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News for November 18 to November 29, 1999 Thank you to Drew Hamre and Ian Geldard for their contributions. Sources: Reuters, AFP, AP, Washington Post and The Guardian * Iraq has said it will begin exporting oil again if oil-for-food is extended to 6 months instead of 2 weeks. This resulted in the oil price dropping again after reaching a 9 year high. There are quite a few articles below regarding the Security Council negotiations on policy towards Iraq and the seesaw status of Iraq's oil exports. Note that it is not clear that Iraq will begin exporting oil again. As far as I am aware this is dependant on the Security Council extending OFF for 6 months, which, in turn, seems to be dependant on the Security Council reaching consensus over a number of disagreements between the US, UK and Russia. * US/UK forces might have bombed an Iraqi school on Sunday. * Iraqi government has imposed strict penalties for citizens who leave the country illegally. * Turkish forces kill Kurds in Northern Iraq. * Amnesty International report on Iraqi government torture. * Canada sends delegation to Iraq to discuss sanctions, arms inspectors and oil-for-food. I've been following wire coverage of Iraq for a while and I must say that Hassan Hafidh (who seems to write mainly for Reuters) consistently reports important sanction related news that most of the mainstream media seems to ignore. He seems to be an excellent journalist. Also, my apologies for not posting the news last week. I was out of town. ----------------------------------- Monday November 29, 10:49 am Eastern Time Russians in Talks on Iraq Oil Deal By LEON BARKHO Associated Press Writer BAGHDAD Iraq (AP) -- Russia's Machinoimport, a power and fuel construction company, is negotiating a $1 billion deal with Iraq's Oil Ministry to upgrade the giant southern oil field of North Rumeila, a company executive said Monday. Alexander Alexeev said the Iraqis are eager to sign the contract, but want the company to start work right away -- an action that would violate U.N. trade sanctions imposed on Iraq for invading Kuwait in 1990. ``They want us to start immediately, but in this situation it is impossible,'' Alexeev, head of Machinoimport's Iraq branch, told The Associated Press. Full-fledged implementation, will have to wait until the company obtains U.N. permission, Alexeev said. Alexeev said the contract, to be implemented in four phases, is expected to add 160,000 barrels per day to North Rumeila in two years. The field is Iraq's most prolific, churning out nearly 1 million barrels per day. Machinoimport is one of a half-dozen Russian companies working with the oil industry in Iraq. Alexeev said Machinoimport is careful to limit its activities to the framework of U.N. trade sanctions, which ban direct foreign investment but allow equipment shipments to rehabilitate the oil industry under a U.N.-approved oil-for-food deal. Russian companies control the bulk of Iraq's external trade under the oil program. They also purchase more than 40 percent of the country's oil exports under the deal. Machinoimport was the largest foreign construction company in Iraq before the sanctions, with more than 5,000 Russian engineers overseeing scores of projects across the country. -------------------------------------------- Monday November 29, 3:40 am Eastern Time FOCUS-Oil down as Iraq lifts supply worries SINGAPORE, Nov 29 (Reuters) - Oil prices fell in Asia on Monday, after Iraq eased worries of a supply shortage by saying it would accept a six-month extension of its U.N. ``oil-for-food'' deal. January New York Mercantile Exchange (NYMEX) crude prices were last traded at $26.43 per barrel at 0825 GMT, down 44 cents from New York's close last Wednesday. U.S. crude futures markets were closed on Thursday and Friday to mark the Thanksgiving Day holiday in the United States. Iraq confirmed on Saturday it would accept a six-month extension of its ``oil-for-food'' deal with the United Nations. ``We confirm we will deal with a resolution of an extension of six months, when it comes,'' Oil Minister Amir Muhammad Rasheed told reporters. But there were no details on when exports might resume. Iraq suspended exports early last week, after it rejected plans to extend the latest round of sales by two weeks. Iraq said the two-week extension was impractical and represented a U.S. move to pressure other Security Council members into accepting a draft resolution on weapons inspections. The suspension drove NYMEX oil prices to near nine-year highs of $27.15 per barrel as the market fretted the halt in Iraq exports would exacerbate OPEC's production cuts. The oil-for-food deal permits Iraq to sell $5.26 million worth of oil every six months so that it can buy food and medicine. But Saudi Arabia, the world's biggest exporter, reassured the market late last week that it was committed to maintaining stability in the market and would not allow prices to overheat. Saudi Arabia was ``required to strive to ensure the stability of the world market in a way that protects interests of all consumers and guarantees at the same time the interests of the producers,'' Crown Price Abdullah said on Thursday. ------------------------------------------------ Sunday November 28 8:48 AM ET Iraq Law Places Travel Restrictions By LEON BARKHO Associated Press Writer BAGHDAD, Iraq (AP) - Iraqis risk prison time and loss of property if they try to leave the country illegally, according to a new travel law that went into effect early this month. The law, excerpts of which were obtained by The Associated Press on Sunday, places additional travel restrictions on Iraqis in a bid to stem the exodus of experts and professionals who have been leaving in droves since the 1991 Persian Gulf War. Under the law, a prison term of up to 10 years and ``the confiscation of movable and immovable property'' will be imposed on anyone trying to leave the country illegally. Similar penalties face anyone found encouraging or helping those banned from travel - including doctors, engineers and university professors. The new rules come three months after President Saddam Hussein granted amnesty to all Iraqis who had left the country illegally. Iraqi lawyers and judges, speaking on condition of anonymity, said the new penalties do not apply to those who left the country before the law was issued. It is not clear how many Iraqis have taken advantage of the pardon. According to official statistics, at least 3,000 university professors have left Iraq since the war, and sources at Iraqi universities, speaking on condition of anonymity, said they were not aware of any who have returned. The Iraqi economy is suffering hyper-inflation due to U.N. trade sanctions imposed for Baghdad's 1990 invasion of Kuwait. Government employees have watched the purchasing power of their monthly salaries shrink from the equivalent of $1,000 before 1990 to an average of $5. The Iraqi opposition says more than 2 million Iraqi citizens are living abroad, a figure disputed by the government. Iraq's population is 22 million. Some say the tough new regulations will have no effect. Travel agents in Baghdad say they have even noticed a surge in the number of Iraqis leaving