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News for period 29 November to 5 December, 1999 Thank you to Ben Rempel for his contributions this week. Sources: Yahoo, AP, Reuters, www.arabicnews.com, Kurdish Media, Alabamha Headlines (?). * The Security Council voted to extend Oil-for-Food (OFF) for 1 week. Four countries, France, China, Russia and Malaysia abstained. France's abstention is unusual and seems to indicate a serious disagreement with the US. Iraq also pressurised the French not to vote for the resolution. * Iraq and the Arab league condemn one-week OFF extension. * There is continued coverage of Iraq's reduction of its oil supplies in protest against the short OFF extensions. Oil prices have been highly volatile during the last couple of weeks. * "Thousands of Iraqis held special prayers for rain Thursday after a year of drought that decimated cattle and crops." * University of Texas Medical Center apparently makes some progress in Gulf Syndrome research. * Some statistics on Iraq's oil supplies appear in the last article. A couple of requests: 1. Will someone please keep an eye out for interesting reports on www.arabicnews.com. Unfortunately, the site's search engine does not work and it seems impossible to get news that's older than a day. Please email the unchanged text of interesting articles to me. Unfortunately, I don't have the time to examine the site everyday. 2. I would appreciate feedback on how this weekly posting can be improved. E.g. Is it too long? Too short? Not enough sources? Formatting suggestions? etc. Please email me directly in this regard, not the discussion list. ------------------------- Sunday December 5 5:37 PM ET Report: Iraq-France Ties To End By LEON BARKHO Associated Press Writer BAGHDAD, Iraq (AP) - France will lose all of its trade benefits with Iraq, including lucrative oil development deals, if it votes in favor of a U.N. resolution backed by the Unawwited States, Iraq's most influential newspaper said Sunday. The warning in Babel, the daily newspaper owned by President Saddam Hussein's eldest son, Odai, singled out French oil giants Elf Aquitaine and Total, which are nearing completion on deals for the development of two large oil fields. If the resolution is passed, ``logic says that both Elf and Total will have to close their offices in Baghdad and leave. That means they will lose the huge oil investment opportunities they have been granted,'' Babel said in a front page editorial signed by Abdulrazzaq al-Hashimi, a senior member of the ruling Baath party and former ambassador to France. Iraq also ``will put an end to the preferential treatment given to French companies,'' it said. Russia and China - Iraq's closest allies among the five permanent Security Council members - as well as France have favored suspending sanctions soon after Iraq allows U.N. weapons inspectors to return. But the United States and Britain demand a longer waiting period and Iraqi answers to disarmament questions. Attempts to reach a compromise have dragged on nearly a year, but a vote appears to be drawing near. Babel did not say whether Iraq would punish its other two major trading partners - Russia and China - if they agreed to the proposal. Both have signed deals to develop oil fields in Iraq. Later Sunday, Saddam met with several members of Iraq's highest legislative body - the Revolutionary Command Council - to discuss the U.N. resolution. ``The meeting stressed Iraq's rejection of the evil British draft resolution and Iraq's position not to deal with any formula that does not contain the comprehensive and unconditional lifting of the sanctions,'' the official Iraqi News Agency said. The United States is pressing U.N. Security Council members to reach agreement on the proposed resolution, which charts a new policy toward Iraq that would restart U.N. weapons inspections as well as upgrade the humanitarian program in the country. U.N. arms inspectors left Iraq almost a year ago on the eve of U.S.-British airstrikes. The government had vowed not to let them return. Nizar Hamdoun, a deputy foreign minister, said Saturday that Iraq would only allow the inspectors back if U.N. sanctions imposed after Iraq's 1990 invasion of Kuwait were abolished. France is among Iraq's major trading partners under the U.N.-approved oil program, which permits oil sales worth $5.2 billion every six months despite the sanctions. French exports to Iraq were estimated at a half-billion dollars during each the past two phases of the program. -------------------------------------------- Sunday December 5, 2:24 pm Eastern Time Iraq's Main Oil Center Back on Line By LEON BARKHO Associated Press Writer KIRKUK, Iraq (AP) -- Iraq's biggest oil center is going full bore again despite the hindrance of U.N. trade sanctions and the need to repair extensive damage from the 1980-1988 war with Iran and the 1991 Gulf War. The boost in production from the aging wells around Kirkuk, l85 miles north of Baghdad, is helping Iraq earn badly needed hard currency to buy food and medicine for its citizens and spare parts for its oil industry. Sanctions imposed by the United Nations after Iraq's 1990 invasion of Kuwait have crippled the economy, hitting ordinary Iraqis hard, but U.N. rules allow oil to be sold to buy necessities for ordinary people. For the first time since sanctions were imposed a decade ago, Kirkuk's wells are producing at their previous capacity of 900,000 barrels a day, says Adil al-Qazzaz, deputy chairman of Iraq's Northern Oil Co. He says there are plans to drill 100 new wells next year and add an additional 200,000 barrels to daily output. That would maintain Kirkuk's key role in the Iraqi oil industry, accounting for more than a third of the 3 million barrels a day Iraq wants to export by the end of 2000. Just two years ago, Kirkuk was at its lowest point, with daily output of just 700,000 barrels of low-quality crude. Officials blamed lack of processing chemicals, spare parts and equipment. But the arrival of hundreds of millions of dollars in equipment and spare parts bought under the U.N.