U.N. Council extends Iraq oil, food plan for 6 months

UNITED NATIONS -- The U.N. Security Council voted unanimously Tuesday to renew a six-month extension of the Iraq humanitarian program after days of intensive debates over the four-year old oil-for-food plan.

The program allows Iraq to sell oil, under U.N. supervision, to buy food, medicine, oil equipment and a host of other goods in an effort to ease the impact of the U.N. sanctions, imposed in August 1990 after Baghdad's troops invaded Kuwait. The United Nations controls monies from oil sales and pays for the supplies Iraq orders.

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New was a provision allowing Baghdad to spend cash locally from its windfall of oil revenues for industry expenses as well for food, medicine and other humanitarian sectors. Under this arrangement, costs for paying its oil workers and repairing equipment can move ahead first.

The resolution adopted by the 15-member council would also increase the funds available for humanitarian purposes and expedite shipment of electricity and housing supplies by adding goods to lists of pre-approved items.

Iraq last week cut off all oil shipments and diplomats did not expect any movement on resuming them before the resolution was adopted, although Baghdad's reaction to the measure was not immediately clear.

Western diplomats said that, in a compromise, demands by Iraq's supporters to use oil revenue to pay Baghdad's U.N. dues would likely be dropped, along with calls backed by Britain and the United States for an investigation of the smuggling of Iraqi oil and petroleum products.

At the same time, Iraqi and U.N. oil experts were trying to reach agreement on a pricing formula that would enable Iraq to resume oil shipments. Iraq halted oil exports last Thursday after U.N. experts rejected its proposed prices for December as too low -- and its U.N. ambassador said shipments will not resume until the United Nations approves new prices.

Iraqi Oil Minister Mohammed Rasheed told the Organization of Petroleum Exporting Countries that Iraq hoped to resolve the impasse "in the next day or two," the OPEC News Agency reported.

Iraq is allowed to sell oil under the four-year-old U.N. oil-for-food program, provided the money goes for food, medicine and other humanitarian supplies, and equipment to rebuild its frayed oil infrastructure. The program was launched to help ordinary Iraqis cope with the effects of U.N. sanctions imposed to punish Iraq for its 1990 invasion of Kuwait.

Under Security Council resolutions, sanctions cannot be lifted until U.N. inspectors certify that Iraq's nuclear, chemical and biological weapons have been dismantled along with the missiles to deliver them. Iraq is demanding the immediate lifting of sanctions, and has barred U.N. weapons inspectors, who pulled out ahead of U.S. and British airstrikes in December 1998, from returning.

The draft resolution would extend the oil-for-food program for six months, increase the funds available for humanitarian purposes by 5 percent, expedite shipment of aid by establishing lists of pre-approved items, and exempt contracts for electricity and housing supplies from mandatory approval by the U.N. committee that monitors sanctions.

The program has generated $37 billion in revenue, and $24 billion has gone to humanitarian programs. Currently, contracts valued at $2.5 billion have been placed on hold, and there is $4.7 billion available to purchase supplies.

While Security Council members are united in calling for the return of weapons inspectors, Iraq's council supporters, led by France, have been pressing for measures to ease what they contend are the adverse impact of sanctions.

France wants to set aside 600 million euros ($528 million) for Iraq to use for its oil industry expenses, but the United States and several other council members argue that any cash allocation must be available to all economic sectors.

"There's a good case to be made that there's a need for a cash component for the oil industry as well as a cash component for other sectors," deputy U.S. ambassador James Cunningham said. "We would like to see a cash component across the board."

Iraq's supporters are also pressing for $15 million in oil revenue to be earmarked to pay Baghdad's U.N. dues and arrears, which now total $11 million. The United States remains strongly opposed to any such diversion of oil-for-food money.

The Associated Press & Reuters contributed to this report.

United Nations
  • Office of the Iraq Programme
Iraq energy profile, U.S. Dept. of Energy

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