UN Security Council Divided Over New Iraq Oil-for-Food Plan

The 15 members of the United Nations Security Council have been divided over a draft resolution that would extend for another period of six months the oil-for-food program for Iraq, a UN diplomat said Tuesday, December 5.

Negotiations on the draft are expected to continue until the last minute of the current phase of the humanitarian program expires at midnight, the diplomat said.

According to the diplomat, the draft resolution contains a " cash component" of about US$525 million over the next six months.

Iraq wants the funds for the cost of production and transportation of oil which is opposed by the United States and Britain which insist that the "cash component" come under UN supervision and be used for humanitarian supplies, not just oil- related costs. Other members of the Security Council such as China, France and Russia shared the same view with Iraq.

The diplomat said another issue of contention is whether Iraq can use some of its oil revenues, now deposited in a UN escrow account, to pay the 15 million dollars arrears it owes the United Nations. The United States and Britain opposed the move.

The draft resolution asks the UN Secretary-General to report to the council by March 31, 2001 "all forms of smuggling" of oil by Iraq and the "potential for manipulation of oil contracts," a US-British proposal that Russia and China strongly opposed, the diplomat said.

It also asks the U.N. chief to report on the feasibility of Iraq's opening a pipeline to Syria, but the United States and Britain want to make sure that any revenues go into the oil-for-food program, the diplomat added.

The current phase of the oil-for-food program expires at midnight of December 5.

The oil-for-food program, which began in late 1996, allows Iraq to sell oil under UN supervision to buy food, medicine, oil spare parts and a host of other goods in an effort to ease the impact of the UN sanctions.

The United Nations imposed stringent sanctions on Iraq after its invasion of Kuwait in 1990. The sanctions cannot be lifted until Iraq is clarified to be free from weapons of mass destruction.

Iraq halted oil exports Friday after it failed to get an agreement on the pricing formula of oil exports for December. The United Nations Sanctions Committee on Iraq last week rejected Iraq 's proposed pricing formula, saying that it did not reflect a fair market value.

Iraq had proposed the lower prices to compensate buyers of its oil for a surcharge of 50 US cents a barrel and wanted the funds paid directly into its account not controlled by the United Nations.

Iraq Earns US$452 Million in Weekly Oil Revunue

Iraq exported 16.4 million barrels of oil, earning US$452 million under the oil-for-food program in the week leading up to December 1, the United Nations Office of the Iraq Program reported Tuesday, December 5.

The office which administers the UN humanitarian program said that since the start of the program in December 1996, Iraq has exported over 2,207 million barrels of oil, raising the estimated total revenue to more than US$38.7 billion.

The total value of contracts placed on hold by the United Nations sanctions committee on Iraq as of December 1 stood at almost 2.5 billion dollars, representing 14.9 percent of all circulated contracts, the office said.

During the week, 33 contracts worth 115 million dollars were released from hold by the committee, however, 46 new contracts worth 184.4 million dollars were placed on hold, the office added.






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