-monitored oil export program let work crews lay new pipelines and replace aging and dilapidated machinery. Independent oil analysts in the West are skeptical of Iraq's plans for the Kirkuk field, saying they believe it is on an irreversible decline. Leo Drollas, chief economist for the London-based Center for Global Studies, predicts Kirkuk's oil reserves will be depleted in 20 years and says output could soon plunge to 600,000 barrels a day. Iraqi experts dispute that. They estimate up to 10 billion barrels are still to be recovered from Kirkuk, which Al-Qazzaz says should yield oil for at least 70 more years at the current rate of production. But the Iraqis also acknowledge that billions of dollars of investment will be needed in the field. Kirkuk has been pumping oil for seven decades. On Oct. 14, 1927, a column of oil sprayed so high from the first Kirkuk well that it could be seen from several miles away, according to industry lore. The gusher was the start of the transformation of Iraq's economy from agriculture-based to one powered by crude. Iraq's proven oil reserves are the world's largest after those of Saudi Arabia. The U.N. sanctions generally keep Iraq from earning hard currency. But the U.N.-monitored ``oil-for-food'' program lets Iraq export up to $5.2 billion of oil every six months, with the proceeds used to buy food and medicine for ordinary Iraqis and equipment for the oil industry. Producing oil worth about $25 million a day, the Kirkuk field is a key asset of President Saddam Hussein's government. Troops ring Kirkuk's 95 square miles of wells to ward off the region's rebellious Kurds, who temporarily occupied the field during a failed uprising after the Gulf War. ------------------------------------------------- Arab League criticizes renewal of oil-for-food agreement for one week www.arabicnews.com The Arab League criticized today a resolution by the United Nations Security Council to extend the Iraqi oil-for-food program for one week. Iraq, Politics, 12/4/99 ------------------------------------------------- Saturday December 4 9:15 PM ET Iraq Wants U.N. Sanctions Decision By AHMAD SAMI Associated Press Writer BAGHDAD, Iraq (AP) - The U.N. Security Council must choose between trade sanctions on Iraq and disarmament inspections, the deputy foreign minister said Saturday. ``We have always said that we cannot take both the sanctions and the inspectors ... one of them will have to go,'' Nizar Hamdoon told Associated Press Television News. ``Without removing the sanctions entirely, it is impossible for us to deal with any inspection activity,'' said Hamdoon, who is the previous Iraqi ambassador to the United Nations. His remarks came as the United States pressed U.N. Security Council members to reach agreement on a new policy toward Iraq that would restart U.N. disarmament inspections as well as upgrade the humanitarian program in the country. U.N. arms inspectors left Iraq almost a year ago on the eve of U.S.-British airstrikes. The government had vowed not to let them return. But Hamdoon made clear that Iraq would allow the inspectors back if the sanctions were abolished. The sanctions have been in force since Iraqi forces invaded Kuwait in 1990. Hamdoon urged France, a permanent member of the council, to veto a British-Dutch draft resolution that links a partial suspension of the sanctions to the resumption of disarmament inspections. Iraqi state-run newspapers have recently criticized France severely, accusing it of leaning toward the U.S.-British position on Iraq in the Security Council. But Hamdoon said France was still a friendly country and had a duty ``to try and stop (the draft resolution) from being passed. This resolution is bad. We think it is going to lead to further crises.'' Iraq's relations with council members are currently poor following the world body's decision to extend the U.N. oil-for-food program for only two weeks last month and for one week on Friday. U.S. diplomats argued in favor of the short extensions in order to encourage the council to reach agreement on a comprehensive package on Iraq. The program, which allows Iraq to bypass sanctions and sell oil to buy food and humanitarian goods, is normally extended in six-month stages. Hamdoon said the short extensions were a U.S. attempt to ``apply pressure on council members to try to make them move on the British draft resolution, which is a very bad one.'' France, in a rare move, refused to take part in the council's vote on a one-week extension on Friday. Russia, China and Malaysia abstained and 11 members voted in favor. Also Saturday, Iraqi Oil Minister Amer Mohammed Rashid said the extension ``is a political mockery. It is meaningless (and) totally impractical.'' He made the comments in Cairo, following a meeting of Arab oil ministers. Asked when Iraq would return to the market, Rashid said: ``We will wait and see. We cannot predict what will result from the Security Council meetings.'' -------------------------------------------------- Friday December 3, 10:48 pm Eastern Time Iraq's return to oil market several weeks away By Bernie Woodall UNITED NATIONS, Dec 3 (Reuters) - Iraq's return to the world oil market is at least two weeks away, and that is a favourable assessment contingent on a six-month renewal of the programme by next week, U.N. diplomats and officials said on Friday. A divided Security Council Friday extended through December 11 the ``oil-for-food'' programme that allows Iraq to sell oil outside of U.N. sanctions. Whether the Security Council is able to approve another six months of oil sales by December 11 is closely linked to sticky negotiations on the so-called ``omnibus'' or ``comprehensive'' resolution on wider Iraq policy. A Western diplomat said Friday that if the United States is correct in its assessment that the omnibus resolution will pass next week, a six-month renewal -- Phase 7 -- of the oil programme with no sales cap would be implemented immediately. Iraq has said it will reject an omnibus resolution. But the diplomat said that even if Iraq rejected a council-approved omnibus resolution, elimination of the sales cap and additional spending for Iraq's oil industry would still be included in the next six-month tranche of the programme. VOTE WANTED NEXT WEEK, BUT OPTIONS AVAILABLE Peter Burleigh, the U.S. deputy U.N. representative, on Friday linked adoption of the comprehensive resolution to a six-month renewal of the oil-for-food programme ``a week from now.'' The comprehensive resolution ``needs to be in place before we turn our attention to authorising a full Phase 7 of oil-for-food,'' Burleigh said during Friday's council session. But another western diplomat said that there were a number of alternatives available