Bartering
oil for food
As
the dust of war settles over Iraq, the future of the UN oil-for-food
programme would significantly impact Indian industry, finds Binny Sabharwal
Before
the discovery of the prodigious oil deposits in Iraq, the country’s
principal export was dates, the fruit. And guess which country was its
largest trading partner? It was India. Much water has flown down the
Euphrates and Tigris since. But even today, when the two countries’
economies have grown far apart, the effect of a war in Iraq may yet
rattle India in ways more than one.
Understandably,
the consequences of a massive war in oil-rich Iraq would be felt throughout
a world that runs on oil. The agriculture sector consumes large quantities
of oil to power irrigation pumps and farm machinery. Increased freight
costs resulting from war risk surcharges and higher insurance premiums
would soon make some imports items costlier and hurt exports.
Also,
any disruption in the supply of fertilisers, some of which originates
from Jordan and Saudi Arabia, could also adversely affect the agricultural
production of various countries.
Let’s
look at the diverse cases of two food items that would be affected –
mangoes and pepper. Trade in the king of mangoes – Alphonso – is already
suffering as exports to the major Gulf markets have dwindled. For pepper,
the dynamics are different. It is becoming more readily available as
US shows less interest in this region and Sri Lanka continues to flood
the market with the black spice. So, India finds herself in a pickle
– on the one hand, there is a spurt in the supply of some essential
commodities, but on the other, the export markets are getting tighter.
Several
Indian exporters had looked at the United Nations’ oil-for-food programme
for Iraq, which started in earnest in the year 1996, as a huge opportunity.
And so it was… till the recent war all but scuttled the project. This
uncertainty has cast a spell on the market. Even Union Commerce Minister
Arun Jaitley acknowledged earlier in April that there was a fair amount
of uncertainty over the Indian export consignments. Orders worth Rs
1,000 crore bound for Iraq were at various stages of execution before
the war, and in that, various items worth about Rs 600 crore were almost
ready for delivery.
But
at the time of going to press, the major powers were still cribbing
over the so-called ‘spoils of the war’ – shares in the reconstruction
pie. But even as Russia, France and Germany were contesting Washington’s
plans to put retired US General Jay Garner as Iraq’s post-war interim
administrators, the fate of the oil-for-food programme was far from
clear.
Down
the timeline
In
the immediate aftermath of the Gulf War in 1991, the UN Secretary-General
dispatched an inter-agency mission to assess the humanitarian needs
arising in Iraq and Kuwait. The mission reported, “The Iraqi people
may soon face a further imminent catastrophe, which could include epidemic
and famine, if massive life-supporting needs are not rapidly met.”
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