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Enhanced programme yields pitiful revenues: AP latest.

    UN, Iraq Discuss Oil-for-Food Plan 
By Nicole Winfield
Associated Press Writer
Saturday, August 22, 1998; 12:42 a.m. EDT

UNITED NATIONS (AP) -- The United Nations and Iraq have begun discussing
cuts in Baghdad's plan to distribute food and medicine to needy Iraqis
because revenues from oil sales are coming up less than expected, U.N.
officials said Friday. 

Next week, Secretary-General Kofi Annan is expected to deliver his midterm
update on the so-called oil-for-food program, which allows Iraq to
circumvent U.N. sanctions and sell its oil to buy humanitarian goods for
its 22 million people. 

The report notes that oil-for-food revenues over the last three months
will fall short of expectations and that Baghdad must begin work on
prioritizing aid requests, said a U.N. source familiar with the data of
the report. 

The United Nations had expected the shortfall because of current low oil
prices and known production limits of Iraq's oil infrastructure. 

In a letter to the U.N. chief made public Friday, Iraqi Foreign Minister
Said al-Sahaf blamed the United States and Britain for the shortfall in
revenues, saying the two countries were delaying approval of contracts. 

The delays will force Iraq to reduce the quantities of exports already
agreed to in some oil contracts, al-Sahaf wrote. ``It will also have an
adverse impact on the quantities of humanitarian goods and supplies for
which contracts have already been concluded,'' he said. 

While it's up to Baghdad to decide where and how deeply to cut the aid
plan, diplomats said they will favor keeping food, medical supplies, and
spare parts for Iraq's oil sector. The council recently authorized the
delivery of $300 million in spare pipeline parts to help Iraq repair its
oil infrastructure and boost oil revenues. 

The oil-for-food program was established in 1996 to help provide for
Iraqis suffering under U.N. sanctions imposed after Baghdad invaded Kuwait
in 1990. 

Concerned that Iraqis were still suffering despite the program, the
Security Council in February raised the maximum amount of oil Iraq can
sell over six months from $2 billion to $5.2 billion. 

Nevertheless, Iraq is on course to raise only $3 billion through oil sales
in the six months beginning May 30, al-Sahaf wrote. Since 34 cents of
every oil-for-food dollar go for Gulf War reparations and administrative
costs, only $2 billion is expected to be available for humanitarian aid. 

Baghdad has characterized oil-for-food as a tool to justify what it
considers unjust sanctions imposed in 1990 after Saddam Hussein's invasion
of Kuwait. 

) Copyright 1998 The Associated Press




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