if a comprehensive resolution is not approved next week. Among the options, he said, was a six-month rollover of the oil-for-food programme similar to a measure attempted in mid-November by the United States that would keep the programme largely unchanged. Currently, Iraq is allowed to export up to $5.26 billion of oil every six months with about two-thirds of the proceeds funding humanitarian supplies for needy Iraqis. Another option if no omnibus resolution is passed is for another short-term extension, but several Western diplomats said it was clear at Friday's devisive council session that support for another short-term extension is wearing thin. DELAY IN EXPORTS Saeed Hasan, Iraq's ambassador to the U.N., said Iraq would not begin the preliminary work necessary to ship oil -- signing contracts with oil companies, submitting a monthly pricing plan to the United Nations, and ramping up production -- until after the Security Council approves a full six-month phase of the programme. Hasan said this means that Iraq would not begin shipping oil until at least two weeks after any Security Council vote to extend the programme for six months. A U.N. official on Friday said short delays to Iraqi oil exports at the beginning of every six-month sales phase were common. He said that in the past, shipments from Ceyhan in Turkey had begun three to five days after Iraq agrees to ship oil and five to 10 days for the first shipments from Mina al-Bakr, Iraq. Before it suspended oil exports on November 24, Iraq was averaging exports of about 2.3 million barrels per day (bpd). This represents about three percent of the world's daily oil consumption. --------------------------------------------------------- Friday December 3 5:39 PM ET U.N. Approves Iraq Aid Extension By EDITH M. LEDERER Associated Press Writer UNITED NATIONS (AP) - The U.N. Security Council narrowly approved a U.S. resolution Friday to extend the oil-for-food humanitarian program in Iraq for one week, with France refusing to vote in protest and three other countries abstaining. The vote reflected the continuing divisions in the Securitproved by 11 countries. The resolution needed nine votes for approval. U.S. officials said the one-week extension will maintain pressure on the Security Council to adopt a comprehensive resolution on Iraq that would enhance the oil-for-food program and return U.N. weapons inspectors. But the U.S. proposal angered Iraq, which favors a simple six-month renewal of the program, as well as its supporters in the Security Council, including France, which tried but failed to broker a compromise one-month extension. France's U.N. Ambassador Alain Dejammet and Malaysia's U.N. Ambassador Agam Hasmy said the one-week extension was too short and impossible to implement. Russia, China and Gabon also spoke in support of the French position, diplomats said. The U.N. oil-for-food operation allows Baghdad to sell $5.2 billion in oil over six months to buy food and medicine for Iraqis who have been under strict sanctions since Baghdad's 1990 invasion of Kuwait. The United States and Britain have been spearheading talks with the other veto-wielding council members - France, Russia and China - to reach agreement on a comprehensive Iraq resolution which would incorporate the humanitarian program. They had hoped to reach agreement before the last six-month phase of the oil-for-food program ended on Nov. 20, but failed. So the council voted for a two-week extension and Iraq responded by shutting off oil exports. With that extension expiring Saturday night, and no agreement on a comprehensive resolution, the council was faced with the prospect of another extension. U.S. and British officials believe agreement is near on an omnibus resolution - and a week can clinch it. In Washington, State Department spokesman James P. Rubin said, ``We still have big problems, but some procedural progress has been made.'' Hasmy, the Malaysian ambassador, said the brief extension was intended primarily to exert pressure on some permanent council members. While he didn't identify any countries, Russia has been Iraq's most outspoken supporter on the council, and Russia and China remain at odds with the United States and Britain over key provisions of a comprehensive resolution. Russia and China favor suspending sanctions soon after Iraq allows U.N. weapons inspectors to return and demonstrates compliance with them. But the United States and Britain demand a longer waiting period and Iraqi answers to outstanding questions about its disarmament. ``We feel there's too much of a hurry, artificial deadlines being exerted,'' said Hasmy, noting that the 10 non-permanent council members have only seen ``bits and pieces'' of the omnibus resolution. ``We don't feel that we're taken seriously.'' Iraq's U.N. Ambassador Saeed Hasan said Baghdad won't restart oil exports if the council votes for a weeklong extension on Friday. Iraq objects to using the humanitarian program ``as leverage on Security Council members to pass their omnibus resolution, which will be rejected certainly by Iraq,'' he said. ------------------------------------------------- Friday December 3 2:53 PM ET U.S. Hopeful of Iraq Inspections By BARRY SCHWEID AP Diplomatic Writer WASHINGTON (AP) - The Clinton administration claimed some progress on a U.S.-led move to return international weapons inspectors to Iraq. ``We still have big problems, but some procedural progress has been made,'' State Department spokesman James P. Rubin said Friday. Russia, China and France all have resisted in varying degrees a plan pushed by the United States and Britain to pressure Iraq into complying with U.N. arms inspections that were halted last December. While administration officials said Russia had not agreed to the plan, Rubin said Foreign Minister Igor Ivanov agreed in a telephone conversation with Secretary of State Madeleine Albright to send Russia's U.N. ambassador, Sergey Lavrov, back to New York. There he will hold detailed talks with Peter Burleigh, the deputy U.S. ambassador, and other American diplomats, Rubin said. In the meantime, facing a Saturday deadline, the U.N. Security Council is divided over whether to extend a humanitarian program in Iraq for a week or the customary six months. The United States is pushing for a one-week extension because it believes the council is close to agreement on a new overall policy toward Iraq that