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Lebanon lobbies UN over ‘oil-for-food’ contracts - Will program expire or be extended ?

Lebanese industrialists are lobbying the United Nations to pay for some $450 million pending contracts won under Iraq’s “oil-for-food” program prior to the US-led war against Iraq, a senior industrialist said on Tuesday.

Lebanon is pushing the New York-based office of the Iraq Program to execute these contracts before the oil-for-food mandate is suspended, once the UN Security Council lifts the sanctions on Iraq to make way for autonomous rule.“It is going to be difficult to implement all of these contracts right away,” said Ahmed Kabbara, head of the export department at the Lebanese Industrialists Association.

“But the important thing is that Lebanon is not being treated any differently from any other country that has pending contracts under the oil-for-food program.”

Kabbara, who is seeking compensation for contracts he signed under the UN program prior to the outbreak of war, recently returned from New York, where he held talks with UN and US officials. At least $10 billion worth of contracts are still pending under the oil-for-food program, which was suspended on March 17, after UN Secretary-General Kofi Annan ordered the program’s staff to leave Iraq, a few days prior to the onset of war.

Since the war ended, the office of the Iraq program has divided up all pending contracts into three categories with different priorities: priority goods, goods in transit and other goods.“Unfortunately most of the Lebanese contracts are in the second and third categories, which means they do not have top priority,” said Kabbara. The industrialists whose contracts are in the third category are the most affected, he said, as they have invested cash without a return on their investments.

Around 5 percent of the contracts have been executed as priority goods, and some of the Lebanese contracts categorized as goods in transit have a chance of getting paid for by the United Nations. “It all depends whether the oil-for-food program expires on June 3, or is extended further,” said Kabbara.

The Security Council voted, toward the end of last month, to extend the oil-for-food program an additional three weeks to June 3, allowing the UN to include more goods in transit on its priority list.“The extension of the program is going to be a subject of debate between the UN and the United States, who are the de facto rulers of Iraq right now,” said Kabbara. “The main problem is in the UN’s cash flow, which is currently being spent on basic goods. But who is going to be in control of the oil sales to pay for pending contracts?” He argued that the Americans can be convinced that it is in their interest to extend the mandate of the oil-for-food program to make use of the executed goods, which would save the Americans time from making new orders.

Most of the Lebanese industrialists won the oil-for-food contracts for basic goods such as motors, cables and medicine.“Winning these contracts was good and bad,” said Kabbara. “They helped us expand our production lines and cut costs, but several companies cannot find a market as big as Iraq to dispense with these goods.”

Lebanese industrialists have long acknowledged they would never have been able to compete in the Iraqi market without the political backing of the Saddam Hussein regime that favored, in its last years, Arab countries over others.

Unless Lebanese industrialists get paid for these pending contracts, the industry may begin to see more layoffs, particularly as a number of firms expanded their outlets just to cater to the Iraqi market. “The Iraqi contracts were important as they contributed to Lebanon’s development by employing people and investing in the local economy,” said Kabbara.

Beirut,05 19 2003
Dania Saadi
The Daily Star
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