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News for 4 October to 11 October

News clippings: October 4-11

Highlights This Week
*       Iraq accuses US of blocking $750m worth of trade
contracts related to sewage and water plant

*       US rejects speculated Iraqi deal offer to allow
inspectors back into country in exchange for easing of
State department official says, ``We are not
interested in talking to Iraq."
James Rubin says, ``The Iraqis regularly seek to have
discussions with American officials, and we're not
interested in those discussions.''

*       Security Council allows Iraq to exceed $5.26 billion
oil export ceiling until November 20.

*       US bombs area west of Mosul.

*       Russian minister accuses countries of
sanction-busting. He says that Russia will not be able
to stop LUKOIL from ignoring sanctions. LUKOIL is
Russia's biggest oil producer.

I'm struggling to find UK related news items.  If
anyone finds UK-Iraq articles of interest, please let
me know.

Nathan Geffen

Monday October 11, 2:46 pm Eastern Time
Oil Output Limits Said Weakening
AP Business Writer
LONDON (AP) -- Iran, Iraq and several other OPEC
members boosted their crude oil output in September,
increasing global supplies at a time when wealthy
nations are consuming less oil than expected,
according to a respected survey released Monday.

However, possible signs of a softer market -- and
cheaper petroleum prices -- are being offset by an
anticipated strong growth in demand for heating oil
this winter, the International Energy Agency disclosed
in a monthly report.

The report was compiled before last week's sharp
reversal in world oil prices, when profit-taking and
fears of weakening OPEC resolve to keep oil production
under control triggered a 16 percent plunge in prices
for crude contracts for future delivery on the New
York Mercantile Exchange.

David Knapp, the economist who edited the survey, said
the sudden drop in prices did not change the agency's
conclusions that the markets are still strong.
Speaking by phone from his Paris headquarters, he
predicted that global markets would remain firm on the
back of an expected 3 percent rise in fourth-quarter
demand to 77.2 million barrels per day.

The IEA is part of the Organization for Economic
Cooperation and Development, a group of the world's
most developed nations.

Knapp said the biggest surprise in the report was that
oil inventories in industrialized countries actually
increased from June to September. Iran led the
increase in production, pumping an additional 190,000
barrels of oil per day, while Iraq boosted output by
60,000 barrels daily.

Some industry analysts challenged the IEA's data,
however, calling it puzzling and inconsistent. Peter
Hitchens of London brokerage Williams De Broe said the
IEA's finding on oil inventories was a ``glaring
error,'' and he noted alternative surveys that showed
decreases in oil stockpiles in the United States,
Europe and Japan.

But these analysts concurred with the IEA's basic
conclusion that the market was still firm despite the
recent drop in crude prices and a lower level of
compliance with OPEC output quotas.

Crude prices peaked last week in New York at a
33-month high of $25.12 per barrel, but had tumbled to
$20.90 by late Friday.

In New York, November contracts for U.S. benchmark
West Texas Intermediate were trading slightly lower
Monday at $20.85 per barrel. In London, November
contracts for North Sea Brent were trading late Monday
at $20.47 per barrel, down 23 cents per barrel from

Analyst Mark Redway blamed the price reversal on
speculators who had bet that OPEC would stick to its
quotas. When market sentiment changed, they panicked
and closed out their long positions, causing a sharp
retreat in prices, said Redway of London-based
brokerage Greig Middleton and Co. Ltd.

Last week's price volatility was a ``blip,'' said
Peter Gignoux, who manages the petroleum desk in
London at U.S. investment bank Salomon Smith Barney.

``Is OPEC falling apart at the seams? No. Have they
lost the will to make the production cuts stick? No,''
Gignoux said.

``The price of crude had built up such a head of steam
that if it didn't have a pause, the price would have
been shooting toward $30 a barrel now.''

U.S. gas prices, which have on the rise for the past
six months, enjoyed at least a temporary reprieve as a
result of the cheaper crude, said Trilby Lundberg,
director of the Lundberg survey of 10,000 gasoline
stations across the United States. The weighted
average nationwide on Friday was $1.3288, down .53
cents per gallon from a Sept. 24 survey.

The IEA reported that OPEC was 86 percent compliant
with the production cuts agreed that its members
agreed to in March and reconfirmed in September.
OPEC's compliance rate for August was 94 percent,
revised upward from 92 percent, the agency said.

Given OPEC's record of cheating on quotas, analysts
agreed that the group's compliance rate was still good
even at its reduced level.

