1) INTRODUCTION - A GRIM OUTLOOK Return to top

The US and UK are pursuing a strategy towards Iraq which, if not resisted vigorously, will succeed brilliantly in undercutting the international pressure to lift economic sanctions, while at the same time doing very little to relieve the suffering of the Iraqi people. This strategy can be summed up in four words: 'zero holds, stronger sanctions'.

The intention seems to be that these re-invigorated sanctions, embodied in a new UN resolution currently under discussion, would continue for the indefinite future, despite the human toll involved. The international anti-sanctions movement faces a very bumpy ride ahead, and the outlook for the Iraqi people is rather grim, in my view.

2) ZERO HOLDS Return to top

Currently, Iraq is allowed to import certain, specified, civilian goods without interference, through the UN-controlled 'oil-for-food deal'. For other civilian goods, it has to seek permission from the UN Security Council Sanctions Committee. Each country in the Sanctions Committee is allowed to veto an application by placing it on 'hold' - perhaps indefinitely.

The US and UK have come under a lot of fire for their obstructive behaviour in the Sanctions Committee, as the two countries are almost entirely responsible for the $3.67bn worth of goods on 'hold' in the Sanctions Committee (as of 19 May 2001).

The FT has reported that 'the main aim' of the new British draft resolution on sanctions 'would be to reduce the number of holds'. (16 May 2001) 'No "holds" on contracts will be allowed, the [British] official said.' (AP, 17 May)

A British official told the New York Times that three procedures would be followed with 'questionable contracts' referred to the Sanctions Committee under the new system. The contracts, which might contain many different items, could be denied completely, or some items within the contract could be specifically denied, or the Sanctions Committee could ask UN monitors to track the goods to their destination in Iraq and check that they were being used in an approved manner. (NYT, 17 May)

As a sign of their intentions, the US lifted holds on $800m worth of goods on 1 June 2001. (AP, 1 June) Further releases of holds are very likely this month.

The net result of the holds released, and the new system of simply denying goods rather than imposing holds, will be that the US and UK will be able to evade international and domestic criticism for the mountain of goods they are preventing Iraq from acquiring.

The fact that the new resolution also allows a much wider range of civilian goods into Iraq is also helpful to Washington and London in escaping their responsibility for the humanitarian crisis in Iraq.

3) STRONGER SANCTIONS Return to top

Another aspect of the new UN Security Council resolution, due to be passed at the end of June, is its tightening of many aspects of the sanctions regime.

The sanctions have always been 'leaky'. Jordan has always had a semi-legal barter arrangement with Iraq - trading construction materials and other goods for cheap Iraqi oil. Turkey also has been permitted by the great powers to engage in large-scale smuggling over the Iraqi border. Iran has also long co-operated with Iraqi More recently, Syria has re-opened a pipeline to buy Iraqi oil at discounted prices and trade is apparently going on over the Syrian border as well.

The resolution aims to legalise and regulate these arrangements by bringing them all into the oil-for-food deal, and channelling Iraq's hitherto illegal oil revenues through UN-controlled bank accounts. For example, Syria would pay for Iraqi oil by placing funds in a special UN account. Iraq could then use the funds from that account to buy approved civilian goods, but only from Syria.

If adopted by all the neighbouring countries, this would mean that for the first time since 1991, no cash, no foreign exchange, would go through to Iraq.

Stronger sanctions.

If all neighbouring countries co-operated, the resolution would also institute new tight border controls around Iraq.

Stronger sanctions.

For the past few months, Iraq has been charging oil brokers a lower price on oil bought through oil-for-food. It has been demanding an under-the-counter payment or 'surcharge' for each barrel of oil. This payment has been going directly to Baghdad, outside UN control. The new resolution has a mechanism for allowing only approved oil brokers (ones who will not pay the surcharge) to buy oil under oil-for-food. It ends a stream of foreign exchange going directly to Iraqi-controlled accounts.

Stronger sanctions.

The resolution also deals with the breakdown over the past year of bans on flights into Iraq. It imposes a new regime of controls and inspections on flights going into Iraq.

Stronger sanctions.