would restart U.N. weapons inspections there. A brief extension would maintain pressure and momentum for an agreement and hopefully lead to a vote next week, U.S. officials said. The program permits Iraq to sell oil provided the proceeds are used to purchase food and medicine for the Iraqi people. Iraq cut all oil exports Nov. 22 when the council refused to extend the program automatically for six months. Iraqi Ambassador Saeed Hasan has said Iraq would not return to the market if the council accepted the ``ridiculous, senseless'' U.S. proposal for a one-week extension. The U.N. oil-for-food humanitarian operation allows Iraq to sell $5.2 billion in oil over six months to buy food and medicine for Iraqis who have been under strict sanctions since Baghdad's 1990 invasion of Kuwait. Rubin described Albright's telephone conversation Friday with Ivanov as ``very good and constructive'' and said she also had talked to British Foreign Secretary Robin Cook and French Foreign Minister Hubert Vedrine. Albright and Ivanov agreed they would consult extensively by telephone over the next week, he said. Albright will spend most of the week in the Middle East. ``We would expect those consultations to intensify in the coming week,'' Rubin said. ``We certainly believe that the time has come to move quickly to a vote, and that we should move to a vote very, very, very soon.'' However, he also said, ``We have not made a specific decision on any specific day that we intend to call for a vote.'' ----------------------------------------- Friday December 3 11:00 AM ET France Says Week Too Short for Iraq Oil Deal By Catherine Bremer PARIS (Reuters) - France said it would oppose a U.S. proposal due to be put to a U.N. Security Council vote Friday to prolong Iraq's oil-for-food program by just one week, and will push instead for a longer extension. ``For us, seven days is insufficient for technical reasons. We need a more substantial period to allow Iraq to export its oil,'' Foreign Ministry spokeswoman Anne Gazeau-Secret told a news briefing. ``We are in favor of the usual six-month extension. Between one week and six months, there may be a compromise.'' Iraq has already said it will reject any week-long extension, which would follow on from a two-week extension of the program that expired Saturday. Oil markets were jittery ahead of the Security Council decision with fears that more disruption to Iraqi oil exports could bump up prices, especially coming at a time of high seasonal demand in the West. The humanitarian food-for-oil deal, under which Iraq has sold up to 2.4 million barrels of crude a day, has always worked in phases of six months, each one being rolled over on expiry. The U.S. proposal, which Iraq's oil minister Amir Muhammed Rasheed has denounced as ``evil,'' is seen as a bid to pressure the U.N. to vote on a comprehensive resolution to extend the oil-for-food deal and let U.N. arms inspectors back into Iraq. France Wants A Workable Consensus France backed those pushing for a solution this month but was more concerned with reaching a workable consensus than forging a speedy deal, Gazeau-Secret said. ``We stand by the resolution...but it must be adopted by consensus so that it doesn't remain just a principle, but can be put into practice,'' she said. ``We are trying to find a complete, global solution which at the same time reestablishes control of disarmament and achieves suspension of sanctions.'' The United States and Britain have piled pressure on Russia to accept the resolution, which seeks Iraq's compliance with a new disarmament regime in return for suspending sanctions on civilian goods. Paris originally appeared to side with Russia in seeking more enhanced terms but had been felt recently to be moving closer to the British and U.S. view. Gazeau-Secret said talks had reached an ``active discussion phase'' and Foreign Minister Hubert Vedrine was frequently on the telephone to his U.S., British and Russian counterparts. However, she could not give details of Iraqi Deputy Prime Minister Tareq Aziz's last-ditch visit to Moscow this week in a bid to enlist Russia's support in getting the U.N. sanctions lifted without letting arms inspectors back into Baghdad. Russia is an ally of Iraq and its biggest creditor, with little chance of being repaid until the end of sanctions in place since the end of the 1991 Gulf War. Gazeau-Secret said that among the issues to be tackled, the thorniest was the criteria under which the five permanent Security Council members would agree to suspend sanctions. ------------------------------------------------- Friday December 3, 9:25 am Eastern Time ANALYSIS-Iraq's oil shock poses OPEC winter test By William Maclean LONDON, Dec 3 (Reuters) - Haunted by past mistakes, OPEC exporters are terrified of jeopardising high-flying oil prices as they seek to calm consumer jitters about winter shortages. But as anxieties fester in the absence of Iraqi exports, top producers have let it be known that if push comes to shove, they won't let consumers freeze and prices overheat. The tricky task for Saudi Arabia and others is to soothe nervous customers like the United States without bashing this year's triumphant bull run on the futures markets, analysts say. ``I am not the slighest bit surprised that they want to tamp down an overheated market,'' said Sarah Emerson of Energy Security Analysis Inc in Boston. ``They don't want to see a U.S. economic slowdown and they they want to continue to be seen as the standard bearer for price stability.'' PRODUCERS' CHARM OFFENSIVE TO NERVOUS CUSTOMERS A senior OPEC delegate suggested this week that if a lengthy oil shock occurred amid peak winter demand, key suppliers could ride to the rescue by relaxing supply curbs possibly even before their agreed end-March expiry. That hint, the most explicit in a series by top exporters to the United States, scared markets briefly lower but won high praise from analysts alarmed by rapidly tightening supply. ``It was the correct thing to do. We've been saying for months that OPEC should not exclude that option,'' said Leo Drollas of the Centre for Global Energy Studies. ``It was pragmatic. It was good public relations,'' argued Geoff Pyne, an OPEC-watcher at Standard Bank in London. ``OPEC has got to use a softly softly approach like this to defuse the market, while keeping its options open.'' Pyne said top producers probably believe in