Iraq threatens to halt oil exports

By Kesava Menon

MANAMA (Bahrain), JUNE 3. Iraq has warned that it will halt oil exports from June 4 in retaliation to a United Nations plan to revise the regime of sanctions.

An agreement between Iraq and India, whereby wheat is to be bartered for oil, is not likely to be affected, since Iraqi officials have said that a supply cut-off decision would only affect contracts yet to be signed. The decision is also not expected to affect world oil supplies overall, since Saudi Arabia has said that it can make up the shortfall.

On Friday, the U.N. Security Council decided to extend the oil- for-food programme by one month instead of the half year that is stipulated by agreement. The extension is a compromise between the positions of the U.S. and the U.K. on the one hand and Russia on the other. The U.S. and the U.K. had wanted a new sanctions plan, designated as a ``smart sanctions'' plan, to be substituted for the ongoing oil-for-food programme when the current six-month phase of the latter concludes today. Russia wanted the Council to extend the programme by another six months to give the member- states more time to study the ``smart sanctions''.

Under the current oil-for-food programme, Iraq is allowed to export oil to pay for the imports of food, medicines and humanitarian goods. Each phase of the programme runs for six months and the Security Council has to approve each extension. Money raised through the sale of oil under this programme is deposited in a U.N.-controlled escrow account and payments for food, etc,. are made out of this fund after the sanctions review committee approves the relevant contracts. Iraq has chafed at the need to follow the escrow fund and sanctions committee route for its trade with the world and has been pressing for the lifting of the whole sanctions regime.

Most governments in the world have come around to the view that the sanctions regime against Iraq has not only lost its utility but that it is proving extremely harmful to the Iraqi people. With support for the sanctions regime dwindling, the U.S. and the U.K. have crafted the ``smart sanctions'' plan, which they say would target the Iraqi regime instead of indiscriminately hitting at the Iraqi people.

Essentially, the smart sanctions plan enables Iraq to import civilian goods freely while import contracts for all goods that can be used for both military and civilian purposes will have to be put before the sanctions committee. (The sanctions committee is of course mandated to ensure that Iraq can not import military goods).

Under the smart sanctions plan, there will be only a negative list of items Iraq cannot import while all other goods could be imported without the sanctions committee approval. The members of the Security Council have not been able to reach agreement on the items, or categories of goods, that should be put on the negative list. Friday's compromise is intended to give the Security Council members time to refine the negative list. Payments for all imports, even under the smart sanctions scheme, would still have to be made into and out of the U.N.-controlled escrow fund.

In rejecting Friday's Security Council's decision, Iraq has relied on a legal position. The oil-for-food programme, Iraq points out, was the result of an agreement between Baghdad and the U.N. Security Council. How then, they ask, can the Security Council unilaterally decide that it is going to change the terms of the agreement. While this legal argument is undoubtedly sound, what really provokes Iraqi ire is their belief that the switch from the general prohibitions under the oil-for- food programme to the smart sanctions plan is nothing more than cosmetic.

So long as the money from oil export have to be paid into the U.N.-controlled escrow fund and imports have to be paid for from the fund, the U.N. will continue to exercise its stranglehold on Iraqi trade. Moreover. the U.S. and the U.K. have a record of giving a broad interpretation to the ``dual use'' clause and their representatives on the sanctions committee have banned all manner of imports on the grounds that the goods could be used for both military and civilian purposes. But even if the negative list under the smart sanctions plan is strictly worded, the new scheme will not help Iraq. What Iraq needs is not freedom to import consumer goods but the freedom to trade so that it can repair its economic infrastructure.

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Section  : International
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