Iraq Primes Oil Pumps As UN Lets In Food Aid

The oil pipelines are repaired, the pumping stations primed, and United Nations monitors are in place: Iraqi oil is now ready to flow to the outside world for the first time since sanctions were imposed just before the Gulf war.

The limited oil sales are meant to finance food and medicine for Iraqi civilians, and to help pay for UN efforts to destroy Iraq's weapons of mass destruction.

But the long-awaited oil-for-food deal - which UN Secretary-General Boutros Boutros-Ghali approved yesterday after months of haggling with Iraq - has given rare cause for celebration in both Baghdad and Washington.

The deal - which isn't likely to immediately affect prices at your local gas station - is seen as a positive by both camps, analysts say, but for very different reasons.

Iraqi leader Saddam Hussein and a growing number of Arab states see the deal as the first step in lifting sanctions and the start of Iraq's post-Gulf-war rehabilitation.

But for the United States, Kuwait, and Western allies that helped repel Saddam's 1990 invasion of Kuwait, the move reinforces sanctions by easing the plight of Iraq's people, and therefore relieves popular pressure to lift sanctions altogether.

As world oil markets prepare to absorb Iraq's oil, the political significance underscores that, five years after the Gulf war, much unfinished business remains.

"The deal benefits those who want sanctions to continue; it's something concrete we can point to for the Iraqi people," says a senior Western diplomat. "No, it's not the first step of lifting sanctions. It's in place because we can't lift sanctions."

Pressure to ease the sanctions has grown with details of civilian agony, which have proven a strong propaganda tool for the regime. The UN Children's Fund estimates that 4,500 children die each month from hunger and disease; the UN World Food Program says 180,000 children below the the age of 5 are malnourished.

Sanctions won't be fully lifted until Iraq cooperates with the destruction of its weapons of mass destruction and complies with demands to stay within its borders.

A military buildup along the frontier with Kuwait in 1994, and the invasion of a UN-declared safe area for the Kurds in northern Iraq in August - which reestablished Baghdad's control over the region and resulted in American missile strikes - has hardened the view in Washington that sanctions will continue for as long as Saddam remains in power.

Details of the deal

UN Security Council Resolution 986 allows Iraq to sell $2-billion worth of oil every six months. Some two-thirds of that revenue is earmarked for the tightly monitored distribution of humanitarian aid; the rest is to pay for war reparations and the UN's weapons destruction mission.

At current prices Iraq will be able to sell between 525,000 and 575,000 barrels per day (b.p.d.), a fraction of the 3.2 million b.p.d. it sold before the invasion of Kuwait. The renewed sales represent 1.2 percent of the world's daily supply and are expected to lower oil prices slightly.

Analysts recently in Baghdad note that food has been available in Iraq, but most can't afford it.

"The people of Iraq need not starve," says a senior Western diplomat. "The regime has let people starve for its own political reasons."

The outlook is different among some Gulf neighbors - especially Qatar and the United Arab Emirates (UAE) - and Arab governments in Jordan and Egypt, which want to bring Iraq back into the international fold. Their reasons are many, although the issue has divided Gulf oil states at their weekend summit in Doha, Qatar.

Of primary public concern is the suffering of the Iraqi people, the economic gains to be made by reopening Iraq's markets, and the belief among many diamond-studded Gulf sheikhs that Arab Iraq is their only guarantee of safety from Persian and Shiite Muslim Iran, which menaces them from across the Gulf.

Kuwait and Saudi Arabia, however, fear a reinvigorated Iraq as much as Iran, and recognize that the oil-for-food deal may free up resources that will enable Saddam to bolster his military.

"Saddam Hussein is very weak and is no longer a threat," counters Mohamed al-Musfir, editor of Doha's Al-Rayah newspaper, who is close to Qatar's emir. Kuwait has an understandable "inferiority complex," he says. "But it is not for them to veto all relations of Arabs with Iraq."

Many benefit from deal

So who does the deal help most?

"There is divided opinion because there are divergent interests," says John Duke Anthony, head of the Washington-based National Council on US-Arab Relations. The US and the West have a "boot on the neck" of Iraq to "send a message that more positive behavior is required."

But the UAE, for example, is "less worried about global strategy than about trade. The minute Iraq opens up, they stand to reap a fortune" through increased trade. Still, UAE leaders have made high-profile calls to reconsider Iraq's isolation.

Iraq and the UN first agreed on the plan last May, but squabbling about monitors and pricing caused delays. The deal was suspended in September to punish Iraq for invading Iraqi Kurdistan.

Oil analysts say that the fresh supply could not have come at a better time for the market, which this week neared a six-year high of just over $25 per barrel for North Sea Brent Crude.

Bespeaking oil producers' bullish attitude, Iran's oil minister Gholamreza Aghazadeh said at an oil meeting in Goa, India, that Iraq is "welcome into the market," "At this moment the market is good," he said. "We are not afraid of Iraq's oil."

The same also applies politically, for some. "The threat of Iraq has been blown up like a balloon - it's full of hot air," says a Qatari official.

"Iraq is big and important and we must live together. After all - and this is often forgotten in the West - we are all Arabs."

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