In total, OPEC produced 26.43 million barrels a day
last month, up 420,000 barrels from August, the IEA

``Given the recent higher prices, everyone tries to
sneak in a few more barrels,'' said Hitchens.

Yet last week's plunge in prices could work to the
advantage of OPEC and other oil producers, by
highlighting the fragility of the market and providing
an incentive for renewed discipline, he added. 


Friday October 8 3:52 PM ET 
U.S. Rejects Iraq Attempt At Direct Dialogue
WASHINGTON (Reuters) - The U.S. will reject any
attempt by Iraq to establish direct dialogue about
easing sanctions, a State Department official said
The spokesman was referring to news earlier this week
that Jordan's King Abdullah would deliver a message
from Iraq's Deputy Prime Minister Tareq Aziz when the
king meets President Clinton and Secretary of State
Albright in Washington on Oct. 12. 
``We are not interested in talking to Iraq. We are
interested in Iraq complying with U.N. Security
Council resolutions and any discussion about that will
be done through the Security Council,'' the State
Department official said. 
Iraq has in the past been rebuffed when it tried to
talk directly to the U.S., the strongest and most
important opponent of any easing of comprehensive Gulf
War trade and political sanction. 
The sanctions cannot be lifted until Iraq has complied
with all U.N. Security Council resolutions including a
clean bill of health from the U.N. certifying that it
has destroyed all of its programs to build and deliver
weapons of mass destruction. 
The official said Washington's policy toward Iraq
remains one of ``containment followed by a change of
``The Americans at this time are not going to deal
with the Iraqis,'' said Raad al-Kadiri, an Iraq
specialist at consultants Petroleum Finance Corp. in
Washington D.C. 
``There is a clear recognition from Baghdad that the
Americans are the players that Iraq needs to turn
around if it is going to get any significant progress
in terms of the regime's rehabilitation,'' al-Kadiri
The U.S. official said it wasn't clear what was in the
But there has speculation in political circles that
Iraq offered a deal to allow weapons inspectors back
into the country. The inspectors left Iraq last
December after a series of confrontations with Iraqi
officials. The speculation is that Iraq is asking for
further easing of sanctions which would allow it to
develop its oil industry unfettered. 
Currently, Iraq can export oil, which accounts for
virtually all of its foreign earnings, under the
stringent ''oil-for-food'' program, administered by
the U.N. 
Though the rules have been eased since the program
began nearly three years ago, effectively allowing
Iraq to pump oil at current capacity. But Iraq has the
potential to produce much more oil if foreign oil
companies were allowed to come in and develop vast
Iraq has favored companies from Russia, France and
China with oil concessions for giant new fields. But
while these countries -- powerful permanent members of
the Security Council -- have put pressure on the U.S.
to support easier sanctions, Iraq is only allowed
under the rules to spend a limited amount of its oil
revenue on fixing its dilapidated oil infrastructure
and is not allowed to develop the new fields. 
Friday October 8 11:25 AM ET 
Report: Iraq Executed 11 Prisoners
CAIRO, Egypt (AP) - Iraq has executed 11 political
detainees in a prison near Baghdad, a human rights
group affiliated with an Iraqi opposition party
claimed Friday. 
The Center for Human Rights said the executions took
place Sept. 23 in Abu Ghraib prison, just west of
Baghdad. The group, which is linked to the Iraqi
Communist Party, cited unidentified sources inside
Iraq as providing the information. 
President Saddam Hussein's government refuses to
comment on such accusations and there is no way to get
independent confirmation. 
The Center for Human Rights, based in Shaqlawa in
northern Iraq, provided a list identifying the
prisoners it said were executed. All of them had been
detained since an abortive Shiite Muslim uprising in
southern Iraq after the 1991 Gulf War, it said. 
In March, former Dutch Foreign Minister Max van der
Stoel, who is a U.N. human rights representative to
Iraq, said hundreds of executions took place in 1998
as part of an Iraqi prison cleansing campaign. Since
late 1997, he said 2,500 prisoners had been put to
Thursday October 7 10:11 PM ET  Iraq Says U.S.
Blocking Contracts By LEON BARKHO Associated Press
Writer  BAGHDAD, Iraq (AP) - Iraq's trade minister
accused the United States on Thursday of holding up
$750 million worth of contracts that would have
greatly improved the health of millions of
malnourished Iraqi children.  Mohammed Mehdi Saleh
told reporters that the blocked contracts were related
to water and sewage treatment plants which have
crumbled during more than nine years of U.N. trade
sanctions imposed on Iraq for invading Kuwait in 1990.
 Saleh claimed the United States is deliberately
impeding contracts for central and southern parts of
Iraq, home to more than 20 million people. He said
similar deals involving the Kurdish northern Iraq,
which has a population of 3.3 million, are not
hindered.  The government handles the purchase and
distribution of humanitarian supplies under the
U.N.-approved oil-for-food deal in central and
southern Iraq. In the Kurdish North, the program is
the responsibility of the United Nations.  A survey by
the United Nations Children's Fund in August reported
a dramatic increase in malnutrition and deaths among
Iraqi children in the heavily populated southern and
central Iraq, while there was a significant drop in
the Kurdish north.  UNICEF also reported that at least
40 per cent of water samples it examined in
government-controlled areas were found to be
contaminated.  Saleh said the United States did not
want the situation to improve in central and southern
Iraq in order ``to show that the Iraqi government is
not capable of implementing the program as it is
happening in the North.''  U.N. officials overseeing
Iraqi contracts and purchases under the oil deal
declined to comment on Saleh's remarks. 

