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[casi] Dirk Adriaensens contribution to Saddam's Palaces.

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Thanks to Dirk, Colin, Anai, and Bert for their help on this topic.  Great
contributions from a great DISCUSSION list.

Briefing on Palace Construction in Iraq
The issue of Saddam's building palaces is complex, but the claim that ithas
been the main reason behind the worsening of conditions in Iraq isfalse.
Although it's hard to refute it being a diversion of resources, itcannot be
used to justify sanctions.

In the report "Unsanctioned Suffering," the New York-based Center
forEconomic & Social Rights (CESR) cited Sec. of State Albright's claim
in1996 that Saddam had spent $1 billion over the last five years on
palacebuilding. CESR reported that this estimate was exaggerated because it
"wasbased on the cost of constructing similar buildings in the region
andtherefore did not take account of Iraq's peculiar economic conditions"
suchas low wages and building costs.

In her book "Sanctioning Saddam," Sarah Graham Brown states that after
theIran-Iraq war, the regime had allocated $2.5 billion on a
presidentialpalace. The Iraqi economist Al-Nasrawi, in his book "The Economy
of Iraq,"makes the same point.

Here's my take on it. Towards the end of the first war, Saddam privatizedthe
construction sector, giving preference to individuals with strong tiesto the
regime. This in my opinion was part of his strategy to secure theirsupport.
After both wars, the construction sector benefited from the needto
reconstruct the infrastructure. Although prestige was definitely afactor,
palace building may have been Saddam's way of buying them off (bygiving them
contracts to build palaces).

Although the State Department's figure of $1 billion may be exaggerated,the
palace building was probably done by private contractors which meansthat
they would charge enough money (in dinars) to make a sizable realprofit in a
hyperinflationary economy.

A Diversion of Resources?

Palace building can only be classified a diversion of resources if fundswere
used to import materials that could otherwise have been used to meetcivilian
needs. It's not clear how much of the amount allocated for palacebuilding
was used for imports.

Which brings us to the question of the estimate. Even if the $1 billion
isaccurate, it is staggered over five years which means that $200 million
wasspent annually on palace building (or $400 million annually if you use
theinflated $2 billion estimate from other sources). Iraq's civilian
importsin 1989 were $11.1 billion (Alnasrawi). Even if we take the larger
$400million/year estimate for palace building and assume that it was all
usedon importing materials, that still is only 3.6% of 1989 imports. To
saythat $400 million/year on palace building is the leading cause for
thehumanitarian crisis (especially in an economy that was importing
$11.1billion in civilian goods in 1989) is ridiculous.

In short, one should emphasize that a) it's not clear whether this
"$2billion" amount was used for importing materials (which would make it
adiversion of resources) and b) even if this diversion of resources
tookplace, it's an insignificant amount and can not be the main cause of
Iraq'shumanitarian crisis.

4) Isn't Saddam spending all the money on palaces and luxuries for his
No. According to the British Government's own figures, last year, if all of
the illicit revenues available to the Iraqi Government had been channelled
into the official humanitarian programme ('oil for food') revenues would
have been increased by less than 3%.

By contrast the UN currently diverts 28% of all 'oil for food' to pay for
'war reparations' and its own expenses. The mega-rich Kuwait Petroleum
Company (KPC) was recently awarded $15 billion compensation : the folk at
the KPC aren't suffering from malnutrition and water-borne disease.
Myth 6: The Iraqi leadership uses money intended for humanitarian purposes
to build palaces and enrich itself.

The New York Times claims that "with oil sales blocked, [Saddam Hussein]
chose to spend what money was available on lavish palaces and construction
projects." (22) In the years before oil-for- food, it's important to recall
that the Iraqi government was distributing food to its civilian population.
The UN Food and Agriculture Organization said in 1995 of the rationing
system that began in September 1990: "The food basket supplied through the
rationing system is a life-saving nutritional benefit which also represents
a very substantial income subsidy to Iraqi households." (23)

Iraq is pumping as much oil today as it did before the Gulf War, but is
making less money because of the change in oil prices and the dramatic rise
of inflation since 1990. When one considers that three Iraqi dinars could
buy $1 in 1990, and today it takes more than 2,000, the difference in oil
sales between 1990 and today is significant. While Iraq is permitted to sell
more than $5.26 billion of oil every six months, these funds are not at the
discretion of Saddam Hussein, but are kept in a
UN escrow account with the Bank of Paris in New York City.

The sanctions, though intended to weaken Iraq's elite ruling class, only
strengthen its political hegemony. With Iraq's population decimated by
hunger, disease, and fear of US and UK bombs, the development of civil
society is hampered, as are hopes for pluralism. Iraq's elite is empowered
by a lucrative black market. With sanctions taking thousands of lives each
month, the Iraqi government can better rally popular support and bitterness
against the US government.
Dear Roger,
that's all I could find about palace-building. I found it here: and here:

Roger Stroope
Peace is a Human Right
Austin College

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