BAGHDAD, Iraq (February 22, 2000 4:51 p.m. EST http://www.nandotimes.com) - A handful of protein biscuits seems like too little, too late for the family of Zakiya Abdulrahman.

Nonetheless, the biscuits are a windfall for the pregnant woman with five children whose family's income is less than $1 per day - and they are possible only because of a rise in world oil prices. The costly oil means Iraq is earning more money under the U.N. oil-for-food program designed to let it skirt trade sanctions for the good of its people.

Recently, that has meant a small improvement for Abdulrahman and nearly 5,000 other malnourished mothers and children in the low-income Baghdad neighborhood of Mashahda: six high protein biscuits a month per person. That is in addition to free rations of rice, flour, legumes, sugar and tea distributed under an earlier phase of the oil-for-food project.

But Abdulrahman and her five children are still in dire need. Abdulrahman's husband earns his tiny income selling groceries from a cart. Her 11-month-old boy weighed 13 pounds - the norm for that age is almost 20 pounds - when a community care volunteer put him on an electronic scale.

In the past three months, regular power cuts in Abdulrahman's neighborhood have lasted as long as 16 hours a day. Broken pipes inundate some streets with sewage. Children scour garbage heaps in search of used tin cans and bottles they can sell to recyclers.

Such misery exists despite Iraq's oil reserves, and despite the fact that in the past year, the price of the crude basket of the Organization of Petroleum Exporting Countries has risen from a 25-year record low of around $6 a barrel to more than $27.

While the increase has boosted Iraq's revenues, it isn't doing much to help the country's poor because much of the money is either taken away or blocked by the United Nations, Iraqi officials say.

Iraq is not allowed to freely sell its oil on world markets under sanctions imposed to punish it for its 1990 invasion of Kuwait. The sanctions cannot be lifted until U.N. inspectors certify Iraq is not producing weapons of mass destruction. Iraq has barred inspectors for the past year.

The sanctions have crippled Iraq's economy. But in December 1996, the oil-for-food exception was instituted.

At first, it allowed Iraq's government to sell $2 billion worth of oil every six months on the condition that the proceeds are used to buy food and other essentials for ordinary Iraqis. The financial ceiling was raised to $5.2 billion in 1998, and a December 1999 U.N. resolution removed it altogether.

All told, Iraq has sold about $22 billion worth of oil under the program, officials estimate. So far, though, the government has earmarked only $30 million of the proceeds to combat widespread malnutrition among children and pregnant and nursing mothers.

Deputy Prime Minister Tariq Aziz charges that his country is the last to benefit from the oil sales. He has said about $7.7 billion of total earnings have been funneled to a U.N. fund to compensate the victims of Iraq's invasion of Kuwait. The money also covers U.N. expenses incurred in administering the program and dismantling Iraq's war machine.

Tariq also says the U.N. sanctions committee is blocking Iraq from buying commodities for its people and its oil industry. He charges that commodities contracts worth more than $8 billion are either blocked or have not reached Iraq yet.

In addition, about 15 percent of the revenues are earmarked for Iraq's Kurdish north, an area outside Baghdad's control. All of those subtractions together, Iraq says, leave few funds to do what the oil-for-food program was intended to do - help Iraqis.

But U.S. and British diplomats say the Baghdad government hoards medicines instead of distributing them to hospitals and is refusing to rid itself of weapons of mass destruction and long-range missiles. They maintain that in the absence of weapons monitors, Iraq will acquire equipment and spare parts to reinstate its weapons programs.

Meanwhile, smuggled oil is pouring out of Iraq and onto the markets, the U.S. Navy says.

Although smugglers sell for less than the legitimate market rate, their prices go up with world market prices. Smuggled oil revenues go straight to the Iraqi regime's coffers and can be used in any way Iraqi President Saddam Hussein sees fit, observers say.

The wrangling between Iraq and the United Nations has taken its toll.

Two senior U.N. relief officials in Baghdad resigned this week, frustrated at the disputes. The two, U.N. humanitarian coordinator Hans von Sponeck and U.N. World Food Program chief Jutta Burghardt, said they feared the spats between the sides will continue - and the suffering of innocent civilians will worsen.

They also said they don't believe Iraq is trying to misuse the oil-for-food funds.

"We don't have the impression that there is a willful act" on the part of the government to divert equipment to military use or hoard supplies, von Sponeck said.

For Abdulrahman, like millions of other Iraqis, it is a political game for which she and her children are paying a heavy price.
 

By LEON BARKHO