Thursday October 7, 6:00 pm Eastern Time 
Russia, Iraq Sign Oil Deals
MOSCOW (AP) -- Iraq has signed contracts with Russian
companies to supply oil production equipment worth $57
million, a top Russian official said Thursday. 
The deals were signed during a recent visit by a
Russian delegation to Baghdad, Fuel and Energy
Minister Viktor Kalyuzhny was quoted as saying by the
Interfax news agency. He didn't name the Russian
companies or provide any other details on the
Iraq has also asked Russia to prepare a contract for
pumping water to the Qurna oil field, the report said.
The sides also prepared a deal on the joint drilling
of 100 wells in the Northern Rumeila oil field. 
Russia has provided food and equipment for oil
production worth hundreds of millions of dollars to
Iraq under a food-for-oil program, the only exception
to U.N. sanctions imposed after Iraq's 1990 invasion
of Kuwait. 
Russia has been the leading buyer of Iraqi oil even
though it is itself one of the world's largest oil
producers. Russia hopes that its efforts will be
rewarded when sanctions are lifted against Iraq. 
Iraq owes billions of dollars to Moscow, mostly for
weapons purchased in the 1980s, and Russia would like
to get at least some of that money back through
contracts to rebuild Iraq's oil industry. 
Thursday October 7 5:14 PM ET  U.S. Using Concrete
Bombs on Iraq By SELCAN HACAOGLU Associated Press
Writer  ISTANBUL, Turkey (AP) - U.S. warplanes have
been dropping bombs filled with concrete and not
explosives in raids on Iraqi installations in a move
to minimize civilian casualties, a military official
said Thursday.  The 2,000- to 3,000-pound laser-guided
bombs are still capable of causing damage, especially
when dropped from high altitudes by a speeding jet,
said Lt. Col. Michael Waters, a spokesman for
Operation Northern Watch, the allied effort to patrol
a no-fly zone over northern Iraq.  ``If you drop it on
a radio, it could break the radio without blowing
up,'' Waters said.  The new bombs were introduced
following Iraqi allegations that the constant bombings
by U.S. jets in response to Iraqi anti-aircraft fire
were causing civilian casualties.  ``We are extremely
careful about collateral damage,'' Waters said. ``We
have used those bombs.''  Army Gen. Henry Shelton,
chairman of the Joint Chiefs, said Thursday in
Norfolk, Va., that U.S. forces have been using
concrete bombs for a long time. He declined to discuss
how much or under what circumstances they were being
used in Iraq.  He said, however, ``If we have a
target, a specific target that we are very concerned
about collateral damage, but it's very important that
we hit that target, that is a technique that we have
of going after it.''  Operation Northern Watch
warplanes are based at Incirlik air base in southern
Turkey.  U.S. and British planes have been patrolling
no-fly zones over northern and southern Iraq since the
1991 Persian Gulf War to protect Kurdish and Shiite
minorities from the forces of Iraqi President Saddam
Hussein.  The concrete-filled bombs would also cut the
cost of the operation. American and British pilots
often drop bombs a few times a week, responding to
Iraqi challenge. They use anything from $12,000
laser-guided bombs to $80,000 Maverick missiles. 
Since December, when Baghdad started challenging the
allied planes, warplanes have dropped more than 1,400
bombs and missiles on targets in northern and southern
Iraq.  U.S. officials say missiles have hit more than
375 military targets, including radar sites and
anti-aircraft weapons. Iraq claims nonmilitary
facilities are being hit and hundreds of civilians
have been killed.  U.S. authorities say civilian
damage has been minimal and most of what the Iraqis
claimed as casualties were military casualties or
false reports. 
Thursday October 7 1:27 PM ET  Hussein Offers U.S.
Olive Branch By JOHN HALABY Associated Press Writer 
AMMAN, Jordan (AP) - Iraqi leader Saddam Hussein has
sent a message to President Clinton, promising major
political reforms in Iraq and offering to stop
threatening Israel, a leading Arabic newspaper
reported today.  Administration officials, however,
doubted that Iraq would make a serious overture to the
United States through Abdullah.  ``The Iraqis