private they would have to raise output in March to replenish desperately low stocks drained more quickly than expected by Iraq's absence. ``But they dare not yet say there will actually be an output increase because if they did the market would be sold off.'' The charm offensive launched last month by Saudi Arabia, Venezuela and non-OPEC Mexico appears aimed in part at dousing inflation fears in Washington at the onset of a presidential election year, analysts say. The trio, the top three exporters to the economically- buoyant U.S. and the architects of this year's tough supply curbs, have fretted publicly about the danger of price spikes to polish their credentials as responsible global citizens. OIL PRICE CAN STOKE U.S. INFLATION Year-on-year changes in oil prices have a marked impact on U.S. headline inflation and are nothing but bad news in convalescent Asia. Some analysts estimate that each 10 percent rise in oil prices adds about 0.25 pct to the consumer price index in the United States, the world's largest energy market. Consumer fears heightened by OPEC's supply cuts were given added urgency last month by Iraq's suspension of exports amid a big power dispute over overall Gulf War U.N. sanctions. The move by Iraq, among the top 10 oil suppliers to the U.S., tightened an already imbalanced market and underscored Western nerves about shortages amid precautionary stockpiling in case of Y2K-related industry shutdowns. ``The thing that got Washington going was 'Has Saddam hijacked our economy'? Are we now threatened with higher oil prices again because of Saddam?''' said Peter Gignoux, head of the energy desk at brokers Salomon Smith Barney. ``All of a sudden people were saying 'are we OK with the SPR (the U.S. emergency Strategic Petroleum Reserve) and the IEA (International Energy Agency). Do we really have a problem?'.'' Prices gyrated this week when the senior OPEC delegate made out a case for Saudi Arabia and other exporters hiking output if tight fundamentals lit the fuse on a prolonged price spike. CALMING CONSUMER FEARS SEEN AS PRUDENT Bulls and OPEC price hawks looked askance at mention of a price that producers could use to gauge concern, $25 for U.S. crude West Texas Intermediate -- just below current levels. Producers like Iran and Kuwait are anxious that OPEC not repeat the mistake it made at a Jakarta meeting in late 1997 when it set higher output quotas and sparked a price collapse. But analysts say that with supply so tight, another collapse is now unlikely and the OPEC delegate's argument is prudent. ``It was the wise thing to do -- take some steam out of the market with little danger of a collapse,'' said Emerson. Kuwait has helped prop up prices by talk of possibly extending the cuts after March. ``That to me is a non-story,'' said Emerson. ``It's an arrogant effort to try to spook the speculators. There's nothing to be gained by that.'' --------------------------------------------- In Kirkuk - Iraq displaces Kurds while Russians Drilling for Oil Kurdish Media - Dec 3, 1999 Against the background of displacement of Kurds from the oil-rich city of Kirkuk, the Russians started drilling for oil in that city and dealing with the Iraqi regime in violation of the UN resolution 688, issued specifically to protect Kurds and other Iraqi population against Saddam's wrath. The Iraqi regime has intensified atrocities against Kurdish populations under its control, in particular populations of Kirkuk and Khanaqeen. In less than a month, form 1 to 27 Nov 1999, 46 Kurdish families, total of 289 people were displaced into Kurdish self-rule area. This makes the total figure for this year, from 1 Jan to 27 Nov 1999, of 455 families and 2,433 persons. During this period, Iraq increased its oil production in order to sponsor the UN Resolution 986 Food-for-Oil programme. The Associated Press (AP) reported on Dec 2 that Russian and Iraqi oil companies were drilling scores of oil wells in Kirkuk area. Russian officials reported that Russian engineers and their Iraqi colleagues were drilling 45 wells in Kirkuk to boost the production of the field to 1.1 million barrels a day from the current 900,000 barrels. AP also reported that last month, Iraqi Oil Minister said that several Russian companies were engaged in contracts worth $400 million to boost Iraq's oil output and to revamp its oil industry. Zarubezhneft is the only Russian firm engaged in drilling. The others are working on the rehabilitation of oil infrastructure. Russian involvement raises a crucial question. Does doing business with Iraq breach the 1991 the UN sanctions against Iraq? Russians may not respect international sanctions because they have been uneasy about, if not against, the sanctions on Iraq. Also, Russians do not concern themselves with the plight of the Kurds since their ongoing genocide campaign against Chechnya leaves them with little moral capital to criticize Saddam's war against the Kurds in Iraq. The US administration is expected to act more responsibly than Russia towards Kurds and Arabs of Iraq. The Al-Jezera Arabic Satellite TV station reported on Dec 2 that Iraq is the sixth largest oil exporter to the US and Associated Press (Dec 1) translated this amount as nearly one million barrels of Iraqi crude oil per day. A UN statement released on last Wednesday stated that this amount of oil reached to US markets during the past six-month phase of Iraq's UN - approved oil-for-food program. Perhaps, that is why media reports suggest that the US is buying Iraqi crude through the Russian intermediaries to avoid the embarrassment of having to deal with Iraq directly. The Russian companies receive preferential treatment from Iraq as a reward for their government's sympathetic stand on the sanctions. Almost all Iraqi crude oil that goes through the Russians and an estimated 40 percent of total Iraqi sales, lands in the United States. The oil-for-food program permits Iraq to export $5.2 billion worth crude oil every six months in order to enable the government to buy food, medicine and other humanitarian goods for Iraqis suffering under sanctions imposed after Iraq's 1990 invasion of Kuwait. US has been talking about support for the Kurdish and Iraqi people and has been sponsoring the 'Iraqi Opposition' for years. One would have thought that the US would have linked allowing Iraq to sell oil to improvement of its human right. Is not buying the Iraqi crude