UN Keeps Economic Grip on Iraq Amid Appeals for Leniency

THE United Nations Security Council has decided to keep its economic squeeze on Iraq, hoping that if the Baath Party leadership cannot be ousted, it can at least be forced down the path of political reform. Western allies say that how hard they push for international policing of Kurdish zones in northern Iraq depends on the outcome of talks being held in Baghdad with Kurdish representatives. Pressure is on the Iraqi government, Western diplomats say, to live up to a 1970s agreement that makes Kurds responsible for their own security, but which was never implemented.

Iraqi diplomats at the UN complain that they face a growing list of United States demands, but say they have no choice but to comply. They privately predict strides toward Iraqi democracy.

The UN's continued squeeze was made clear when Iraq asked permission on April 14 to sell enough oil to buy nearly $1 billion of food and other civilian supplies. The Security Council's sanctions committee, which had previously put off Iraq's request, ruled Friday that, before the appeal can be considered, Iraq will have to account for other assets it might use for such purchases.

``Iraq must have some liquid foreign assets on hand,'' a US diplomat said Friday. ``It must have had them on Aug. 1, before its invasion of Kuwait, and it must still have them.''

Mandatory UN sanctions imposed Aug. 6 prohibit trade with Iraq. Under the UN cease-fire resolution, Iraqi oil exports would not resume until arrangements are made for paying war reparations and until Iraq's most dangerous weaponry is destroyed.

One Iraqi, who requested anonymity, says the UN has already been informed that Iraq's Central Bank, where foreign exchange and gold would have been deposited, was destroyed in air raids. Recent reports, however, claim Iraqi president Saddam Hussein, his family, and associates have secret bank accounts. Middle Eastern diplomats have complained about lavish televised celebrations last week for Mr. Hussein's birthday. The Iraqi leader vowed to rebuild a new Iraq, even if UN sanctions were not lifted.

Diplomats said they believe UN and International Committee of the Red Cross reports that the Iraqi population has been badly affected by the war. But, they complained, the Iraqi leadership's posturing is depriving its people of help.

Iraq asked April 28 for $1 billion in frozen assets abroad to be unblocked to finance food and medicine purchases. The next day, Abdul Amir Al-Anbari, Iraq's ambassador to the UN, enlarged his appeal, asking the Council to alleviate ``the critical situation'' he said ``threatens to lead to starvation and disease.''

Mr. Al-Anbari petitioned the council for help in releasing food destined for Iraq, but impounded in ports around the world after the UN embargo began. The cargoes, he said, included $19 million of milk for infants, and $45 million of sugar, lentils, meat, fish, eggs, and tea.

The sanctions committee decided Friday that individual governments could release Iraq's frozen assets, under UN monitoring, according to the rules already set down by the Council.

Under these rules, Iraq can buy food if it informs the sanctions committee of its purchases; it can buy other essentials to meet civilian needs if no member of the committee objects; no funds can be unblocked for any other purpose. Under the embargo, Iraq is free to import medicine. Despite these guidelines, US diplomats said, no US-held Iraqi assets would be released.

Iraq last week also asked for a five-year exemption from any payments for war damages. Under the cease-fire terms, Iraq is to pay a percentage of its future oil revenues in reparations.

Al-Anbari said in a letter to UN Secretary-General Javier P'erez de Cu'ellar that Iraq's reconstruction and development needs over five years would require $170 billion, but that expected oil revenues would not total more than $20 billion.

Mr. P'erez de Cu'ellar has promised to fix a ceiling rate for reparations after further consultations. But, he warned, Iraq's future oil exports will have to be strictly supervised to ensure that accurate reparation payments are made.