the country. Leaving the country legally requires an exit visa fee of $210, and some citizens must also provide collateral in the form of homes, land, jewelry or bank accounts. ------------------------------------------------- Sunday November 28 9:22 PM ET Report: Turkish Army Kills 70 Kurds ISTANBUL, Turkey (AP) - Turkish troops killed 70 Kurdish rebels over the past five days in northern Iraq, the Turkish daily Cumhuriyet reported Sunday. Kurdistan Workers Party officials in Europe confirmed that Turkish soldiers had crossed into Iraq a week ago, and were carrying out 15 operations. There were no reports of casualties, a Kurdish official said. Turkey's military would not comment on the report. Some 20,000 Turkish troops, backed by helicopters, were pursuing rebels fleeing Turkey and were trying to destroy the group's winter hideouts in northern Iraq, Cumhuriyet said. Some 2,000 Iraqi Kurdish fighters allied to the Turkish government were taking part in the operation, it said. Turkish troops frequently cross into northern Iraq to pursue guerrillas in the region, which has been out of Baghdad's control since the end of the Gulf War in 1991. In September, Turkey sent 5,000 troops to attack rebel bases there. The rebels, heeding a call by their imprisoned leader, Abdullah Ocalan, announced a cease-fire and withdrawal from Turkey in August. They accuse Turkey of attacking them during their retreat. Ocalan's death sentence for treason and separatism was upheld by Turkey's national appeals court Thursday. After the verdict, the rebels warned that their patience was running out. Ocalan's sentence must be approved by parliament and President Suleyman Demirel before it can be carried out. Ocalan's lawyers said they would appeal to the European Court of Human Rights. Turkish troops also killed a rebel commander who broke away from the Kurdistan Workers Party because of Ocalan's concessions to Turkey, Cumhuriyet said. Haydar Alparslan, who left the group with 22 members after recruiting youths for the rebels for 10 years, was killed in a clash in the southeastern Turkish province of Tunceli, the report said. Some 37,000 people have been killed in fighting in southeastern Turkey since 1984. ----------------------------- Sunday November 28 1:07 PM ET Iraq: Allied Warplanes Bomb School By WAIEL FALEH Associated Press Writer BAGHDAD, Iraq (AP) - Iraqi media accused allied warplanes of bombing a school Sunday in northern Iraq, injuring eight people and damaging the building, surrounding homes and nearby cars. The official Iraqi-News Agency said the Al-Zanaziq elementary school in Mosul, 250 miles north of Baghdad, was hit at 11:05 a.m., when U.S. and British warplanes carried out 18 sorties over three northern provinces. Three children - identified as Heba Khalid Mahmoud, 3, Mena Omar Zuhair, 4, and Ahmed Mahmoud Jameel, 4 - were among the eight wounded, INA reported. Two cars belonging to civilians and some homes also were damaged, the spokesman was quoted as saying. The U.S. European Command, based in Germany, said in a statement Sunday evening that U.S. warplanes responded to Iraqi antiaircraft artillery fire by bombing air defense targets in northern Iraq. A U.S. military spokesman at Incirlik base in southern Turkey, from where U.S. planes head out to patrol northern Iraq, refused to discuss what was hit or where. Allied warplanes have been patrolling the skies over northern Iraq since after the 1991 Persian Gulf War. So-called ``no-fly'' zones were set up to protect Kurds in the north and Shiites in the south from the Iraqi military. ------------------- Saturday November 27, 7:59 am Eastern Time FOCUS-Iraq accepts six-month extension of oil deal (Writes through with more details, quotes) By Hassan Hafidh BAGHDAD, Nov 27 (Reuters) - Iraq, which has suspended oil exports, confirmed on Saturday that it would accept a six-month extension of its oil-for-food deal with the United Nations. ``We confirm that we will deal with a resolution of an extension of six months, when it comes,'' Oil Minister Amir Muhammad Rasheed told reporters. The U.N. Security Council on November 19 voted to extend phase six of the oil-for-food programme for just two weeks because of differences between the United States and Russia over terms for a full, six-month renewal. Iraq rejected the two-week extension and halted oil exports on November 22, calling the 14-day term impractical as well as a U.S. manoeuvre to prolong U.N. sanctions against Baghdad. Rasheed reinforced Baghdad's opposition to such a short programme renewal on Saturday, while making clear a six- month extension was acceptable. ``Our decision...is not to deal with a meaningless, sinister United Nations resolution which is the extension of two weeks.'' Iraq's rejection of the two-week extension helped lift world oil prices to fresh nine-year highs. But Saudi Arabia, the world's largest producer and exporter, says it will not let markets spin out of control. Rasheed, asked whether the Saudis might pump more oil to compensate for Iraqi exports, said: ``It would be irresponsible of any country to make such a statement if it did.'' SAUDIS KEEN TO ENSURE MARKET STABILITY Saudi Crown Prince Abdullah was quoted as saying his country was ``required to strive to ensure the stability of the world oil market in a way that protects interests of all consumers and guarantees at the same time the interests of producers.'' Under the oil-for-food programme, Iraq is permitted to sell $5.26 billion worth of oil every six months to enable it to buy food and medicine to help offset the effects on ordinary Iraqis of the sanctions imposed for its 1990 invasion of Kuwait. Western diplomats in Baghdad said on Thursday that Iraq was likely to accept a straightforward six-monthly rollover of the oil-for-food deal. The United States said on Wednesday it would re-submit next week its resolution on renewing the Iraqi oil-for-food deal for six months. Rasheed also made a prediction of Iraqi oil output next month in his remarks to reporters while opening a Baghdad exhibition of oil equipment produced by foreign companies. ``During November, we achieved 2.95 million barrels per day...but possibly in December, we will just exceed the three million bpd,'' he said. Asked if the Y2K computer problem would cause any disruption in Iraqi oil production, Rasheed said: ``Not in the least.'' Before it suspended its oil exports last Monday, Iraq exported an average of 2.4 million barrels per day. Baghdad said it would also reject an overall resolution on Iraq which is being discussed by the Security Council because it would not result in a complete lifting of sanctions. -------------------- Friday November 26 3:54 AM ET Iraq Prefers Sanctions to Inspectors' Return BAGHDAD (Reuters) - An influential Iraqi newspaper said on Friday Baghdad would tolerate crippling sanctions rather than accept the return of U.N. weapon inspectors. ``We prefer sanctions to continue with all their hardship...to the return of spies to our country,'' Al-Thawra, mouthpiece of the ruling Baath party, said. ``We say we cannot tolerate the impact of the sanctions and spies at the same time, but the unjust sanctions...are much easier to accept than the presence of spies and their