UN Council Approves Extension of Iraq Oil-Food Plan
U.S. releases $800 million in holds
June 01, 2001
Reuters
By Evelyn Leopold
UNITED NATIONS (Reuters) - In a rare show of unity, the U.N. Security Council on Friday extended the Iraq humanitarian program for a month to give itself time to revamp decade-old sanctions against Baghdad.
A resolution, approved by a 15-0 vote, would roll over the U.N.-Iraq "oil-for-food" program, which expires on Sunday, for 30 days instead of the usual six months.
This would allow council members to continue negotiations on a new U.S.-British plan to lift restrictions on civilian goods imported by Iraq but tighten controls on military-related supplies and smuggling.
In a surprise move, the United States announced it would release nearly $800 million of the more than $3.5 billion worth of contracts to Iraq it has blocked at the United Nations -- meeting a prime demand of Russia as well as U.N. officials. This is in addition to $400 million released last week.
"We have been reevaluating them in light of the new system which we are advocating and proposing and we are looking at the holds through that filter," U.S. Ambassador James Cunningham told Reuters.
Russia and United Nations officials have criticized the United States for years on the large number of "holds" it placed on the Iraqi contracts. But Cunningham said the releases were not in exchange for getting Moscow's agreement on Friday's resolution.
THREAT TO CUT OFF OIL SALES
Iraq has threatened to cut off oil sales if the council approved the short extension but said Baghdad would honor all oil contracts signed to date.
However, council members, including Iraq's closest allies, went ahead anyway, apparently unconvinced that Baghdad's move would have an immediate impact on oil markets.
Iraq has nearly 300 million barrels of oil, equivalent to about 150 days of its current exports, allocated in contracts under the U.N. program that have not yet been delivered.
Friday's resolution to extend the oil-for-food plan for 30 days "expresses its intention" to consider new arrangements that would "improve significantly" the civilian goods that Iraq can import, ban military-related items and prevent Baghdad from selling oil outside the U.N. system.
The oil-for-food program, which the United States and Britain want to revamp, is an exemption to stringent sanctions imposed when Iraq invaded Kuwait in August 1990.
It allows Iraq to sell oil with the proceeds going to a U.N. escrow account out of which the United Nations pays suppliers of goods ordered by Iraq. The escrow account would stay in place under the U.S.-British proposals, thereby denying Iraq free use of its oil revenues.
The rare agreement on Iraqi policy came after meetings in Budapest, Hungary, on Tuesday and Wednesday between Secretary of State Colin Powell and Moscow's Foreign Minister Igor Ivanov as well as their British and French counterparts.
Before that Russia flatly rejected the Anglo-American plan and wanted a six-month rollover of the oil-for-food program. Its opposition, backed by China, forced Washington to call off a vote to revamp the sanctions it wanted this week.
"It's very unusual to have a resolution of some controversy passed on Iraq with unanimity in the council," British Ambassador Sir Jeremy Greenstock said, adding that negotiations among experts would begin in earnest on Monday.
Russia, China and France, have been sympathetic to Iraq and openly split with the United States and Britain for at least four years. The five countries are the Security Council's permanent members with veto power.
U.N. TO KEEP CONTROL OF OIL REVENUES
It is by no means clear Russia will support the complicated U.S.-British proposals next month. Russia's U.N. ambassador, Sergei Lavrov, said on Thursday the measures "entered into areas not covered by the sanctions."
The core of the dispute is a lengthy U.S.-British list of "dual use" goods that have both military and civilian applications. Iraq would be barred from buying them without council approval.
Obstacles are also expected to arise over controversial U.S.-British proposals that involve cooperation from Iraq's reluctant neighbors Jordan, Turkey and Syria.
These include regulating illegal trade, monitoring Iraq's land and sea borders against smuggling and sifting through a list of oil traders to eliminate shadowy firms paying Baghdad a surcharge on oil sales outside of the U.N. system.
The Iraqis have threatened to punish Jordan and Turkey by denying them oil if they cooperate with the United States and council members are seeking ways to compensate those countries.
However, when the trade sanctions were imposed in 1990, Jordan was allowed to
circumvent the sanctions and receive oil directly from Iraq because the big
powers could not come up with resources to make up its losses. (Matthew Robinson
contributed to this report)