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BBSNews - 2003-04-18 -- Washington, D.C. - Iraq's oil must be managed in a transparent and accountable manner that meets humanitarian needs and ensures respect for human rights, Human Rights Watch said today.

On April 16, U.S. President George W. Bush called on the United Nations to lift economic sanctions against Iraq. But this would effectively remove U.N. oversight of Iraq's oil revenues through the Oil-for-Food program before a new and transparent regime is in place.

In a new backgrounder, Human Rights Watch outlines principles for the management of Iraq's oil revenues that would ensure transparency and accountability in order to avoid the long-term problems of corruption, poor governance, and human rights violations that plague many undemocratic, oil-dependent countries.

"Iraq's oil belongs to the Iraqi people. An independent mechanism must be kept in place to ensure oil revenues are managed transparently and to meet their humanitarian needs," said Arvind Ganesan, director of the Business and Human Rights Program.

Human Rights Watch said oil revenues should be directed first to meeting the humanitarian needs of Iraq's people. Prior to the war, approximately 60 percent of Iraqi families received their sole sustenance from the Oil-for-Food program. Because of the conflict and the initial suspension of the Oil-for-Food program, humanitarian needs will increase substantially.

Human Rights Watch said another pressing issue was who should manage the oil. Any reversion to foreign control, or the appearance of foreign control, in the aftermath of U.S.-led military intervention will likely be a major issue of contention and popular opposition.

"There is an inherent conflict-of-interest if the world's largest oil importer is seen to be managing the world's second largest oil reserves," said Ganesan. "The only way to deal with that is to allow functioning Iraqi institutions, or an independent mechanism with Iraqi participation, to manage the oil resources for the good of the Iraqi people."

It is not clear whether the Iraq National Oil Company, which has managed the Iraqi oil sector, is now capable of functioning effectively in this role. To ensure transparency and independence, Human Rights Watch recommended that a third party be given this role, for instance the United Nations Office of Iraq Policy.

Regardless of the institution managing Iraq's oil, Human Rights Watch said that all sources of oil revenue and expenditures should be audited and those results made public. The designated institution should also have the authority to tender and manage an open bidding process for the reconstruction and rehabilitation of Iraqi oil infrastructure. In the case of new exploration and production agreements, the entity responsible for the open tendering and bidding process should ensure that the contracts that it awards are comparable to similar agreements throughout the world and should be made public. The companies that receive such contracts should publish all payments made to the authority managing Iraq's oil as a result of their contractual or other agreements in order for the Iraqi public to be aware of these arrangements.

"Post-war Iraq should be a model for other oil-dependent states," said Ganesan. "Careful management of Iraq's oil resources would allow for strengthening institutions that protect human rights and would show that it is possible to benefit from oil wealth without sacrificing human rights and democratic freedoms or fueling massive corruption.

Background

Iraq has more than 112 billion barrels of proven oil reserves, the second largest in the world. However, its oil infrastructure is underdeveloped or deteriorating and will require considerable investment to realize its full potential as the economic engine of a post-war economy and a democratic government that respects human rights.

The cornerstone of Iraq's post-Gulf War oil revenue management has been the U.N.-administered Oil-for-Food Program that was established by the Security Council in 1995. Although Iraq has the second largest proven oil reserves in the world, its actual production is currently far below its potential.

The U.N. Security Council modified and extended the mandate of the Oil-for-Food program for forty-five days on March 28, 2003, but it is not clear whether the mandate will be renewed, for what period of time, or what will be the scope of the program's mandate.

To read the full text of Human Rights Watch backgrounder, Considerations For the Management Of Oil In Iraq, please see:

http://www.hrw.org/backgrounder/mena/iraq/iraqoil032703-bck.htm

Michael Hess is the Editor of BBSNews in Charlotte, NC. Write to the editor here. Not all submissions are published. Or visit the completely new BBSNews Blog and Forum on our front page - Please Participate in BBSNews!