recurrent and concocted crises aiming to prolong sanctions,'' Thawra added. A resolution under discussion at the United Nations Security Council to suspend sanctions was abhorrent since it proposed to combine lifting sanctions with the return of the inspectors. ``This combination between the sanctions and spies is what the malicious British draft resolution aims at achieving,'' Thawra said. It defended Iraq's decision to reject the draft resolution as natural and legal and called on ``friendly states'' at the Security Council to reject and resist it. Iraq halted oil exports on Monday in protest at what it sees as a U.S. attempt to prolong crippling U.N. sanctions. Washington called Baghdad's action a cynical bid to avoid disarming. The U.N. Security Council approved a 14-day extension to give the United States and Russia time to settle differences on the program that allows Iraq to sell $5.26 billion worth of oil every six months to buy food, medicine and other goods. The U.N. oil-for-food program was established three years ago to help ease the impact on Iraqi civilians of the stringent sanctions imposed for Baghdad's 1990 invasion of Kuwait. The U.N. Special Commission (UNSCOM), in charge of Iraq's disarmament under the terms of the 1991 Gulf War cease-fire, has not been allowed into Iraq since December 1998 when the United States and Britain launched extensive air and missile raids against Iraq. Secretary of State Madeleine Albright said on Wednesday the United States could keep Iraqi President Saddam Hussein in check with air force patrols even if attempts to get arms inspectors back into Iraq fail. -------------------- Friday November 26 12:53 AM ET Albright Says Inspectors Not Needed to Control Iraq WASHINGTON (Reuters) - Secretary of State Madeleine Albright said on Wednesday the United States could keep Iraqi President Saddam Hussein in check with military air patrols even if an attempt fails to get arms inspectors back into Iraq. ``It would obviously be better to have monitors on the ground, but I believe that through our ... continued patrolling of the northern and southern no-fly zones, we are able to keep Saddam Hussein in his box,'' Albright said when asked how crucial it was for the U.N. Security Council to approve a comprehensive resolution on Iraq that, among other things, would condition any suspension of sanctions on the return of weapons inspectors. The United States and Britain have tried to persuade Russia and China -- both with veto power on the council -- to force Iraq to answer key questions on disarmament before sanctions are lifted. Moscow and Beijing have said the United Nations should ease sanctions once Baghdad cooperates with a new U.N. weapons commission. The United States is due to resubmit another closely related resolution on Iraq next week -- a six-month extension of the $5.2 billion oil-for-food program meant to allow Baghdad to feed its people but not to spend money on arms. Iraq suspended its oil exports on Monday to protest a two-week extension of the humanitarian export program approved by the Security Council as a temporary measure because Russia and the United States could not agree on terms for the six-month deal. Moscow wants to lift the cap on how much oil Iraq can sell and it wants to let Baghdad buy $600 million in spare parts for its oil industry. Albright made it clear she saw passage of the comprehensive resolution as very important but not essential. ``We have believed in the importance of an omnibus resolution as a way of specifically dealing with the issues that are of concern to us on Iraq,'' she said. That resolution, which is still being negotiated by council powers, would reflect overall U.N. policy toward Iraq, including arms inspectors -- kicked out of Baghdad in 1998 -- and standards for any suspension of sanctions. ``These are all things that would be desirable to get as a way of stating where the majority of the council is on the issue and I believe that there is increasing support for such a resolution,'' Albright said. ``But I think it is also important to understand that even without it, we are still able to tell what Saddam Hussein is up to through our national technical means,'' she added. -------------------- Thursday November 25, 5:31 pm Eastern Time Canada team in Iraq for talks on U.N. resolution By David Ljunggren OTTAWA, Nov 25 (Reuters) - Canadian officials held talks in Baghdad this week to urge Iraq to accept a proposed United Nations Security Council resolution to end a stand-off over arms inspections, Foreign Minister Lloyd Axworthy said on Thursday. Axworthy was confident Security Council members would soon set aside their differences and agree on a draft text for a resolution suspending sanctions in exchange for arms inspectors returning to Iraq after nearly a year's gap. ``The important thing in this case...is to have the Iraqi regime accept it. There's no point having a Security Council resolution that is then rejected or not complied with,'' he told reporters. Axworthy said he sent the five-person team to Baghdad earlier this week with two goals. ``(One was) to meet with senior Iraqi members of the regime to say, 'Go along, don't reject this, it is an important step','' he said. ``They (the officials) have had those meetings and hope they (the Iraqis) will comply.'' The team's second goal was to assess the humanitarian needs of Iraq, where the ordinary population has been hit hard since trade sanctions were imposed in August 1990 following the invasion of Kuwait. ``We had received lots of indications that such a visit would be welcome and there was an interest in having Canada come to Iraq and make this kind of influence felt,'' Axworthy said. Baghdad insists it will reject any resolution which does not lift all the sanctions but the Security Council has yet to agree whether or how many disarmament tasks Iraq must fulfill before it can qualify for a suspension. Axworthy said he hoped the five permanent members of the Security Council -- Britain, France, China, the United States and Russia -- could produce the draft of a compromise resolution by the start of next week. The United States and Britain say key questions on Iraqi arms of mass destruction must be answered while Russia and China say establishment of a new commission on the weapons is sufficient for the easing of the embargoes. Iraq on Saturday rejected a temporary extension of the U.N. oil-for-food program to give council members time to thrash out their differences over enhancing the terms of the deal, which is rolled over every six months. Under the terms of the deal Iraq can sell oil to feed its people but not to buy or produce weapons. -------------------- Thursday November 25 4:29 PM ET Explosion Near Iraq Opposition Camp BAGHDAD, Iraq (AP) - A stationary truck loaded with four rockets exploded near an Iranian dissident group's camp outside Baghdad, but caused no damage or casualties, the group claimed Thursday. The Mujahedeen Khalq, Iran's main opposition group, based in Iraq, accused agents of Iran's clerical government of intending to attack their camp with the rockets. It said the agents had infiltrated Iraqi territory with the truck laden with four missiles. The truck was driven up to