According to diplomats on October 27th, a ten-page UN report detailing the risks of Iraq’s proposal to conduct all oil sales in euros or any other European currency, rather than in dollars, will not prohibit the currency switch.
In early October, Baghdad had asked the UN to open a separate escrow account from the dollar-denominated one at the Banque Nationale de Paris (BNP) in New York used for the deposits of proceeds from the oil-for-food program that would be paid in Euros.
Iraq has also demanded that all letters of credit for its oil must be paid in euros from November 1st. An Iraqi source said on October 26th that Baghdad would likely suspend oil sales if the UN fails to approve its request, calling this a “political issue and not a technical matter."
"The UN report indicates that there is no issue with the legality of Iraq’s request, as UN Security Council resolutions that allow Baghdad to sell oil through the oil-for-food program don’t specify the currency to be used.
The report also outlines the financial risks of the proposal, which the US and the UK worry will lessen the revenue of the humanitarian program, which currently receives $60 million a day from Iraq’s average 2.3 million b/d of exports.
Diplomats said that the report contains an extensive analysis of the financial repercussions of the plan, but did not release any specific figures. The UN sanctions committee is to discuss Iraq’s proposal on October 30th.
Both France and the US have said that they are not opposed to the change of currency. When asked whether the U.S. would oppose Iraq’s plan, a White House spokesman said that: “We’re going to continue to support the oil-for-food program, but as to the specific currency, I don’t think it matters.”
A spokesman from the French foreign ministry said that: “We are not opposed to oil transactions with Iraq being made in euros.” - (oilnavigator)