through Russia circumventing the UN resolution No. 688? --------------------------------------------- DECEMBER 02, 09:49 EST Iraqis Pray for Rains By LEON BARKHO Associated Press Writer BAGHDAD, Iraq (AP) — Thousands of Iraqis held special prayers for rain Thursday after a year of drought that decimated cattle and crops. Agriculture Minister Abdel-Ilah Hamid Saleh joined the nearly 3,000 worshippers at the site of a former airport in Baghdad, where Iraqi President Saddam Hussein is constructing what is billed as the largest mosque in the Muslim world. Many wept as they raised arms to the sky and recited verses from the Koran, Muslims' holy book, pleading with God to preserve Iraq's cattle and crops this year. The prayers were performed on direct orders from Saddam and officials said they were carried out simultaneously throughout the country. More than 1 million sheep were reported to have perished and yields of wheat, barley and other cereals were at least 70 percent lower than expected after too little rain this past year. The drought further strained a country already crippled by nearly nine years of U.N. trade sanctions. Saleh, the agriculture minister, said rain was already late this year, delaying planting that should have been done in October and November. ``Now we are in December and the amount of rain (that has fallen) is not enough to start sowing .... So we are in a very, very critical situation,'' he told The Associated Press. The U.N. Food and Agriculture Organization in Baghdad agreed. ``The present state is so perilous .... Absence of rain this year is going to have a catastrophic impact on animals, orchards and vegetable growing areas in addition to other crops,'' Dr. Al Khair Khalaf-Allah of FAO said. The drought-induced grain shortfall prompted the government to rely almost entirely on food shipments under the U.N.-approved oil-for-food program. Wheat imports surpassed 1.5 million tons every six months and Iraq's food import bill swelled to nearly $2.2 billion a year. Iraq needs about 4 million tons of wheat a year. The amount of domestic production shipped to state silos last year was estimated at 700,000 tons. The country only produced about 100,000 tons of rice last year, while consumption is at least 750,000 tons a year. --------------------------------------------- Thursday December 2 8:24 AM ET Source: Russia Undecided on U.N. Iraq Resolution MOSCOW (Reuters) - Russia is still considering whether to accept a U.N. Security Council draft resolution that would insist Iraq accept arms inspectors in return for easing economic sanctions, a Foreign Ministry source said Thursday. ``We are still working on the resolution. There is work in progress which will continue for the time being,'' the source told Reuters. Iraqi Deputy Prime Minister Tareq Aziz is in Moscow to try to persuade Russia to reject the draft, drawn up by Britain and the Netherlands, and press for an unconditional lifting of sanctions. The Foreign Ministry source said he expected Aziz to remain in Moscow until Friday. Earlier Thursday Aziz met Gennady Seleznyov, speaker of the Communist-dominated State Duma lower house of parliament, who expressed his support for Iraq and called for the lifting of sanctions. The U.N. has refused to roll over a six-month agreement under which Iraq is allowed to sell oil for humanitarian goods, when it expired last week, in an attempt to force Iraq to accept inspectors. Iraq has completely halted oil exports as a result. --------------------------------- Alabamha headlines, Dec 1 Gulf War Syndrome Clue Detected - (DALLAS) -- Researchers at the University of Texas Medical Center in Dallas are making progress studying the mysterious illness that affects veterans of the Gulf War. Scientists report that high tech scans of Gulf War veterans' brains detected a marked reduction of an important chemical thought linked to exposure to nerve gas or potent pesticides. Many veterans who returned from the war with Iraq reported an odd combination of symptoms. Those range from confusion and inability to concentrate to paralysis, sleep disorders, pain, and intense anxiety. Researchers believe the discovery will lead to more effective treatment of the mysterious illness. ----------------------------------------------- Wednesday December 1, 12:57 pm Eastern Time FOCUS-Iraq's Aziz rejects short oil deal extension By Sebastian Alison MOSCOW, Dec 1 (Reuters) - Iraqi Deputy Prime Minister Tareq Aziz on Wednesday rejected as a joke a U.S. plan for a short- term extension to a U.N. deal under which Baghdad exports oil in exchange for humanitarian goods. Aziz was speaking on a visit to Moscow aimed at trying to persuade Russia to help lift U.N. sanctions against Iraq and block Western-backed attempts to get U.N. arms inspectors back into Baghdad. The United States has proposed following up a two-week extension of the U.N. oil for food arrangement with another of perhaps as little as a week to allow world powers more time to thrash out changes to broad U.N. sanctions against Iraq. When asked if he would reject it, Aziz replied: ``Of course.'' ``What can you do in two weeks? You can buy a suit. You can buy a pair of shoes. You can sell some potatoes,'' he said. ``But you cannot sell oil and buy 200,000 tonnes of wheat or 50,000 tonnes of rice and so on. So this two week extension is a joke.'' Iraq's position raises the prospect of a third consecutive week without Iraqi exports and more tightening of global supply in a market hungry for oil at the onset of peak winter demand. ``The (oil) programme is for six months. It does not work unless it's for a reasonable period. These periods are not reasonable, they are not practicable and so they are meaningless,'' he said after a joint news briefing with Russian Foreign Minister Igor Ivanov. Aziz is in Moscow to try and drum up support from Russia, a Security Council member, for the lifting of U.N. sanctions in place against Iraq since the end of the Gulf War in 1991. He reiterated Iraq's rejection of a Western-backed comprehensive draft resolution as the basis for discussions on a possible suspension of sanctions following a resumption of weapons inspections. Ivanov told the briefing Russia would address the issue of Iraqi sanctions strictly within the law, but added that he favoured a full lifting of the restrictions. ``The problems must be resolved strictly in accordance with the norms and