the camp and abandoned by its occupants, who had apparently intended to launch the rockets by remote control to hit the camp, a Mujahedeen Khalq statement said. One of the missiles exploded prematurely Wednesday, tearing the truck in half, it said. The missiles were aimed at Ashraf camp, Mujahedeen Khalq's largest camp in Iraq, the statement said. An Iraqi government spokesman confirmed the incident and said it was an attempt ``to harm our country and undermine its domestic security.'' In a statement carried by the official Iraqi News Agency, the unidentified spokesman said Iraqi experts defused the remaining three missiles, which had not exploded. The spokesman promised that Iraq planned ``suitable retaliation for (such) vicious aggressions taking place inside its territory no matter their source.'' The Mujahedeen Khalq has nearly 20 camps in Iraq equipped with tanks, artillery and helicopters to launch attacks on Iran. Iran also hosts Iraqi dissident groups, including the biggest, the Supreme Council for the Islamic Revolution in Iraq, a Shiite organization. Wednesday's incident was the third attack that the Mujahedeen Khalq has claimed this month. Iran has denied involvement in any of these alleged attacks. Iran and Iraq fought a war from 1980 to 1988, and relations remain hostile. -------------------- Thursday November 25 3:29 PM ET U.S. Fighter Planes Bomb Iraq ANKARA, Turkey (AP) - U.S. warplanes bombed an Iraqi air defense system Thursday after coming under missile and artillery fire during patrols of the no-fly zone over northern Iraq, the U.S. military said. The U.S. planes attacked an Iraqi integrated air defense system after the Iraqi forces fired multiple surface-to-air missiles and anti-aircraft artillery from sites near Mosul, the Germany-based U.S. European Command said in a statement. The Iraqi forces also targeted the planes with tracking radar, the statement said. Mosul is some 250 miles north of Baghdad. The planes, based in Incirlik air base in southern Turkey, all left the area safely, the statement said. U.S. and British planes have been patrolling no-fly zones over northern and southern Iraq since the end of the 1991 Persian Gulf War to protect Kurds and Shiites from the forces of Iraqi President Saddam Hussein. Iraq says the zones are a violation of international law and has frequently challenged the allied planes there since December. -------------------- Thursday November 25 9:44 AM ET No Date for Pope Visit to Iraq By LEON BARKHO Associated Press Writer BAGHDAD, Iraq (AP) - Iraqi and Vatican officials have completed preliminary talks on a proposed papal visit, but it's still too early to say when the pope might come, a senior Iraqi church official said Thursday. The Rev. Joseph Habbi said the talks that ended Wednesday in Baghdad focused on the duration of Pope John Paul II's visit, scheduling and other details. ``At this stage we can say nothing more because we have nothing concrete yet,'' he said, adding a joint statement from Iraq and the Vatican may be released in the next few days. John Paul has expressed a desire to visit the ancient Sumerian city of Ur in Iraq, where the faithful believe biblical patriarch Abraham was born, as part of a proposed tour of pilgrimage sites in the Middle East. A delegation led by Archbishop Carlo Maria Vigano, a top aide to the Vatican's secretary of state, met with Iraqi Foreign Ministry officials to discuss the proposed trip. Vigano arrived in Baghdad on Saturday. Early this month, Iraq's most senior Christian clergyman, the Chaldean Catholic patriarch Rafael Bedaweed, said he expected the pope to make his Iraq trip around Jan. 20. But Habbi, who is Bedaweed's assistant, said Thursday it is still ``too early to set dates for the papal trip.'' Though preparations are underway, the Iraqi government has so far declined to issue a formal invitation. Iraqi Deputy Prime Minister Tareq Aziz said Wednesday the visit was still under discussion. The fate of the visit has been uncertain since the Iraqi state media published a scathing attack on the pope by several Iraqi scholars who said the pontiff should not expect Muslims to cheer him. The United States, Britain and Iraqi opposition figures have expressed fears President Saddam Hussein's government would use a visit to boost its international standing after years of isolation. -------------------- Wednesday November 24 12:02 AM ET Report: Iraq Tortures Opposition CAIRO, Egypt (AP) - Iraq's government continues to arrest political opponents without warrants and executing some after unfair trials, Amnesty International charged Wednesday. ``Those suspected of any involvement in opposition activities can expect to be arrested without a warrant, held in secret detention, be brutally tortured ... and finally could face execution,'' the human rights group said. The report, released to the media in Cairo, cited one case where a detained suspect had his eyes gouged out during torture. ``This is the length the Iraqi security forces are prepared to go to identify any opposition views and silence them,'' Amnesty International said. Shortly before resigning early this month, Max van der Stoel, the special investigator on Iraq for the U.N. Commission on Human Rights, said the human rights situation in Iraq is worsening and the repression of civil and political rights continues unabated. Van der Stoel, a former Dutch foreign minister, expressed regret that the Iraqi government had not replied to any of his communications and had refused to accept the stationing of U.N. human rights monitors in the country. In the past, Iraq has accused van der Stoel of being a ``dishonest observer'' who obtained his information from U.S., British and Israeli sources in addition to ``traitors and agents,'' a reference to Iraqi opposition groups in exile. Iraq's U.N. ambassador, Saeed Hasan, rejected the report as baseless U.S. propaganda. ``The real violation of human rights in Iraq is the sanctions,'' he said. He summed up the true scenario as ``the United States perpetrating genocide agianst the Iraqi people and alleging that some Iraqis were arrested.'' Amnesty International's report said grave human rights violations in Iraq ``range from arbitrary arrest and detention, to torture, extrajudicial and judicial executions after unfair trials.'' The report said the majority of the victims are Shiite Muslims in southern Iraq and in some districts of Baghdad, as well as Kurds in the north. U.N. Security Council resolutions require Iraq to improve its human rights record as one of several conditions to lift economic sanctions imposed in 1990 after Iraq invaded Kuwait. -------------------- Oil Prices Spike on Iraq Move Export Halt Raises Inflation Worries By Martha M. Hamilton Washington Post Staff Writer Tuesday, November 23, 1999; Page A01 Oil prices surged to their highest level since the end of the Persian Gulf War yesterday after Iraq suspended oil exports, throwing already nervous oil markets into a turmoil that analysts said may send prices higher than $30 a barrel. Stable oil prices have been the norm for much of this decade and have been one of the fundamental factors underlying the United States' longest-ever economic expansion. But oil prices have swung sharply