inside the glass house

No money to pay UN: Whither Iraq’s billions?
NEW YORK - After Saudi Arabia, Iraq has the world's second largest oil reserves amounting to over 112 billion barrels -- a heck of a lot of oil by any standards.

The violence-ridden Arab nation is virtually sitting on top of a black gold mine -- and every major Western oil company wants a piece of the action. A potentially rich country, Iraq also has a $20 billion national budget for 2004, of which at least $2 billion will be spent on the military.

Yet in the corridors of the UN, the US-installed Iraqi interim government is crying poverty in an attempt to forestall payment of a measly $15 million in accumulated arrears of its assessed contributions to the world body.

If it can afford to pay, why is it pleading for more time? Contempt for the world body? Lack of confidence in the UN? Or both?
Ironically, Iraq has joined the ranks of the world's poorest nations, including Burundi, Comoros, Guinea-Bissau, Niger, Moldova, Somalia and Tajikistan, who are the habitual deadbeats in the world body.

All of these countries have been on the verge of losing their voting rights in the General Assembly for non-payment of their accumulated assessed contributions to the world body.

But their inability to pay is primarily due either to a cash crunch, a short of hard currency or an ongoing civil war. If the reason for non-payment is justifiable -- "circumstances beyond their control" -- the UN is generous enough to allow them to vote, until economic conditions in the country change for the better.

Of the total of 10 countries, nine, including Iraq, have been permitted to vote and given a deadline of June next year to pay their dues. Burundi was the only country whose excuse was rejected by the UN Committee on Contributions.

After the UN imposed sanctions on the former government of Iraqi President Saddam Hussein in August 1990 for invading neighbouring Kuwait, Baghdad stopped paying its UN dues thereby accumulating an arrears of $15 million.

Article 19 of the UN Charter says a member state "which is in arrears in the payment of its financial contributions to the organisation shall have no vote in the General Assembly if the amount of its arrears equals or exceeds the amount of the contributions due from it for the preceding two full years."

In a letter to the Committee on Contributions, the interim government in Baghdad says that "Iraq was not in a position to pay what it owed to the United Nations, although it hopes to do so next year, when oil production has increased."

The reason: "the devastation wrought (to Iraq) by more than two decades of war and the effects of a decade of international sanctions." The letter also says that living standards in Iraq have fallen sharply and the country faces a high level of unemployment. ''Although Iraq has enormous potential, with large oil reserves, hydroelectric potential and a skilled population, the immediate problems of reconstruction are vast.''

The irony of it is that the plea for help comes at time when US newspapers have been running stories of how hundreds of millions of dollars in Iraqi oil revenues are missing or remain unaccounted for.

The sloppy book keeping -- or as some would say, misappropriation of Iraqi funds -- has been blamed on the US-run Coalition Provisional Authority (CPA) which administered the country from May 2003 to June this year.

According to a Washington Post story last week, the California-based Halliburton Company, with ties to US Vice President Dick Cheney, and other American civilian contractors, were paid at least $1.9 billion from Iraqi funds, some without competitive bidding.

Striking a note of sarcasm, Jim Paul of the New York-based Global Policy Forum says, "The Iraqi government should perhaps ask Halliburton to help them out." Last week, the CPA's auditor general released a report critical of how the body kept accounts when it was in charge of running Iraq.

The CPA used money seized from the Saddam Hussein government and Iraq's oil revenues to pay for 1,928 contracts worth more than $847 million.

The report said that in one glaring case, officials of the former CPA did not have any records to justify spending $24.7 million to replace Iraq's currency. There were also excess charges of more than three million dollars on an oil pipeline repair contract. The auditors also found that 29 of the 43 contracts had incomplete or missing documentation.

"We were unable to determine if the goods specified in the contract were ever received, the total amount of payments made to the contractor, or if the contractor fully complied with the terms of the contract," they wrote.

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