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U.N. to let Iraq sell oil for euros, not dollars
UNITED NATIONS (Reuters) -- A U.N. panel on Monday approved Iraq's plan to receive oil-export payments in Europe's single currency after Baghdad decided to move the start date back a week.
Members of the Security Council's Iraqi sanctions committee said the panel's chairman, Dutch Ambassador Peter van Walsum, would inform U.N. officials on Tuesday of the decision to allow Iraq to receive payments in euros, rather than dollars.
U.N. Secretary-General Kofi Annan's office is to report in three months on the impact of the switch to euros, which a U.N. study said would cost Iraq at least $270 million.
Iraq's U.N. Ambassador Saeed Hasan reported earlier that Baghdad would delay the changeover until after Nov. 6, rather than put it into effect on November 1, as originally announced. Iraq has called the dollar the currency of an "enemy state."
Hasan said the delay would give the United Nations time to make arrangements for the change, as it requested.
Iraq had also threatened to stop oil exports, the bulk of which flow through the U.N. humanitarian programme, if its request for payment in euros was denied.
On Friday, the chief U.N. financial officer, Joseph Connor, asked Iraq to delay any action until proper arrangements could be made. He did not say how long he would need.
Connor, the U.N. undersecretary-general for management, told Hasan in a letter that the Central Bank of Iraq and U.N. officials should consult first on "banking arrangements involved and currency management issues."
Baghdad currently is selling about $60 million in crude a day, about 5 percent of the world's oil exports.
Under the U.N. "oil-for-food" programme, Iraq is permitted to sell unlimited quantities of oil to purchase needed supplies for its people, to alleviate the impact of U.N. sanctions. The embargoes were imposed when Baghdad's troops invaded Kuwait in August 1990.
Contracts for goods as well as oil sales are approved by the United Nations, which has a dollar-based escrow account at the New York branch of the French bank BNP-Paribas. More than $10 billion is in the bank.
In a 10-page report on Friday, Suzanne Bishopric, the U.N. treasurer, outlined how Iraq should go about making the switch but said the euro would accrue lower interest than the dollar.
She said buyers of Iraqi crude would pay 10 cents a barrel less to offset the cost of dealing in euros rather than dollars.
Hasan assailed the report as "highly exaggerated," and diplomats said he gave a detailed critique of her analysis in his letter to the committee.
Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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