in the past year and closed yesterday above $27 a barrel in trading on financial markets, compared with a 12-year low of just under $11 last December. "The best inflation news is behind us," said Cynthia M. Latta, DRI-McGraw Hill's principal U.S. economist. She noted that low energy prices have insulated the U.S. economy from other price pressures during the long economic boom, helping to dampen overall inflation. Oil industry analysts said the cancellation of Iraqi sales could push prices higher in the coming weeks. Latta said those higher energy costs could slow the U.S. economy and add to inflation pressures, though how much depends on how long the price spike lasts. Transportation fuel costs already have increased substantially, she said, although not all of the increase has been passed on yet in the prices of goods and services. The Labor Department reported last week that so far this year, prices of gasoline and home heating oil have increased at a 30.9 percent annual pace. Gerald D. Cohen, an economist at Merrill Lynch & Co., noted that airline fares jumped by 5.3 percent last month, but he added that fare prices are volatile and had fallen sharply in the previous two months. Trilby Lundberg, publisher of the Lundberg Survey of gasoline costs, said gasoline prices increased 2.5 cents over the past two weeks to reach a nationwide average price of $1.2774 for self-serve regular. If oil prices were to climb to $30 a barrel, the price could increase by an additional 8 cents per gallon, she said. Rising oil prices hit more broadly than just at the pump. Petroleum makes up a quarter of the cost of many plastic bags, half the cost of certain fertilizers and 5 percent of the cost of nylon. Manufacturers consume oil in big gulps to produce an array of products. Oil experts said yesterday that Iraq's decision to cut off supply comes at a time when oil-producing countries are enjoying increased leverage. Global demand for oil is increasing now that several Asian economies are rebounding from last year's crisis and production cutbacks orchestrated by the Organization of Petroleum Exporting Countries are sticking. Yesterday the January-delivery contract for light, sweet crude climbed as high as $27.20 before closing at $27.07. "If you basically have no Iraqi oil for two to three weeks, you have a major problem in the oil markets," said Roger Diwan, managing director for markets and countries for the Petroleum Finance Corp., an industry consulting and research firm. Iraq has been exporting 2.2 million barrels of crude oil per day, or about 3 percent of total global supplies. OPEC members had been debating whether to extend production cuts beyond March 30, out of concern that higher oil prices at some point might diminish demand, but more recently indicated a willingness to keep the cutbacks in place until June. "What better time to squeeze the market than when inventories have been drawn down and OPEC is creating all kinds of uncertainty?" said Philip K. Verleger Jr., an oil industry consultant. Iraq canceled its exports after rejecting a two-week extension of the United Nations program that allows Iraq to sell limited quantities of crude oil to buy food and medicine. The program, which has been extended six times previously for 180 days at a time, expired on Sunday. Members of the U.N. Security Council had been seeking a broader agreement with Iraq but weren't able to reach an agreement by the time the oil export agreement expired. Diplomats said Baghdad appeared to be trying to put pressure on the Security Council to ease the sanctions. But they also said they expect Iraq, the world's second-largest oil exporter, to resume the sale of more than 2 million barrels of oil a day in two weeks. U.N. officials said the decision will have virtually no immediate impact on deliveries of humanitarian assistance to Iraq. More than $2 billion worth of goods, including spare parts for the oil industry, have been approved for delivery to Iraq. And there is $2 billion more in the U.N. account used to buy humanitarian goods. U.S. Secretary of State Madeleine K. Albright said today that Baghdad's action was a "cynical" ploy to use the people of Iraq to extract political advantages from the council. Ann-Louise Hittle, director of world oil for Cambridge Energy Research Associates, said the balance between supply and demand was sufficiently tight that just the uncertainty over how long Iraq may be out of the market is enough to raise prices. In the fourth quarter, supply is expected to be 75.1 million barrels a day, with demand of 77.4 million barrels a day. Where prices end up will depend not just on how long Iraq stays out of the market and what OPEC decides to do in response but also on the winter weather and on whether any supply glitches develop at the end of the year as a result of year 2000 problems. Special correspondent Colum Lynch contributed to this report from New York. © Copyright 1999 The Washington Post Company -------------------------- Monday November 22 3:25 PM ET Iraq Halting Oil Exports By EDITH M. LEDERER Associated Press Writer UNITED NATIONS (AP) - Iraq has begun wrapping up oil exports after rejecting the Security Council's decision to extend the oil-for-food program for two weeks, U.N. and Iraqi officials said Monday. The 3-year-old exemption to crippling economic sanctions allows Iraq to sell $5.2 billion worth of oil every six months to buy food, medicine and other humanitarian supplies as well as to pay reparations stemming from the 1991 Gulf War. Iraq's rejection of the extension is not expected to have a major impact on the humanitarian program because U.N. officials say supplies are continuing to arrive normally. More than $2 billion worth of humanitarian supplies and equipment approved under the program has not yet reached Iraq - and another $2 billion from Iraqi oil sales is in an escrow account waiting to be spent, said John Mills, spokesman for the U.N.'s oil-for-food program. On a one-day visit to Bratislava on Monday, U.S. Secretary of State Madeleine Albright said Iraq had once again ``shown its true colors ... by turning down the possibility of having food, more food and medicine for its people by selling more oil.'' Iraqi oil reportedly has stopped flowing through a key pipeline, but Iraq's oil minister refused to say whether the nation has stopped all pumping in response to actions taken at the United Nations. Amer Mohammed Rashid said Iraq has ``no more contracts to fulfill during these days,'' suggesting an end to pumping for the latest phase of the oil-for-food program. But he would not confirm that all pumping had stopped. ``We have completed pumping and loading tankers for all contracts under the sixth phase on Monday, so we have done our part of the program,'' he said repeatedly when asked for clarification. Mills said exports scheduled out of Mina al-Bakr, Iraq's offshore platform in the Persian Gulf, were expected to be completed by Tuesday afternoon. Iraq's U.N. Ambassador Saeed Hasan said he didn't sign the memorandum of understanding required to implement the two-week extension, and Iraq has yet to submit oil contracts for the two-week period. The Security Council on Friday approved a stop-gap extension of