4) FAILING THE PEOPLE Return to top

The new resolution has been designed to repair some of the PR damage Washington and London have suffered over the past few years on this issue. No doubt there is some relation between US willingness to accept these proposals and the damage its reputation is sustaining in the Middle East over the Israel/Palestine conflict. Without holds, there will be much less criticism.

The new resolution is also well-crafted in terms of blocking up loopholes in the sanctions regime. Especially since Washington has made it clear that funds will be found to compensate neighbouring states against promised Iraqi retaliation.

If Iraq cuts off trade with its neighbour's ailing economies, the US intends to divert money from the Compensation Fund (funded by oil-for-food), suggests the Washington Post. (17 May) Funds may come from 'friendly countries' or institutions such as the IMF, according to the Economist. (26 May)

Where the resolution falls down is in relation to its stated objective: the welfare of the Iraqi people.

'[A]id agencies say ordinary Iraqis are unlikely to feel much benefit from the new strategy. "It won't improve life for the ordinary Iraqi. It will be a dole, a handout to Iraq as a whole," said an officer with a high-profile aid agency, who requested anonymity. "It will do nothing to tackle the real issue - how to stimulate the internal economy and allow civil society to come back." (FT, 1 June)

While the resolution allows more civilian goods into the country, it does not allow economic revival, foreign investment, foreign loans, or wholesale reconstruction of the Iraqi oil industry.

It is clear that 'the US plan will not revive Iraq's devastated economy while control over Iraq's oil revenues remains in the hands of the UN, and foreign investment and credits are still prohibited.' (FT, 28 May 2001)

'To recover from its 11 years under the sanctions battering-ram - which has crushed the country's industrial and agricultural infrastructure - Iraq needs the freedom, and overseas investment, of a huge reconstruction effort.' (Economist, 24 Feb. 2001)

'[A]lthough the country would be able to import more, it would still be denied the free movement of labour and capital that it desperately needs if it is at last to start picking itself up... Iraq needs massive investment to rebuild its industry, its power grids and its schools, and needs cash in hand to pay its engineers, doctors and teachers. None of this looks likely to happen under smart sanctions." (Economist, 26 May 2001)

The UN Security Council's own expert 'Humanitarian Panel' said in March 1999, 'the humanitarian situation in Iraq will continue to be a dire one in the absence of a sustained revival of the Iraqi economy'.

The Panel recommended - over two years ago - local purchasing of food for oil-for-food rations, reducing the proportion of Iraqi oil revenues diverted to compensation payments, foreign businesses taking 'responsibility' for reconstruction and infrastructure rehabilitation, and private foreign investment in the oil and other industries. None of this is allowed in the UK resolution.

On the last point, even the recent hawkish International Institute for Strategic Studies report on Iraq proposed 'Lifting restrictions on investment in Iraq's energy sector'. (Strategic Survey 2000/2001 Iraq Sanctions: Towards a New Policy) This is not in the resolution.

Without outside investment and loans, without economic revival through free civilian trade with its neighbours (exports apart from oil continue to be banned under the resolution), without direct access to foreign exchange, without reconstruction in the decaying oil industry, the outlook for millions of ordinary families in Iraq is grim.

5) FINAL WORDS Return to top

The Economist pointed out some months ago, as the outlines of the UK/US proposal were emerging that 'the British proposal of "smart sanctions" offers an aspirin where surgery is called for'. (Economist, 24 Feb. 2001)

While it is pitifully inadequate in relation to the humanitarian crisis in Iraq, the new resolution may deal a powerful blow to the international anti-sanctions movement by removing one of the major targets of criticism - the holds imposed by the Sanctions Committee.

If we are not careful, the 'smart sanctions' pill could be a powerful sedative, lulling the world's conscience to sleep.

I believe we must re-focus our attention. We must stop concentrating on 'holds' and 'lists', and concentrate our energies instead on the real causes of the humanitarian crisis. Our core concern ought to be the demand that the Security Council allow the re-inflation of the Iraqi economy - in order to generate jobs and a living wage for ordinary Iraqi families.

This seems to me the best way to explain to people how US/UK policy is failing the ordinary people of Iraq.