British seek to regulate Iraq oil trade with neighbors

Published May 23rd, 2001 - 02:00 GMT

UNITED NATIONS, (Reuters) - A British-U.S. proposal to lift sanctions on Iraq's civilian goods would also seek to legitimize unregulated oil trade between Baghdad and its neighbors, diplomats said on Tuesday, May 22. 


The draft Security Council resolution, to be circulated later in the day, would allow Iraq to trade 150,000 barrels per day (bpd) of crude and oil products with neighboring countries. The funds would go into new escrow accounts or through a barter arrangement or both, the envoys said. 


The resolution, if adopted, would not enact such measures immediately but asks U.N. Secretary-General Kofi Annan to recommend arrangements, including monitoring by the United Nations. 


This provision is bound to spur opposition from Russia and China, two of the permanent five council members with veto power, along with Britain, the United States and France. 


Iraq is eager to have as much control as possible over its oil revenues, which now go into an escrow account out of which the United Nations pays suppliers of imports to Iraq as well as reparations to Gulf War victims. Baghdad has threatened to cut off oil supplies with Jordan and Turkey if they cooperate with the such a proposal. 


The aim is to get a Security Council vote on the resolution by May 31, before the next phase of the U.N.-Iraq humanitarian oil-for-food program begins on June 4. That program was designed to ease the impact on ordinary Iraqis of council sanctions, imposed when Baghdad invaded Kuwait in mid-1990. 


Official oil exports, not including smuggled oil, in the U.N. oil program have averaged 2.04 million bpd in the past month, U.N. figures show. 


While most of Iraq's oil exports are controlled through the U.N. oil program, industry experts claim that Iraq has been smuggling up to 250,000 barrels per day (bpd) of oil to neighboring states such as Turkey and Syria. 


Iraq currently ships about 100,000 bpd to Jordan outside of the oil-for-food program. The U.N. Security Council has ignored the Jordanian shipments since 1991 as a concession to Iraq's Arab ally in the Gulf War, but has not officially approved the bilateral arrangement between Jordan and Iraq.  

© 2001 Mena Report (

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