Iraq leans towards acceptance of new oil-for-food deal with UN

Published December 7th, 2000 - 02:00 GMT

Iraq is leaning towards acceptance of six more months of the UN oil-for-food programme under which the sanctions-hit state exports crude, an official Iraqi source said Wednesday."Chances for it being accepted are greater than it being rejected," the source told AFP. 

 

The UN Security Council agreed on Tuesday to extend the programme -- under which Iraq exports crude in return for imports of humanitarian supplies -- until June and to streamline its vetting procedures to speed up delivery of the supplies. 

 

It also agreed in principle to release up to 600 million euros ($540 million) of Iraq's oil income in cash from the tightly controlled UN escrow account to train and pay workers in Iraq's dilapidated oil industry. 

 

The Security Council also formalised an earlier decision to reduce from 30 to 25 percent the amount that goes into a compensation fund for victims of the Iraqi invasion of Kuwait in August 1990, when sanctions were slapped on Iraq. 

 

Late Wedneday, the Iraqi leadership studied the renewal and the Security Council's improved terms for the new six-month phase, the official INA news agency reported.  

 

Without providing details, INA said a joint meeting of the Command Council of the Revolution and the ruling Baath party executive "studied the UN Security Council position on Iraq following the decision on Tuesday to extend the 'oil-for-food' programme." 

 

Earlier, an official who asked not be identified, said they were "prone to encourage its acceptance". 

 

Exports of Iraqi crude, meanwhile, have been suspended since December 1 in a dispute with the UN over the pricing formula for exports and a premium which Iraq wants paid outside the UN escrow account for its oil revenues. 

 

The move has taken between 2.3 and 2.4 million barrels per day of Iraqi crude off the world market.Oil prices in London rebounded slightly on Wednesday after steep recent declines which sent prices to four-month lows, amid mild concern at a fresh batch of US figures that showed stocks persisting at low levels. 

 

In London, the price of oil slumped below 27 dollars a barrel on Wednesday for the first time since early August after official US figures showed stock levels were on the rise. A barrel of benchmark Brent North Sea crude for January delivery fell to $26.92, down from $27.79 at the close on Tuesday. 

 

With Iraq hinting that it could resume the exports that it froze a week ago, market players had already driven oil prices down because they feel there will be enough crude to go round this winter. 

 

In the streets of Baghdad, the renewal of the oil-for-food programme was greeted with indifference. 

 

"Our situation will not change so long as the unbelievers have not allow the total lifting of the embargo," said merchant Kazem Abdul Wahed, 38, referring to US opposition to an end of the decade-old sanctions. 

 

Mohsen Hassan, a stall-owner in the same Baghdad market, was equally sceptical. 

 

"If there is no change within the Security Council toward a lifting of the embargo imposed on us, we cannot hope for any real improvement" in living standards, he said. 

 

Traders said the dinar rose to 1,635 against the dollar on Wednesday, up from 1,670 the previous day. But the improvement was "linked to supply and demand, not to the UN resolution", said a currency dealer. 

 

An official newspaper, Alif Ba, said the oil-for-food programme "can only partially meet the needs of Iraq, which wants to satisfy its needs with its own money" from oil exports.—AFP. 

©--Agence France Presse. 

 

© 2000 Mena Report (www.menareport.com)

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