Global Policy Forum

By Leon Barkho

Baghdad, Iraq - The Iraqi government has formally renewed its oil-for-food deal with the United Nations that provides food and medicine for its people, a senior official said today. The official also said Iraq's SOMO, the state oil marketing arm, was now working on new contracts for the sixth phase of the deal, which started Tuesday. "The contracts could be ready in a matter of days,'' the official said, speaking on condition of anonymity. Sources at SOMO said there should be no interruption in oil exports.

Iraq is now producing 2.65 million barrels of oil a day with about 2 million earmarked for exports. The official said any production and export increase would be impossible without spare parts. However, he said, $14 million of equipment and spare parts have already arrived in the country and if the current pace of arrivals continues they will be able ``to add another 250,000 barrels a day to output before the end of this year.''

The oil-for-food program allows Iraq to bypass U.N. trade sanctions imposed after its 1990 invasion of Kuwait and sell limited amounts of oil on condition the proceeds are used to buy food, medicine and humanitarian goods for its people. The program, which is approved in six-month phases, began in December 1996.

State-run newspapers, which reflect government thinking, have been very critical of the program recently, with some even advising the government to abandon the deal. The newspaper Babil, which is owned by President Saddam Hussein's eldest son Odai, speculated Monday that the United States and Britain would turn the oil program into a permanent measure that would substitute for any eventual lifting of sanctions.

But Iraq desperately needs the program, particularly as it is facing its worst drought in almost fifty years. Iraq has so far received up to 10 million tons of food through the program.