the oil-for-food program through Dec. 4, but the Iraqi Cabinet on Sunday formally dismissed it. The United States and Britain are hoping the two-week extension will provide time to break months of deadlock on a comprehensive policy toward Iraq - but Russia and China stressed that major differences remain and insist there can be no artificial deadline. Council members agree on the need to restart U.N. weapons inspections but remain divided on the conditions Iraq must fulfill before U.N. sanctions imposed after Baghdad's 1990 invasion of Kuwait can be suspended. Iraq views the two-week extension of the oil-for-food program as a tactic by the United States and Britain to pressure Russia and China, its closest allies on the Security Council, to agree to a new Iraq policy backed by Washington and London, diplomatic sources said. Russia and China favor the suspension of sanctions soon after Iraq allows U.N. inspectors to return while the United States and Britain are demanding a longer waiting period and Iraqi answers to outstanding questions about its disarmament. The five permanent council members - the United States, Britain, France, Russia and China - met again Monday to discuss the comprehensive resolution. -------------------- Saturday November 20 10:45 AM ET Iraq Rejects Extended U.N. Oil-For-Food Deal By Hassan Hafidh BAGHDAD (Reuters) - Iraq on Saturday rejected the United Nations' two-week extension of its ``oil-for-food'' deal with Baghdad, saying the United States ``orchestrated'' the decision to blackmail other Security Council members. Foreign Minister Mohammed Saeed al-Sahaf said Iraq had completed oil shipments under the pact's current phase and accused a U.N. sanctions committee of delaying approval of contracts to buy food, medicine and other supplies. ``The decision taken by the (U.N.) Security Council is meaningless...therefore, Iraq will not deal with it,'' Sahaf said in a statement carried by the official Iraqi News Agency INA. It was not immediately clear what, if any, the practical consequences of Iraq's rebuff would be -- whether it might halt oil-for-food exchanges or take other action. The U.N. Security Council approved on Friday a two-week extension of the oil-for-food pact after the United States and Russia were unable to agree on a longer-term resolution. The current Phase Six of the program, which was to expire late on Saturday, allowed Iraq to sell $8.3 billion worth of oil over six months to raise money to buy food, medicine and other humanitarian needs. ``Iraq has ... exported $7.25 billion worth of crude oil permitted under phase six of the...program,'' Sahaf said. Iraq Accuses U.S. Of Manipulation He said under the rules of the oil pact, which went into effect in December 1996, each extension should be six months not two weeks. He said the extension was ``orchestrated'' by the United States to force other council members to accept a draft resolution which calls for a suspension of sanctions on Iraq only if Baghdad agrees to inspections of its weapons production facilities. Baghdad wants sanctions unconditionally lifted. The five permanent members of the Security Council are divided over how far Iraq must be required to go in cooperating with weapons inspections before it can qualify for a suspension of sanctions in place since its 1990 invasion of Kuwait. While the United States and Britain insist that sanctions shall not be lifted until Iraq answers key questions on its armament, Russia want a more flexible approach, saying Baghdad should make progress in implementing arms demands but without a requirement to achieve specific results. Sahaf also accused the U.S. and British envoys at the U.N. sanctions committee on Iraq of withholding approval of contracts signed under the pact to buy humanitarian goods. ``As a result of this foolish policy not a single item bought under phase six of the agreement has reached Iraq,'' he said. The Baghdad press has criticized the oil-for-food deal, saying it had failed to meet the humanitarian needs of the Iraqi people. Babel, the newspaper of President Saddam Hussein's eldest son Uday, on Saturday accused the United States of preventing the U.N. Security Council from reaching a solution to the diplomatic impasse on arms controls and sanctions. ------------------------- U.S. Presses Russia on Iraq Arms Checks By Colum Lynch Special to The Washington Post Saturday, November 20, 1999; Page A24 UNITED NATIONS, Nov. 19—The United States ratcheted up pressure on Russia today to strike a compromise on a proposal to send U.N. weapons inspectors back into Iraq for the first time in a year. Unless an agreement on the resumption of inspections is reached in December, officials said, the United States is prepared to walk away from months of negotiations about the lifting of economic sanctions on Iraq. Russian officials, meanwhile, backed away from a reported offer to support the U.S. position on Iraq if the United States would refrain from criticizing Russia's bombardment of Chechnya in the U.N. Security Council. "There could be no link between Iraq and Chechnya. Those are absolutely different things," said Russia's U.N. envoy, Sergei Lavrov. Lavrov declined to confirm or deny that the offer was made this week by Russian Foreign Minister Igor S. Ivanov to Secretary of State Madeleine K. Albright at a summit in Istanbul, as reported in today's New York Times. But he complained about leaks in Washington. "It seems that some parts of the administration just cannot hold anything," Lavrov said. Ambassadors from the five permanent members of the Security Council--the United States, Russia, Britain, France and China--have engaged in intensive negotiations this week to try to break the deadlock over Iraq policy. To allow more time for the talks, the Security Council today approved a two-week extension of the U.N.'s "food-for-oil" program, which allows Iraq to sell crude oil and use the proceeds to buy food and medicine for ordinary Iraqis struggling under the nine-year-old sanctions. But the talks clearly have exhausted the patience of some of the council's 10 rotating members, who have not been included. The rotating members cannot simply "sit and wait for the white smoke to emerge" from the gathering of the permanent members, said Peter Van Walsum, the Netherlands' ambassador to the United Nations. Peter Burleigh, the deputy U.S. representative at the U.N., said the discussions have achieved progress. But other diplomats said negotiators remain far apart. According to participants, the talks have focused on three main questions: What should trigger the suspension of sanctions, how much independence should a new arms control agency have, and what restrictions should remain on Iraqi trade if sanctions are lifted? Russia, France and China want sanctions to be suspended quickly if Iraq agrees to cooperate with U.N. weapons inspectors, whose task is to ensure that Iraq has eliminated all of its chemical, biological and nuclear weapons programs. But under a draft proposal supported by the United States and Britain, it would take at least 300 days before sanctions could be eased, diplomats said. The United States and Britain also insist that the director of a new arms inspection team in Iraq have