principles of international law, exclusively by political and diplomatic means,'' he said. RUSSIA IS IRAQ'S BIGGEST CREDITOR ``We believe it is essential to establish clearly defined criteria for the suspension of sanctions ... but in any case we regard suspension as only a transitional step which should lead to a complete lifting of sanctions.'' Russia is Iraq's biggest creditor, and has little chance of being repaid until sanctions end and Russian oil companies, which have been active in signing deals to develop Iraqi reserves, are allowed to begin work in the post-sanctions era. The oil programme, under which Iraq has sold up to 2.4 million barrels per day of crude, has always worked in phases of six months, with each one up to now being rolled over on expiry. But when the last, sixth phase expired, the United Nations Security Council only allowed a two-week extension to allow more time for world powers to discuss a proposed comprehensive overhaul of sanctions. That short extension expires on Saturday. Aziz pointed out that Iraq could not at present sell more oil overseas as it did not now have any export contracts in place and would have none until the seventh phase starts. Aziz also ventured comments on Russia's war with Islamic rebels in Chechnya, seen by some analysts as a potential blight on Russian relations with Islamic countries. ``The events in the North Caucasus are a purely internal matter for Russia, and we categorically condemn any meddling in its internal affairs,'' Aziz said. ``We condemned efforts by some circles to use the events in the North Caucasus against Russia, to set Russia and Islamic Arab countries against each other,'' Ivanov said. ``Such attempts have absolutely no future.'' ------------------------------------- Mujahideen Khalq stationed on the buffer zone between Kurds and Saddam Kurdish Media - Dec 1, 1999 SULEMANI, Southern Kurdistan (Kurdish Media) - Media of Southern Kurdistan reported that the Iraqi regime has stationed elements of the Iranian organisation, Mujahideen Khalq, in the buffer zone separating Kurdish self-rule area with the Iraqi regime’s control area. The patriotic Union of Kurdistan radio station said (on Dec 1) that on Nov 8, the Iraqi regime delivered Mujahideen Khalq members in 60 vehicles into Qara-Tapa and Chamchamal, in Southern Kurdistan. The infamous terrorist organisation acted on behave of Iraqi regime to massacre Kurds and Arabs of Iraq during the uprising of spring 1991, after the Gulf-War -------------------------------------- Wednesday December 1 4:07 AM ET Oil Prices Up on Stocks Decline, Iraq SINGAPORE (Reuters) - Oil prices inched up in Asia on Wednesday, supported by U.S. data showing a decline in weekly oil inventories and Iraqi indications that a one-week extension of a U.N. oil deal was unacceptable. January New York Mercantile Exchange (NYMEX) crude futures were trading at $25.07 per barrel, up 48 cents from their close in New York. The contract had dropped sharply in New York trade on Tuesday, ending the day $1.37 off at $24.59. But prices recovered in Asian trade, after an American Petroleum Institute (API) report late on Tuesday showed a decline in U.S. crude stocks for the third consecutive week. API said crude stocks for the week ended November 26 fell 3.56 million barrels. It also reported a fall of 1.54 million barrels in gasoline stocks, although distillates, which includes heating oil, were higher by 1.68 million. Further support came from comments on Wednesday by Iraqi Oil Minister Amir Muhammed Rasheed that a U.S. proposal for a one-week extension of Iraq's ``oil-for-food'' deal with the U.N. was not acceptable. ``I think this is another sinister step by the American administration to blackmail other members of the Security Council and definitely will not be acceptable,'' Rasheed told reporters in Amman. He also reiterated Baghdad's rejection of a Western-backed comprehensive draft resolution as the basis of discussions at the Security Council to ease sanctions on Iraq in return for a resumption of weapons inspections. The halt of Iraqi exports had pushed U.S. crude prices to a nine-year high of $27.15 at the start of last week. The market had cooled down subsequently on assurances by Saudi Arabia that it was committed to maintaining stability in the oil market, and would not allow prices to rise out of control. But traders said a crude rally could potentially resume on the API data and haggling in the United Nations about Iraq's policy that could once again disrupt Iraqi oil exports. A senior Western diplomat said on Tuesday the United States would seek an short extension, possibly only one week, to Iraq's oil-for-food deal with the U.N. This was to provide the U.N. Security Council with more time to consider its overall policy on Iraq. The Security Council has until Saturday to renew the deal and must decide if this would be an short extension or for the customary six months. Last week, an earlier U.S. proposal for a two-week extension of the deal was rejected by Iraq. ----------------------------------------------------- Tuesday November 30 12:08 PM ET Iraqi Oil Output Is Cut 75 Percent By LEON BARKHO Associated Press Writer BAGHDAD, Iraq (AP) - Iraq has cut its daily oil production by 75 percent since it halted exports under the U.N.-approved oil-for-food program, Oil Ministry officials said Tuesday. But the officials, speaking on condition of anonymity, said they can quickly regain lost production if the Security Council offers to extend the oil deal for another six months and the government accepts. Daily oil production has plunged to nearly 750,000 barrels a day from a peak of 2.95 million per day before Iraq halted exports under the program, the officials said. Iraq needs about 650,000 barrels per day for domestic consumption. Exports of nearly 100,000 barrels per day to Jordan, under a special U.N. permit, are continuing, the officials added. Output soon will be raised substantially, they said, to keep on hand enough of the liquefied petroleum gas on which the country relies for most of its domestic consumption. Iraq halted most oil exports last week to express its indignation at the Security Council's decision to extend the previous six-month phase of the oil program for only two weeks while it tries to break a deadlock on forming a broader Iraq policy. The program routinely has received six-month renewals. Diplomats said Tuesday