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Greetings to all, A few comments on Seb's latest posting to the list. When I last spoke to the OIP, the problem of lack of funds appears to remain serious. To what extent this affects the speed at which letters of credit are opened for purchase orders requires some further investigation. Part of the failure to deliver goods ordered is attributable to two factors: 1. The Iraqi government import organisations remain unwilling to trust normal trade inspection and certification procedures, which generally require inspection at the port of shipment. Most, if not all, cargoes arriving at Umm Qasr are inspected by Iraq on arrival. There have been a large number of cargo rejections, either for reason that the goods fail to meet specification, or because allegedly or actually damaged items have been refused and not discharged. These count as "non-delivery" under the OIP system which only certifies or "authenticates" cargo after it has been discharged and the ship has sailed. For example, significant quantities of Australian wheat were not delivered following the dispute between the Iraqi and Australian governments which received passing mention in previous press reports. 2. The slow pace of ordering, contract approval, and opening of L/Cs makes normal trade pricing difficult. The Iraqi method of allocating trade quotas or contracts adds to the difficulty. For example, a trader or broker who gains a contract for 20,000 MT sugar today may be unable to place a firm order with a supplier for weeks or months until he has the L/C open in his favour. Unless he hedged the contract when first awarded, the market price may move against him and make it impossible for him to confirm an order to a supplier and deliver to Iraq without incurring substantial loss. In such circumstances, the trader may simply default, relying on the goodwill of the Iraqi government not to pursue him for delivery. There are insufficient figures available to me to calculate what proportion of the reported US$ 1.76 billion shortfall is accounted for by such "non-delivery". The US/UK insistence on retrospective pricing of oil purchase contracts likewise makes it difficult for traders purchasing Iraqi oil, particularly in a falling market. Contracts may be awarded, but the purchaser may fail to load. I am not sure how it is possible to check delays on individual contracts, but just as a simple example, a equipment for an electricity power plant arrived in Umm Qasr 2 months ago. The purchase contract appears to have been agreed 3 years ago. It is difficult to conceive what reason there may have been to block the contract. Recent reports indicate that Iraq has stocked up the basic food items, perhaps a sensible reaction to the US threat of invasion. Mark Galloway _______________________________________________ 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 email@example.com All postings are archived on CASI's website: http://www.casi.org.uk