TIME: Almanac 1993/TIME Almanac 1993.iso/time/091790/0917013.000

Text File | 1992-08-28 | 6KB | 124 lines

                                                                                THE GULF, Page 32

Measuring the Embargo's Bite


Even if some countries relent and send emergency food and
medicine to Baghdad, Saddam still faces a cash crunch


    Iraqi television's ubiquitous stand-in for Saddam Hussein
faced the camera with a doleful expression. "The children of
Iraq," he claimed last week, "are dying because they are being
deprived of their food and milk and medicine." With the
U.N.-backed embargo only five weeks old, Baghdad's charge
seemed extremely dubious. Diplomats in the Iraqi capital
reported that despite lines at bakeries and preparations for
rationing, no staples have disappeared from the shelves.

    Precisely when the economic pressure will begin to hurt and
whether it will force Saddam to pull out of Kuwait as the U.N.
demands have become the biggest imponderables in the gulf
confrontation. Iraq earns almost all its foreign exchange by
selling oil abroad, and it imports three-quarters of its food
and much of its manufactured goods. Thus economic sanctions are
likely to hit Iraq hard, but only over six months to a year.

    Analysts offer different estimates of how long food supplies
might last, though most agree that no Iraqis will be
malnourished for at least a year. Even then, food will not
provide the strongest lever for pushing Iraqi troops out of
Kuwait. Iraq had a bumper wheat harvest this year and is
seasonally self-sufficient in many fruits and vegetables. Much
more of the country can -- and no doubt will -- be used to grow
food.

    There is also a loophole in the Security Council resolution
imposing the embargo. It provides that for humanitarian
purposes, food and medical relief shipments to Iraq will be
allowed. A Security Council advisory committee met last week
to work out a definition of "humanitarian" but got nowhere. It
is scheduled to meet again this week.

    In fact, many nations would decide for themselves. Jordan
even now says it will not interrupt delivery of food and
medicine to Iraq or its import of Iraqi oil. China and Iran
hint they are rethinking the question. Altogether, nine
countries have indicated that they may seek exemptions from the
embargo. From these early signals it is clear that starvation
will not become a U.N. weapon. The U.S. does not want to starve
Iraq either; its plan is to make Iraqis' diet so minimal that
they will become resentful and discontented.

    At the same time, Iraq's semideveloped economy is likely to
grind on in straitened circumstances for many months. The need
for imported clothing and household appliances is not pressing.
As the shortage of spare parts becomes acute, water and power
supplies will only gradually begin to decline. "There is scope
for flexibility on Iraq's part for making do in a
self-contained economy," says Marshall Wiley, a former U.S.
ambassador to Oman.

    Nor is Saddam's biggest asset, his 1 million-man military,
in danger of fading away. Iraq has stockpiled conventional
weapons and spare parts and is continuing to assemble exotic
ones -- including missiles and chemical warheads. "Iraq is
reasonably well stocked with parts and ammunition, but only
until a shooting war breaks out," says a White House official.
"Then they're out of everything."

    Saddam's most painful shortage, the one that might break
him, is money. Iraq earned more than $15 billion from its
exports last year, and 97% of that came from oil. Now it cannot
sell abroad, and no money is coming into the country. It has
already lost $2.1 billion in potential oil income since it
invaded Kuwait in early August. In due course, Baghdad's
treasury will be empty.

    Thus far, friendly Arab neighbors like Jordan and Yemen have
been willing to supply some of Iraq's needs with road and air
shipments. Professional smugglers are already operating along
the borders with Turkey and Iran and in small dhows on the gulf
coast. But blockade runners demand cash payments, usually far
higher than the market price, for their goods. "If Iraq has
money, things will continue to get in, including food," says
Rodney Wilson, head of the economics department at the
University of Durham, England. "But now there's no money coming
in, and nobody is going to provide credit."

    The key question is how much foreign exchange Iraq has and
how long it will last. The higher estimates put Saddam's
reserves at $10 billion to $12 billion. Last year the country
spent more than $17 billion on imports. Though Baghdad will buy
what it can this year, the cost of embargo breaking will
increase and the money will run out.

    One way or another, the sanctions calculation seems to come
back to the same time frame: six months to a year. If the
international coalition holds together that long, Saddam should
be hurting badly. The question then will be whether the pain
will force him to withdraw from Kuwait or push him into violent
attack. While the embargo is widely seen as an alternative to
war, it is still possible that it might lead to one.


By Bruce W. Nelan. Reported by Gisela Bolte/Washington and
William Dowell/Cairo, with other bureaus.


____________________________________________________________ HOW
LONG IRAQ'S STOCKPILES MIGHT LAST


    -- Rice 2 - 4 months     -- Wheat 5 - 6 months     -- Sugar
2 - 3 weeks    -- Barley 9 - 10 months     -- Corn 2 - 3 months
   -- Spare parts if war breaks out 2 weeks - 2 months     --
Cash reserves $5 billion - $12 billion (including $2-$4
  billion stolen from Kuwait)