UN Set to Impose Plan For Export of Iraqi Oil

IRAQ may soon be allowed to export a limited quantity of oil under a plan that could come to a vote in the UN Security Council this week.Iraqi officials have indicated, however, that they would rather leave the oil in the ground than pump it under the humiliating conditions the Council plans to impose. They say the revenues envisioned under the plan aren't sufficient even to restore their ability to pump and export oil, much less buy the food necessary to avert a potential famine. But United States diplomats say that if Iraq rejects the proposal, they would feel no obligation to develop an alternative solution. "If Saddam Hussein wants to starve his own people, that's his responsibility," says one US diplomat. The UN shut down Iraq's oil trade just over a year ago by imposing an embargo in efforts to compel Iraq's withdrawal from Kuwait. Iraq has been pleading since mid-April for permission to sell some oil in order to buy food and other civilian needs. Prince Sadruddin Aga Khan, the UN special envoy for humanitarian affairs in Iraq, said at a UN press conference last month that he had informed Council members that Iraq must be allowed to make its own large-scale food purchases soon. He argued that it was unconscionable for the UN and the international donor community to pay for food and medicines for an oil-endowed country like Iraq - thus reducing their commitment to people in equally grave danger in much poorer parts of the world. A team of experts working with the prince estimated that it would take $22 billion to return Iraq to its prewar condition, and said the bare minimum needed for a greatly reduced level of basic services over the next year would be $6.8 billion, including $1.6 billion for food. Iraqi Prime Minister Saadoun Hammadi said Friday that the Council's oil-pumping proposal - which has already been agreed by the five permanent Council members - would not provide enough money "even at a minimal level, to meet the needs of our people in terms of food, medicine, and important humanitarian equipment." The draft proposal permits Iraq to export up to $1.6 billion worth of oil within a period of six months from the date the resolution is adopted, but prescribes the following conditions: * Each purchase must be approved by the Council's sanctions committee. * Payment must be made directly into an escrow account to be administered by the UN secretary-general. * The Council must approve a plan, which Secretary-General Javier Perez de Cuellar is to submit within 20 days, for the purchase of Iraq's essential needs. Not all of the money would go for food: Thirty percent would be siphoned off into the UN compensation fund to pay for war damages, and other amounts would help finance the destruction of Iraq's prohibited weapons and go toward half the costs of demarcating the Iraq-Kuwait border. The proposed resolution would also require Iraq to submit a monthly statement of the gold and foreign-currency reserves it holds inside and outside Iraq. The limited oil sale has been delayed because Iraq hasn't satisfied the sanctions committee that it has little or no monetary reserves. Despite regular inquiries, Iraq only reluctantly admitted over a period of months that it had assets of at least $3 billion held abroad, and $14.75 million within Iraq, plus a still-unspecified amount of gold. But Iraq has recently concluded cash contracts for over 1 million tons of wheat valued at $150 million, and there has been no explanation so far of how they were able to pay for it if only $14.75 million were on hand. The sanctions committee has authorized the unfreezing of Iraq's externally held assets in order to buy food, medicines, or other essentials. But the committee requested to be told if any funds were unfrozen, and no notification has been given to the UN. In initial Council consultations on the resolution, Yemen's Ambassador Abdalla Saleh al-Ashtal charged the proposed draft would in effect make Iraq a trusteeship of the UN. US Ambassador Thomas Pickering replied, according to several diplomats present, that the majority of the American people would have no complaints about that. Diplomats on the Council say the secretary-general was also concerned about the implications of having him oversee Iraq's oil revenues. He apparently feels that the resolution would in effect turn Iraq into a trusteeship, with him as the proconsul. The UN charter prohibits any member state from becoming a trusteeship and says relations between members are based on the principle of sovereign equality.