The Kurds in northern Iraq 

What's happened to our cash?
Jun 12th 2003 | ARBIL 
From The Economist print edition

A quarrel between the Kurds and the UN over unspent oil revenue
REINTEGRATING their region into the rest of the country was never going to be easy for Iraq's Kurds. Having enjoyed 12 years of self-rule, freedom from persecution by Saddam Hussein, and relative economic prosperity, they accepted that there would be a price to pay for the removal of the hated Iraqi dictator. At the same time, they very much hoped that their support for his ousting, combined with a sensibly moderate political agenda that respected Iraq's territorial integrity, would not go unrewarded. 
But as the Americans dither over Iraq's post-war political settlement, growing numbers of Kurds in the overwhelmingly pro-western north are worried that their concerns are being overlooked. Historically familiar mutterings of a sell-out are beginning to be heard. 
The chief cause for concern is the terms on which UN sanctions against Iraq are being ended. Resolution 1483, adopted by the Security Council on May 22nd, provided for the phasing out of the oil-for-food programme within six months, and handed total control of Iraq's oil resources to American and British administrators. Any outstanding money from the oil-for-food programme is to be transferred into a national Development Fund for Iraq. This would include the separate escrow account into which the 13% of oil revenues specifically earmarked for the Kurdish regions were deposited.
Kurdish leaders, who say they were not consulted by their "allies" in the drafting of the resolution, are alarmed that there is no provision in the resolution for reimbursing the $3.7 billion in unspent oil revenue that rests in their account. This is money the Kurds can ill afford to lose. Because of the disruption of the oil-for-food programme shortly before the start of the war, economic life in the north is grinding to a halt.
Vital customs revenues from border trade with Turkey and Iran have all but dried up. Tens of thousands of civil servants, as well as the Kurdish peshmerga soldiers, went unpaid for months. Unemployment is rising fast. Aware of the gravity of the economic situation in the north, America last week provided $30m in cash to help pay key government workers, such as teachers and hospital staff. 
Hoshyar Zebari, of the Kurdistan Democratic Party, asks why Kurds, who fought alongside Americans in the war, should now be made to pay for UN inefficiency and the manipulation of the oil-for-food programme by the former Baathist regime. The programme at first acted as a safety-net for the Kurds, who had been reeling under the double whammy of international sanctions on Iraq and internal sanctions imposed on their area from Baghdad. But there were soon complaints that most of the revenues were still languishing in the UN's bank account.
This, the Kurds say, was due partly to the UN's inefficiency and lack of transparency (to put it charitably) in approving projects, partly to Baghdad's blocking tactics. The UN argues that it had to deal with the Iraqi government as the recognised sovereign power. The result, according to the Kurds, was that health and engineering projects intended for the north remained at the drawing-board stage, some of them for as long as five years. 
An official in the UN office that deals with the oil-for food programme says that, of the $3.7 billion in the Kurdish escrow account, $1.7 billion has been allocated to specific projects but remains unspent, while a further $2 billion is unallocated and unspent. A senior British official at the UN tried to allay Kurdish fears about the fate of these unspent revenues. He was only partially successful. 
He said that the $1.7 billion was safe. So was the $2 billion, provided the Kurds could come up with enough projects to absorb the money in the next six months. That is a taxing task for a developed country, let alone an area in political and economic limbo. The senior official declined to say what would happen if the Kurds failed to spend the $2 billion.