substantial independence from the U.N. Secretariat and employ many members of the U.N. Special Commission (UNSCOM), which withdrew from Iraq last December and has not been allowed to return. France, China and Russia say that any new commission must be created from scratch and remain under the Secretariat's operational control. © Copyright 1999 The Washington Post Company -------------------- Saturday, November 20 4:34 AM SGT Russia comes under pressure in UN Security Council to finish Iraq talks UNITED NATIONS, Nov 19 (AFP) - In remarks aimed at Russia, non-permanent members of the UN Security Council complained Friday about the slowness of talks between the permanent five on a new resolution on Iraqi sanctions. "We are far from happy with the way the Iraq file is being handled," Dutch ambassador Peter van Walsum said. He was speaking before the 15 Council members voted unanimously to extend the humanitarian oil-for-food programme for two weeks to December 4 instead of the customary six months. Russian ambassador Sergei Lavrov said the extension must not be seen as "an artificial timetable" for talks among the five on a resolution which would allow UN arms inspectors back into Iraq after a lapse of almost a year. The inspectors left in December and talks have been going on for months against a background of almost daily bombing of Iraq by US and British planes, and of Iraq's demand that the nine-year-old sanctions be lifted immediately. Van Walsum said "the elected, non-permanent members have had no more than one progress report per month, courtesy of the United Kingdom." The Council president for November, Danilo Turk, acknowledged that the five had a particular responsibility on matters such as Iraqi sanctions. But, speaking in his capacity as ambassador of Slovenia, he said it was necessary "to bring the process back into the Council, to finalise it here and to adopt resolutions that are long overdue." Clearly elated, a Western diplomat said the remarks put pressure on Russia, which in Lavrov's words wants "an end to the sanctions regime on humanitarian grounds". The Council imposed comprehensive sanctions on Iraq in August 6, 1990 four days after it invaded Kuwait. The sanctions can only be lifted completely when Iraq has satisfied UN arms inspectors that it has destroyed all its chemical and biological weapons and missiles with a range of more than 150 kilometres (90 miles). But Russia favours suspending the sanctions if Iraq lets the inspectors return. The oil-for-food programme that was put in place in December 1996 has failed to soften the impact of sanctions on the Iraqi people, Lavrov told the Council on Friday. "The delivery of basic needs is becoming more difficult because of the blocking of contracts by sanctions committee," he said. The programme allows Iraq to sell up to 5.256 billion dollars worth of oil in an 180-day period and to use about two-thirds of the revenue to import food, medicine and other basic necessities with UN approval. On October 4, the Council agreed to let Iraq breach the ceiling and sell up to 3.04 billion dollars extra oil to make good shortfalls in revenue in previous periods. This week, Russia tried to persuade the Council to remove "basic humanitarian items" from the purview of the sanctions committee. "Unfortunately our arguments were not taken into account by other delegations," Lavrov said. The British representative, Jeremy Greenstock, replied that "an enormous programme could be moved forward" if Iraq cooperated fully with the United Nations. Britain, like the United States, says Iraq must comply with a list of "key disarmament tasks" before sanctions can be suspended. Greenstock conceded that "real improvements in the humanitarian situation will not be possible unless there is a comprehensive resolution" but said the problem "is not one of time but of determination." Calling for the right of reply, Lavrov snapped that Greenstock had "made his appraisal on his own behalf and not for the five permanent members." The humanitarian situation in Iraq "must not be a hostage to policy," he declared ------------ UN extends Iraq oil, food program amid sparring REUTERS UNITED NATIONS, Nov. 19 - The U.N. Security Council approved on Friday a two-week extension of the Iraqi ''oil-for-food'' programme in a debate overshadowed by an impasse in the council's overall policy toward Baghdad Friday's stop-gap resolution, providing an extension until December 4, was adopted by a 15-0 vote, a day before the current six-month phase of the programme expires. The two-week extension gives the United States and Russia time to settle differences on the programme that allows Iraq to sell $5.26 billion worth of oil every six months to buy food, medicine and other goods. The plan is meant to offset the impact of stringent U.N. sanctions, imposed in August 1990 when Baghdad's troops invaded Kuwait. But the oil-for-food programme was overshadowed at Friday's council meeting by sparring over a resolution still under negotiation by the United States, Russia, Britain, France and China on an overall policy toward Baghdad. This would link a suspension of trade sanctions to the return of a U.N. disarmament commission in Baghdad, forbidden to resume work since U.S.-British bombing raids against Iraq last December. The five nations are permanent members of the 15-seat council with veto rights. The other 10 countries on the council are elected for two-year terms, five of them each year. Russia said the talks were deadlocked and warned it would brook no artificial two-week deadline. The United States and Britain said they hoped the negotiations would end soon. And the Netherlands lashed out at the permanent five negotiators, saying they had dithered for six months and should finish the talks in two weeks because members were rapidly losing patience. Ambassador Peter van Walsum, calling the permanent five the ''hereditary five,'' said the rest of the council had only received one briefing, from Britain, on the talks to date. ''We the elected members simply cannot go on telling the other U.N. members who have elected us that we are content to sit and wait for white smoke to emerge from the 'heredity-five' or the permanent-five chambers,'' Walsum said. ''Therefore we have been happy to go along for two weeks, but for two weeks only because we hope that this will be a way to keep the pressure on the permanent five to complete their work on the omnibus resolution on Iraq,'' he added. The United States and Britain had hoped that delaying a dispute on the oil-for-food programme for two weeks would allow the permanent five powers to complete intensive negotiations on the comprehensive resolution. But Russian ambassador Sergei Lavrov made clear Moscow was not on board yet. He rejected what he called ''an artificial deadline'' of two weeks and said the talks were ''deadlocked.'' British ambassador Sir Jeremy Greenstock said the key question was one of political will. ''The real question is one of determination to reach a solution,'' he told the council. And U.S. ambassador Peter Burleigh said it was time for all members ''to take up the Iraqi issue comprehensively and I would hope that could be done in a short period of time.'' One of the main issues under discussion is how many disarmament tasks Iraq must fulfil before it can qualify for a suspension of the sanctions. Russia wants the suspension to follow the return of a new arms commission while the United States insists key disarmament questions have to be answered. France's ambassador Alain Dejammet made clear that Paris was not going to approve any resolution unless all members did, an apparent reference to getting Russia's consent. He said that only a text ''adopted unanimously'' could put an end to the Iraqi crisis. As the discussions on the resolution intensified, Iraq has put out statements in Baghdad daily, rejecting any resolution that would not lead to a permanent lifting of the sanctions. Accounting for all of Iraq's nuclear, chemical, biological and ballistic missile programmes is a key demand for lifting the sanctions, spelled out in an April 1991 resolution after the Gulf War, in which U.S.