Measuring The Embargo's Bite

By Bruce W. Nelan

) Iraqi television's ubiquitous stand-in for Saddam Hussein faced the camera with a doleful expression. "The children of Iraq," he claimed last week, "are dying because they are being deprived of their food and milk and medicine." With the U.N.-backed embargo only five weeks old, Baghdad's charge seemed extremely dubious. Diplomats in the Iraqi capital reported that despite lines at bakeries and preparations for rationing, no staples have disappeared from the shelves.

Precisely when the economic pressure will begin to hurt and whether it will force Saddam to pull out of Kuwait as the U.N. demands have become the biggest imponderables in the gulf confrontation. Iraq earns almost all its foreign exchange by selling oil abroad, and it imports three-quarters of its food and much of its manufactured goods. Thus economic sanctions are likely to hit Iraq hard, but only over six months to a year.

Analysts offer different estimates of how long food supplies might last, though most agree that no Iraqis will be malnourished for at least a year. Even then, food will not provide the strongest lever for pushing Iraqi troops out of Kuwait. Iraq had a bumper wheat harvest this year and is seasonally self-sufficient in many fruits and vegetables. Much more of the country can -- and no doubt will -- be used to grow food.

There is also a loophole in the Security Council resolution imposing the embargo. It provides that for humanitarian purposes, food and medical relief shipments to Iraq will be allowed. A Security Council advisory committee met last week to work out a definition of "humanitarian" but got nowhere. It is scheduled to meet again this week.

In fact, many nations would decide for themselves. Jordan even now says it will not interrupt delivery of food and medicine to Iraq or its import of Iraqi oil. China and Iran hint they are rethinking the question. Altogether, nine countries have indicated that they may seek exemptions from the embargo. From these early signals it is clear that starvation will not become a U.N. weapon. The U.S. does not want to starve Iraq either; its plan is to make Iraqis' diet so minimal that they will become resentful and discontented.

At the same time, Iraq's semideveloped economy is likely to grind on in straitened circumstances for many months. The need for imported clothing and household appliances is not pressing. As the shortage of spare parts becomes acute, water and power supplies will only gradually begin to decline. "There ^ is scope for flexibility on Iraq's part for making do in a self-contained economy," says Marshall Wiley, a former U.S. ambassador to Oman.

Nor is Saddam's biggest asset, his 1 million-man military, in danger of fading away. Iraq has stockpiled conventional weapons and spare parts and is continuing to assemble exotic ones -- including missiles and chemical warheads. "Iraq is reasonably well stocked with parts and ammunition, but only until a shooting war breaks out," says a White House official. "Then they're out of everything."

Saddam's most painful shortage, the one that might break him, is money. Iraq earned more than $15 billion from its exports last year, and 97% of that came from oil. Now it cannot sell abroad, and no money is coming into the country. It has already lost $2.1 billion in potential oil income since it invaded Kuwait in early August. In due course, Baghdad's treasury will be empty.

Thus far, friendly Arab neighbors like Jordan and Yemen have been willing to supply some of Iraq's needs with road and air shipments. Professional smugglers are already operating along the borders with Turkey and Iran and in small dhows on the gulf coast. But blockade runners demand cash payments, usually far higher than the market price, for their goods. "If Iraq has money, things will continue to get in, including food," says Rodney Wilson, head of the economics department at the University of Durham, England. "But now there's no money coming in, and nobody is going to provide credit."

The key question is how much foreign exchange Iraq has and how long it will last. The higher estimates put Saddam's reserves at $10 billion to $12 billion. Last year the country spent more than $17 billion on imports. Though Baghdad will buy what it can this year, the cost of embargo breaking will increase and the money will run out.

One way or another, the sanctions calculation seems to come back to the same time frame: six months to a year. If the international coalition holds together that long, Saddam should be hurting badly. The question then will be whether the pain will force him to withdraw from Kuwait or push him into violent attack. While the embargo is widely seen as an alternative to war, it is still possible that it might lead to one.

With reporting by Gisela Bolte/Washington and William Dowell/Cairo, with other bureaus