regularly seek to have discussions with American
officials, and we're not interested in those
discussions,'' the State Department spokesman James P.
Rubin said Wednesday.  The London-based Al-Hayat
newspaper said the message includes an offer for
unconditional talks with the United States and
assurances that Iraq will play an effective role in
the Middle East peace process.  The message is being
carried by Jordan's King Abdullah II, who is scheduled
to meet with Clinton on Tuesday in Washington.  Before
leaving for London on Wednesday en route to
Washington, Abdullah confirmed to Jordanian reporters
that he was carrying a message from Saddam to Clinton.
He refused to give details.  ``I can't comment on
that, but I have a message to pass on,'' Abdullah was
quoted as saying by Jordanian newspapers today.  If
the Al-Hayat report is correct, it would mark a major
turnaround in Iraq's hard-line policies and show a
willingness to mend fences with its main enemies, the
United States and Israel.  In return, Iraq wants
Washington to drop its threats to put Saddam and his
senior aides on trial as war criminals, Al-Hayat said.
 Iraq's change of heart could also be linked to its
demand that the United States drop its opposition to
the lifting of U.N. economic sanctions, imposed in
1990 after Saddam's forces invaded Kuwait.  Al-Hayat
said the Iraqi leadership expressed readiness to start
political reforms that would include a new
constitution, adopting a multiparty system and respect
for human rights.  Iraq has been ruled by the Baath
Party for the last 31 years, 20 of them under Saddam,
whose tight control on power and intolerance for
dissent have driven most opponents out of the country.
 In his message, Saddam also proposed providing
guarantees that it will ``play an effective role in
the (Middle East) peace process and stop its threats
against the Jewish state and neighboring countries.'' 
Jordanian newspapers quoted Abdullah as saying the
message was handed over by Iraqi Deputy Prime Minister
Tariq Aziz to Jordanian Prime Minister Abdur Ra'uf S.
Rawabdeh last week.  Abdullah said he intends only to
deliver the message and not speak on behalf of Iraq.
Asked if he will defend Iraq before U.S. officials, he
said: ``Absolutely not.''  Jordanian and Iraqi
officials refused to elaborate on the contents of the
Wednesday October 6 10:14 AM ET 
U.S. Planes Bomb Iraqi Missile Site
ANKARA, Turkey (AP) - U.S. warplanes patrolling the
no-fly zone over northern Iraq bombed a missile site
Wednesday after Iraqi gunners opened fire on the
aircraft, the U.S. military said. 
The planes bombed a surface-to-air missile site west
of the city of Mosul, the U.S. European Command said
in a statement. Mosul is 250 miles north of Baghdad,
the Iraqi capital. 
The attack came after Iraqi forces east of Mosul fired
on the jets, the statement said. None of the planes
was hit. The aircraft are based at Incirlik air base
in southern Turkey. 
U.S. and British planes have been patrolling no-fly
zones over northern and southern Iraq since the 1991
Gulf War, to protect Kurdish and Shiite minorities
from the forces of Iraqi President Saddam Hussein. 
Iraq regards the zones as violations of international
law and has challenged the allied planes frequently
since December. 
Wednesday October 6, 5:49 am Eastern Time 
Russian oil firms must work in Iraq -Fuel Minister
MOSCOW, Oct 6 (Reuters) - Private Russian oil
companies may start developing Iraqi oilfields despite
United Nations sanctions, Russia's Fuel and Energy
Minister Viktor Kalyuzhny was on Wednesday quoted as
``We have agreed that within two months Russia will
make public its position,'' he said in an interview
with Vremya MN newspaper after returning from talks
with Iraqi authorities. 
``But my opinion is that (Russian) oil companies must
work in Iraq.'' 
Kalyuzhny on Friday told reporters in Baghdad that the
U.N. sanctions posed problems in implementing a deal
signed two years ago with Russian firms to develop
large oil reserves in Iraq. 
The Russian minister, who said his country maintains
strategic relations with Iraq, made it clear in
Baghdad that Russia would respect the U.N. sanctions.
``We will deal with Iraq in accordance with current
existing circumstances,'' he said. 
