44/0) 121 414 3754 | (+44/0) 121 414 7377 (fax) | firstname.lastname@example.org personal | (+44/0) 7768 056 984 (mobile) | (+44/0) 7092 378 517 (fax) | (707) 221 3672 (US fax) | email@example.com _________________________________________________________ Do You Yahoo!? Get your free @yahoo.com address at http://mail.yahoo.com _______________________________________________ Sent via the discussion list of the Campaign Against Sanctions on Iraq. To unsubscribe, visit http://lists.casi.org.uk/mailman/listinfo/casi-discuss To contact the list manager, email firstname.lastname@example.org All postings are archived on CASI's website: http://www.casi.org.uk