Military

DATE=02/26/02

TYPE=CORRESPONDENT REPORT

TITLE=UN/IRAQ UPDATE(L-O)

NUMBER=2-286915

BYLINE= OWEN FAY

DATELINE=NEW YORK

///UPDATES AND RECASTS CR 2-286913///

VOICED AT:

INTRO: The director of the United Nations' oil-for-food program in Iraq says implementation of the program is paralyzed by political squabbling and may grind to a halt. Owen Fay reports from the United Nations that head of the program says it is also plagued by financial difficulties.

TEXT: Benon Sevan last made an official visit to Iraq in 1997. Since then, he says, with the implementation of the "oil-for-food" program, significant improvements have been made in the lives of ordinary Iraqis.

But the U-N representative warns the program faces paralysis unless those countries overseeing it streamline the procedures for scrutinizing contracts. He said major procedural hurdles are being placed in the way by several Western countries, including the United States.

Under the terms of the plan, profits made from oil revenues go into a U-N account -- not to Baghdad -- and are then dispersed to suppliers of food, medicine and other humanitarian goods.

But Mr. Sevan says the U-S and Great Britain routinely block payments for contracts already agreed to by the U-N, claiming they violate sanctions leveled against Baghdad. However, he noted that Washington is involved in a review of those contracts, and expressed optimism they can be resolved soon.

The U-N representative said it is imperative to maximize the benefits available from the oil profits in order to ensure the program helps as many ordinary Iraqis as possible. (signed)

NEB/OF/MAR