But in the Russian newspaper, he was quoted as saying
the government could not prevent private oil firms
like LUKOIL , where the state had just a 28 percent
stake, from intensifying cooperation with Iraq if it
decided to ignore the sanctions. 
``It is the right of LUKOIL's management to decide
where to work,'' Kalyuzhny said. ``Why give away a
delicious morsel?'' 
In 1997, LUKOIL, Russia's largest oil producer, and a
number of other Russian companies signed a contract to
develop Iraq's West Qurana oilfield. 
But the development of the field could not get started
due to sanctions imposed on Iraq by the U.N. Security
Council following Iraq's 1990 invasion of Kuwait. 
Iraqi officials have expressed displeasure over the
failure of Russian companies to fulfil their
obligations and have even raised the prospect of
revising the contract. 
``Today, everybody is profiteering with Iraqis,
including countries which defend the embargo,''
Kalyuzhny said. 
``It is Russia which suffers most, as it is unable to
repatriate huge amounts of money, billions it has
invested, which have been frozen.'' 
He said that the United States, with its control of
the oil business, was taking advantage of the
He also said sanctions were being violated by Turkey,
Algeria and ``to some extent'' by India. 
``Turkey buys crude oil and oil products from Iraq --
and does so in front of American observers who are
keeping a close watch on Russia instead.'' 
``By closing its eyes to such countries as Algeria and
Turkey, the United States is violating the sanctions
themselves,'' Kalyuzhny said 
Monday October 4 7:28 PM ET 
Iraq Allowed To Export More Oil
By NICOLE WINFIELD Associated Press Writer 
UNITED NATIONS (AP) - While still deadlocked on an
overall new policy for Iraq, the Security Council on
Monday authorized Baghdad to temporarily export more
The council unanimously adopted a draft resolution
that slightly adjusts the U.N. oil-for-food program,
which lets Iraq export $5.26 billion in oil over six
months to buy food and medicine for its people
suffering under sanctions. The U.N. sanctions were
imposed after Iraq's 1990 invasion of Kuwait. 
Iraq is expected to reach the $5.26 billion ceiling
between Oct. 8 and 12 - more than a month before the
six-month period expires Nov. 20. Without Security
Council action, Iraq would not legally be able to keep
exporting oil. 
The new resolution, introduced by the Netherlands,
would allow Iraq to keep exporting oil beyond the
$5.26 billion limit through Nov. 20 to make up for
export shortfalls from previous six-month periods. 
Because of low oil prices and production limits, Iraq
fell more than $3 billion short of the ceiling last
U.S. officials stressed that the Dutch resolution was
a technical maneuver that didn't constitute any
lifting of the export limit or easing of sanctions. 
By making up for oil export shortfalls from last year,
the council is merely allowing Iraqis to have the food
and medicine they were authorized to get but couldn't
because of low oil prices, Deputy U.S. Ambassador
Nancy Soderberg said. 
``The resolution does not alter the overall structure
of the oil-for-food program, but will help redress the
shortfall brought about by the lower world oil
prices,'' she said in a statement. 
U.N. weapons inspectors withdrew from Iraq in
December, before the United States and Britain
launched airstrikes to punish Baghdad for failing to
divulge all information about its banned weapons
Iraq has said the inspectors from the U.N. Special
Commission cannot return, and has demanded sanctions
be lifted immediately. Baghdad says it has complied
fully with U.N. resolutions demanding it rid itself of
its biological, chemical and nuclear weapons. 
Under U.N. resolutions, the sanctions cannot be lifted
until Iraq is declared to be free of its weapons
Iraqi Foreign Minister Mohammed Saeed al-Sahhaf met
Monday with U.N. Secretary-General Kofi Annan to
discuss the oil-for-food plan, officials said. Iraq
has complained - as recently as Monday in a press
release - that the Security Council sanctions
committee was holding up contracts for badly needed
protein biscuits and therapeutic milk. 
Al-Sahhaf was in New York for the U.N. General
Assembly's annual debate. 

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