The United Nations (searchwarned Monday that lack of security and a credible government are hampering efforts to rebuild Iraq as it appealed for an additional $259 million to meet humanitarian needs through the end of the year.

But in good news the U.N. aid chiefs said that a large scale refugee crisis that had been feared before the war never happened and food rations, on which 60 percent of the 27 million Iraqis depend, have resumed nationwide.

Ramiro Lopez da Silva (search), the U.N. humanitarian coordinator for Iraq, said, however, that major problems are keeping the country in an emergency situation, including an increase in attacks on American troops, continued looting, unemployment and lack of electricity.

He also said the oil infrastructure in Iraq, which has the world's second-largest proven reserves, was hit as hard as other sectors by years of U.N. sanctions, the U.S.-led war, and continued looting.

"The bottom line is you do not have today not even the capacity to pump and export the same levels that Iraq was pumping and exporting prior to the conflict," Lopez da Silva told reporters. "The quantities of oil being exported at this stage are much lower and it's going to take awhile for that sector to be rehabilitated."

Despite "determined steps" by the U.S.-led coalition to address the lack of law and order, he said criminals are increasingly organized and the movement of aid workers in some areas outside of Baghdad are severely limited.

In addition, more than 50 percent of Iraqi women suffer from anemia (search), and the rate of acute malnutrition has climbed to 7.7 percent from 4 percent before the war broke out on March 20, he said.

U.N. Deputy Secretary-General Louise Frechette launched the humanitarian appeal before potential donors from about 50 countries and a delegation of 12 Iraqi bureaucrats and civil servants working with the Coalition Provisional Administration who were brought here by the United States.

Representatives from the 50 countries will return to the United Nations on Tuesday for a first informal meeting to discuss the reconstruction of Iraq and lay the groundwork for a donors' conference on rebuilding the country later this year.

One of the Iraqis, Fakhridin Rashan, acting officer in charge of the Iraqi Ministry of Trade, told a news conference he was optimistic that the country could start functioning on its own soon.

"Iraq is a relatively rich country with the second-largest proven oil reserves in the world," he said, predicting that the country would discover more oil and have the "largest oil reserves in the world." But he gave no timetable.

The United Nations appealed for $2.1 billion for Iraq's humanitarian needs for six months during the war on March 28 and received nearly $2 billion. The $259 million will take care of the country's needs until the end of the year when Frechette said the United Nations hopes its humanitarian aid will come to an end.

The total $2.2 billion appeal for Iraq is second only to the U.N. appeal for Afghanistan, said U.N. Undersecretary-General for Humanitarian Affairs Kenzo Oshima.

Oshima and others stressed that the coalition, as an occupying power, bears the main responsibility for the welfare of the Iraqi people and that they didn't expect another appeal next year.