The UN is seeking a role in Iraq. US President George W Bush does not want to see UN weapons inspectors back in Iraq so, in some quarters of the international organisation charged with contributing to world stability, an argument is building for the continuation of the UN's oil-for-food programme.

Temporary arrangements, in which the UN has limited authority to run the oil-for-food programme, expire on 3 June 2003. Until then, the US and the UN look likely to lock horns in a battle over who controls Iraq's oil driven economy.

UN benefits

The UN established the oil-for-food programme in 1995. It allowed Iraq to sell oil to finance the purchase of humanitarian goods for Iraqis suffering hardships that many people have argued were largely a result of economic sanctions imposed by the UN in 1990.

Transactions under the oil-for-food programme had to be made using letters of credit (L/Cs) issued by the New York branch of the French bank BNP Paribas where a UN escrow account was held. Money from Iraqi oil sales went into that account out of which suppliers were paid.

Control

Because the all oil contracts had to be approved by the UN, it assumed effective control of the second largest proven reserves of crude oil in the world and consequently Iraq's economy. Over 60 per cent of Iraqis came to rely on UN handouts for their livelihood.

The UN benefited in several ways from its own programme. Principally, it secured an income from oil sales that one UN report reckons generated estimated weekly revenues of US$370 million.

Criticism

The oil-for-food programme and the UN are currently under heavy criticism, particularly from US media. Some reports dub the programme "Oil-for-UN Jobs" while individual members of the UN Security Council - France, Russia and Syria - are accused in several sections of the media of receiving oil contracts on extremely favourable terms.

BNP Paribas has also been in the media firing line. In a widely quoted New York Times article (24 April), William Safire writes: "UN Under-Secretary Sevan admits that the French bank BNP Paribas was chosen to issue letters of credit to most of the favoured suppliers, but brands as 'inaccuracies' charges.of secrecy. He cites a hundred audits in five years. But details of which companies in what countries got how much - that's not public." Safire argues that reports should be made available to US members of the UN.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.