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US to Ask Approval to Control Iraq's Oil Industry
Fri May 9, 2003 07:58 AM ET
By Evelyn Leopold

UNITED NATIONS (Reuters) - The United States and Britain face Security Council members on Friday on their resolution that would end 12 years of U.N. sanctions against Iraq and give them control of the country's oil revenues for at least a year.

The tough resolution, to be formally introduced, in effect relegates the United Nations and other international institutions to an advisory role. It would phase out over four months the existing U.N. oil-for-food humanitarian program.

The United States and Britain, which sponsored the U.S.-drafted measure along with Spain, want a vote by June 3, when the oil-for-food program, which gives the United Nations control over the oil revenues, needs to be renewed.

Without an adopted resolution, no Iraqi, U.S. or U.N. entity in Baghdad has the legal authority to export oil.

The Bush administration is counting on approval from Russia, France, China and Germany, who had the strongest anti-war position in the 15-member council, with officials saying there was little enthusiasm for another bruising fight.

Nevertheless, the text, which two senior council diplomats called 'hard' and 'in your face,' will probably face amendments from France and Russia, who have favored suspending the sanctions but leaving some control with the United Nations until an Iraqi government is established.

And nearly every council member, including Britain, had wanted to send U.N. weapons inspectors back to Iraq, as called for as in at least 16 resolutions as a condition for lifting the sanctions, imposed when Iraq invaded Kuwait in August 1990. But the draft resolution ignores any such requirement.

The U.S. proposal, endorsed by Britain and Spain, would deposit Iraqi oil revenues in an 'Iraqi Assistance Fund' for humanitarian and reconstruction purposes, to be held by the Iraqi Central Bank, currently managed by Peter McPherson, a former deputy U.S. Treasury secretary.

The fund would have an advisory board that would include officials appointed by U.N. Secretary-General Kofi Annan as well as the International Monetary Fund, the World Bank and others. This group would audit expenditures.

IRAQI ASSISTANCE FUND

But decisions on where to spend the money would be made mainly by the United States and Britain, with perhaps some input from other allies, like Australia, who sent some troops to the effort to oust President Saddam Hussein's government.

They would make those decisions in consultation with an Iraqi interim authority Washington is now setting up until a new government is formed, which could take years.

The money in the Iraqi Assistance Fund, which would be used 'for the benefit of the Iraqi people' would remain there until 'such time as a new Iraqi government is properly constituted and capable of discharging its responsibilities.'

The draft resolution also asks Annan to appoint a 'special coordinator' to supervise U.N. humanitarian assistance and 'reconstruction activities in Iraq.' Those may include establishing governing institutions, promoting human rights and legal reforms and building an Iraqi police force.

The resolution would phase out the U.N. oil-for-food humanitarian program over four months but honor 'priority civilian goods' in contracts already approved. This would probably include the $1.6 billion in Russian contracts currently in the pipeline.

The program was designed to ease the impact of sanctions imposed in August 1990. It allowed Iraq to sell oil to purchase food, medicine and other civilian goods under U.N. supervision. Oil money goes into a U.N. escrow account to pay suppliers.

The oil-for-food fund has $13 billion in outstanding contracts for food, medicine and other civilian goods ordered by the ousted Iraqi government.

The document asks all countries to watch out for, return and prohibit trade of Iraq's cultural properties looted from Iraq's National Museum and National Library last month.

"For humanitarian and reconstruction purposes". Translation: for the companies that are rebuilding the Iraq we wrecked - namely Haliburton and Bechtel.

And they're probably going to get it, since Russia and Europe seem to be vewwy vewwy qwiet since the end of the Iraq war. I'm not sure what Russia is going to get out of it, but my spider-sense has been tingling ever since the US and Russia quietly signed a memorandum of understanding on agriculture and agribusiness research on 2 May and not so quietly announced a joint US-Russia Mars exploration program on 5 May. Talks have been going on in the background, my suspicious glands tell me, and I'd keep watching out for what other deals come out on the joint US-Russian front for the next couple of weeks or so.

Europe is probably being cowed by the usual threats of retribution, as seen by the US response to other countries. Chile, for example, has had its Free Trade Agreement left stalled while Singapore has had its FTA signed, even though negotiations for the Chilean-US FTA were completed before Singapore's, and Chile is of course now on record as being "favorably" disposed to the draft resolution.

Not that I'm suggesting that the US deigned to put its pen to paper as a reward for Singapore putting its name to the coalition of the willing. Not in the slightest. After all, Prime Minister Goh has denied this, saying that the decision to sign was made before the war. This, of course is perfectly true. People decide to do things all the time.

I'm perfectly willing to take that statement at face value, and to believe firmly the implication, that the Bush administration would have gone ahead with that decision even if Singapore had taken a stand against the war on Iraq. After all, the Americans - and Bush especially - are kind, trusted friends who would never, ever contemplate trying to influence our government or go back on their word, or indeed, punish countries who didn't support their war effort. Sheer coincidence that we got signed before Chile.

And of course, Dr Chan Heng Chee, our Singaporean Ambassador to the US, was perfectly in error when she said in an interview:

Congressmen know about Singapore?

Actually, I am surprised. They seem to know that Singapore is quite advanced in IT and literacy. I blush to say it, but they say we are a model country for others. They keep telling me that Singapore leaders are very articulate and have a strategic vision. Of course, they know we offer our facilities to US forces. There is a warm appreciation for Singapore's support of the US in the war on terrorism and for our support as coalition members on Iraq.

That support helped you, while Chile's lack of support has delayed its FTA.

In real politics, that happens - whether you articulate it or not. When major powers lobby you, they make it very clear that some of your interests could be jeopardised if you do not support them. This goes on. It is not just the United States. I was not born yesterday.

Neither were we, Dr Chan. Thank you.