-led troops drove Iraq out of Kuwait. Copyright 1999 Reuters Limited. ------------------ Thursday, November 18 8:43 AM SGT UN worried about unspent Iraqi oil revenues in one French bank UNITED NATIONS, Nov 17 (AFP) - The United Nations expressed concern on Wednesday that five billion dollars in unspent revenue from Iraq's UN-controlled oil sales had accumulated in one French bank, BNP-Paribas. "The over-concentration of funds at BNP-Paribas poses a serious investment risk," under secretary general for management Joseph Connor said in a letter to the UN Security Council's sanctions committee on Iraq. "For operational as well as credit reasons, this is an unacceptable exposure," he added. The letter was addressed to Dutch ambassador Peter van Walsum, who heads the sanctions committee. A member of the Security Council made it available to AFP. The Council imposed comprehensive sanctions on Iraq on August 6, 1990, four days after it invaded Kuwait. Since December 1996 it has allowed Iraq to sell limited amounts of oil to pay for imports of badly needed food and medicine. None of the revenue from the oil sales is allowed to pass through Iraqi government hands. Instead, it is paid into an escrow account at BNP-Paribas, which is paid a fee for operating the account. About two-thirds of the revenue may be spent on humanitarian imports approved by the sanctions committee. Thirty percent goes to a compensation fund for Kuwaiti victims of the 1990-91 Gulf war and the remainder covers the cost of administering the oil-for-food programme and the arms inspection team (UNSCOM), which left Iraq in December. In his letter, Connor wrote that "as of November 11, 1999, the balance in the United Nations Iraq account at BNP-Paribas passed the five billion dollar level." The director of the oil-for-food programme, Benon Sevan, told the Security Council on Wednesday that a total 1.042 billion dollars of import contracts had been placed on hold by the sanctions committee. Diplomats said part of the other four billion dollars was money that had not yet been transferred to the compensation fund or for imports that had been approved but not delivered. The rest, they said, was money that Iraq had not yet applied to spend. Diplomats said that the interest would go back into the escrow account, not to BNP-Paribas. So far, 188 million dollars interest has accrued since the start of the oil-for-food programme in December 1996, they said. Connor recalled that the auditors had previously recommended "diversification of the investment portfolio." Diplomats said that UN Secretary General Kofi Annan had suggested "at least twice" to the Iraqi government that some of the oil revenues might be channeled through Swedish or Dutch banks, but did not identify the banks. The UN secretary general and the Iraqi government originally agreed to have BNP-Paribas hold the escrow account. ------------------------------- Allies working on deal that could end Iraq embargo Ian Black, Diplomatic Editor Wednesday November 17 1999 The Guardian >From the Guardian Allies working on deal that could end Iraq embargo Ian Black, Diplomatic Editor Wednesday November 17 1999 The Guardian There are signs that the five permanent members of the UN security council may be nearing agreement on a new system of weapons inspections for Iraq - and a way towards lifting the sanctions imposed on the country almost a decade ago to punish it for invading Kuwait. With senior officials from the US, Britain, France, Russia and China meeting for a second consecutive day in New York yesterday, hopes among US and British officials were rising that long-standing differences could be overcome about what the Iraqi president, Saddam Hussein, has to do to get UN sanctions suspended - and how they could be reimposed if he does not comply. President Saddam has repeatedly vowed not to allow UN inspectors back into Iraq until the economic embargo on his country is lifted, and there is no guarantee that he will accept the emerging deal. Yet, even if he does not comply, agreement in New York would rob him of his ability to exploit the differences between the US, French and Russian positions. Ending the deadlock would come as a relief to millions of Iraqis who have suffered under the embargo for nearly nine years - and to the US and Britain, who have been isolated in their 11-month undeclared air war with Iraq. Earlier this week the air operation claimed the lives of two US airman over the Gulf. Washington said their plane crashed; Iraq said it had been shot down. American officials have been strikingly upbeat about the prospects of forging a new UN resolution, but foreign office sources insist that much work remains. "We are making progress, but it's not in the bag," said one. "Nothing is agreed until everything is agreed." Diplomats say a deal may be possible now because the gap has closed between French, British and American positions. But they warn there can be no automatic assumption that Russia - in a defiant mood about arms control issues and foreign criticism of its military offensive against Chechnya - will change tack. China is expected to side with Russia. Accounting for Iraq's once formidable nuclear, chemical, biological and ballistic missile programmes is a key UN demand for lifting the sanctions imposed on Baghdad in April 1991 after the Gulf war. Under a draft resolution submitted by Britain and the Netherlands last summer, the Iraqis could export unlimited oil as soon as a new UN arms-monitoring commission for Iraq is set up. But questions remain about what powers a new inspection team would have. Unscom, the body set up in 1991 to monitor Iraqi disarmament, was discredited by allegations that its inspectors spied on behalf of Washington and London - a legacy likely to continue to taint any successor group. Experts say that the US is desperate to break the deadlock on Iraq, being aware that its policy of "containment" is doing little to undermine the Baghdad regime and that Washington's intensified efforts to galvanise Iraq's fractured groups of opposition exiles have largely failed. Diplomats note that the language of US officials appears to have softened: now they talk of the need for Iraqi "cooperation" instead of earlier demands for "compliance". 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