Iraqis under sanctions cling to hope

                              BAGHDAD, Dec 17 (Reuters) - Ali
                             works 10 hours a day at a bakery shop
                             in Baghdad where he earns $4 a month
                             and a few loaves of bread to feed a wife
                             and four children. Despite the odds, he
                             makes it with the help of government
                             food rations. And despite the gloom
                             around him he still finds room for
                             optimism. "Things are looking up," he
                 told Reuters. "There is hope that, God willing, things
                 would start to improve and this embargo would be lifted
                 soon." Ali"s remarks are echoed by other average Iraqis
                 in Baghdad ever since foreign states resumed flights, albeit
                 mostly humanitarian, to Iraq since August after a 10-year
                 break because of U.N. sanctions imposed on Baghdad
                 after Iraq invaded Kuwait. "The flights mean the end of
                 our isolation and show that despite what the United States
                 says, the world is on our side," Hassan, a hotel employee,
                 said. "Dawn might not be far away." Diplomats say the
                 flights have had little physical impact on Iraq but have
                 given a huge boost to the morale of Iraqis. The U.N.
                 Security Council is considering a formula to allow more
                 regular flights to and from Baghdad. Iraqis are also seeing
                 some improvements in their daily life. Electricity cuts, a
                 regular feature of the past 10 years, have become less
                 severe, drinking water and sewerage networks are being
                 repaired and the capital is looking cleaner. An increase in
                 revenues from unlimited oil sales under a humanitarian
                 programme with the United Nations have helped the
                 authorities to increase spending on the infrastructure. The
                 Security Council lifted a year ago a ceiling on oil sales in
                 the programme, first introduced late 1996. Iraq has sold
                 oil worth around $17 billion this year. A third of that sum
                 went to a compensation fund and to cover U.N. expenses
                 while the remainder was allocated to buying food,
                 medicines and other essential goods, such as spare parts
                 for the oil industry and other infrastructure sectors. Iraq
                 regularly complains that many contracts to buy goods
                 under the programme are either blocked or delayed by
                 the United States and Britain. "

                MUCH MORE NEEDED TO BE DONE
                 Revitalised plans mean that the Iraqi government is distributing food rations to the 23
                 million population more efficiently under the supervision of
                 the United Nations. "Things are better in general, but
                 make no mistake there is a long, long way to go before
                 any kind of normalcy is restored," a diplomat said. "The
                 economy remains in ruins and the vast majority of people
                 are way under the poverty line." He said the health and
                 educational sectors in particular were still major problems.
                 Iraq, which agreed to an extention of the oil-for-food
                 programme last week, says it has fulfilled all its obligations
                 under Security Council resolutions and sanctions should
                 be lifted. The Security Council wants Iraq to allow back
                 arms inspectors, expelled by Baghdad in December 1998,
                 before any lifting of sanctions. A government decision to
                 halt all dealings in the U.S. dollar in transactions under the
                 oil-for-food programme has shored up the Iraqi dinar
                 from 2,000 to the dollar in September to 1,640 last week
                 in the tolerated parallel market. Shops have more goods
                 than at any other time over the past decade, from
                 computers, latest DVD videos to European clothes and
                 sportswear. But the clientele for such items is still
                 restricted to the privilaged few who can afford to splash
                 large amounts. An Iraqi businessman said all that is being
                 done falls far short of Iraqi aspirations. "The United States
                 and United Nations think that the Iraqi people need just to
                 eat and sleep. But we are a people who have the right to
                 their own land, own oil, a people who have many needs
                 other than just food."