Iraq insists on switch to euro November 1st
Iraq will switch to the euro to price UN-authorised oil exports from November 1 as planned, Oil Minister Amer al-Rashid said Sunday, pressuring the United Nations to give its verdict on the move.
"Iraq will start on November 1 to conclude its contracts in euros instead of dollars," Rashid said. "France, Russia and China support Iraq's request, on which the UN Security Council is to announce its position next week," he said, quoted by the official news agency INA.
Baghdad decided at the end of September to switch to the euro for its foreign trade transactions, on the grounds that the US greenback was the currency of an enemy state.
The sanctions-hit country informed the United Nations on October 4 that the decision would apply from November 1 to oil exports, which are authorised under a UN humanitarian programme.
But the <1>Middle East Economic Survey reported last Thursday that there was a "serious possibility" that Iraqi oil exports could be interrupted over Baghdad's plan. The specialist newsletter said the United Nations had delayed deciding whether to approve Baghdad's instructions to its customers to pay for Iraqi oil in euros.
The UN sanctions committee is set to examine Iraq's plan on Monday. While slamming both Saudi and US oil policies, Rashid said that Baghdad "wants to ensure balanced crude prices which guarantee the rights of producers and consumers." Iraq "is trying to set up a fair policy for crude prices based on a balance between supply and demand in world raw materials," he said.
"The United States is always working to disrupt the oil market and create crises, while Saudi Arabia implements its policies within OPEC to weaken the cartel," charged Rashid. The switch from dollars to euros would cost at least $270 million a year, UN financial experts said last week in a report to the sanctions committee.
This reflects only the cost of converting oil prices in a market dominated by dollar sales, and the lower interest earned by oil revenues held in a euro-denominated, rather than a dollar, account.
The expense would make less money available for humanitarian imports under the UN's oil-for-food programme, set up in December 1996 to lessen the impact of sanctions on the Iraqi people.
Iraq currently exports about 2.2 million barrels of oil a day under UN supervision. Total world demand for crude is running at about 75.8 million barrels a day, but the market is tight and the fear of a cut in Iraqi supplies has already nudged price upwards.
The French foreign ministry said Friday that Paris, which is current president of the European Union, was not opposed to Baghdad's demand to switch to the European currency.
But UN experts estimate that it would take two months to put in place a payment system in euros for the oil exports of Iraq, which has been under sanctions since its 1990 invasion of Kuwait.
Baghdad, branding the dollar a tool of US hegemony, has embraced the euro as part of its battle against Washington, which led a military coalition in evicting Iraqi forces from Kuwait in the 1991 Gulf War.
The United States is a strong supporter of keeping sanctions in place and along with Britain carries out almost regular air strikes as their warplanes are challenged in the skies over northern and southern Iraq. — (AFP)
© Agence France Presse
© 2000 Mena Report (www.menareport.com)