that the United States was proposing another brief extension for the program, whose mandate expires Saturday. The weeklong extension would give more time for negotiations on the larger resolution on policy toward Iraq. Russian news agencies reported that Iraqi Deputy Prime Minister Tariq Aziz arrived in Moscow on Tuesday for talks aimed at gaining support for the easing of U.N. sanctions against his country. Russia favors easing the sanctions against Iraq and reviving trade as a way for Iraq to pay off a multibillion dollar debt to Russia. Aziz planned to meet with Prime Minister Vladimir Putin and Russian oil officials during his four-day visit, the Interfax news agency reported. Iraq has been under strict U.N. sanctions since its 1990 invasion of Kuwait, which led to the Gulf War. Three years ago, the United Nations began permitting Iraq to sell limited amounts of oil to buy badly needed food and medicine for Iraqis suffering under the embargo. ------------------------------ Tuesday November 30, 8:33 am Eastern Time ANALYSIS-Ideal conditions for Iraqi wheat buying By Greg Frost PARIS, Nov 30 (Reuters) - Iraq's acceptance of a six-month extension of its oil-for-food deal makes it likely it will soon return to the world wheat market, and analysts say the timing could not be better for Baghdad. That's because Iraq's biggest currency earner -- oil -- recently hit nine-year highs while world grain prices are mired in a slump because of huge global supplies and sluggish demand. Indeed, wheat futures on the Chicago Board of Trade sank to contract lows on Monday, with the spot December future falling to its lowest level in 22 years. ``The combination of high oil prices and low world wheat prices would seem to signal an appropriate time for Iraq to cover its forward grain requirements,'' said Bill de Maria, assistant executive director of the London-based International Grains Council (IGC). Iraq confirmed on Saturday it would accept an extension of the oil-for-food deal with the United Nations, a programme that allows Baghdad to sell $5.26 billion in oil every six months to buy food, medicine and other goods. Before agreeing to the extension, Iraq last week halted oil exports. That raised fears of a long stoppage that might cut deeply into consumers' already spare oil stocks, and sent benchmark Brent crude futures to their highest level since the Gulf crisis earlier this decade. Oil prices have since fallen back from those highs but are nonetheless double the level they were earlier this year. While Iraq will have ample means to buy wheat, the bigger question is to whom Baghdad will turn for its purchases. A POLITICAL PROCESS The IGC has estimated Iraq will import 2.7 million tonnes of wheat in the current 1999/2000 crop year, roughly unchanged from the past three years. Under the terms of the oil-for-food programme, Baghdad typically holds a wheat import tender twice a year, reviews offers from traders and then selects from a variety of origins. But unlike poorer countries which make their buying decisions mostly on price, Iraq -- flush with cash from oil exports -- has increasingly made what many in the trade intrepret as a political statement with its wheat buying. ``Iraq's purchases are increasingly political,'' a French grain exporter said earlier this year. ``It buys if it is satisfied with a country.'' Iraq in June held its most recent wheat import tender under the sixth stage of the oil-for-food deal and bought 1.3 million tonnes, of which 600,000 tonnes were Australian. Firms from Russia and Saudi Arabia, which sold large chunks of wheat to Iraq in the fifth stage of the programme, maintained substantial shares of the market in the sixth stage. Iraq only bought 50,000 tonnes of French wheat at the most recent tender, after having bought more than 650,000 tonnes in the 1997/98 marketing season. Grain traders said, however, that the loss of business for France had less to do with politics and more to do with a shift in Iraq's specifications for milling wheat. TOO EARLY TO SPECULATE Trade sources said this week that while Iraq would probably announce a new tender in the coming weeks to buy wheat, the political nature of its wheat-buying made it hard to predict who would win the business. ``We don't know, for instance, if they're going to put preference on the Russians as they did last time,'' one European grain trader said. ``It's still not even been confirmed how much of the previous business (from Russia and Saudi Arabia) was actually executed.'' Another trader agreed it was probably too soon to say whom Iraq would pick, and most major exporters were sitting on a ``mountain'' of grain. ``Last year Iraq took quite a few cargoes from the Ukraine, and this year I would assume a lot of cargoes could come from Kazakhstan,'' the trader said. Russian firms sold Iraq wheat from Ukraine, Kazakhstan and Russia under the fifth stage of the accord. Argentina, Canada and Australia were also possible suppliers, the trader added. A third source reckoned Iraq could turn to Turkey, which is said to have an export potential this year of up to 2.0 million tonnes of wheat and which only cleared out a small part of its surplus last week at an export tender. ----------------------------- Monday November 29, 4:21 pm Eastern Time Iraq 6th phase oil exports 389.6 mln bbls - U.N. UNITED NATIONS, Nov 29 (Reuters) - Iraq shipped about 13 million barrels of crude oil in a half week through last Wednesday when it halted oil exports to protest a stopgap extension of the program by the U.N. Security Council, U.N. figures released on Monday show. This brings to 389.6 million barrels the crude oil Iraq sent to the world oil market in Phase 6 of the ``oil-for-food'' program that began on May 25. About 45 percent of oil exported in the sales phase went to Europe with 39 percent going to the United States, 14 percent to the Far East and the remainder to Brazil and South Africa, the U.N. said. The United States' portion of Iraqi crude fell from 45 percent in the previous six-month Phase 5 of the program. Iraq's four-week export rate is between 2.3 million barrels per day (bpd) to 2.4 million bpd. In Phase 6, Iraqi oil sales totaled an estimated $7.45 billion, the U.N. said. Although Iraq has Security Council authorization to export oil in Phase 6 of the program through December 4, Baghdad halted exports last Wednesday. When Iraq would resume oil shipments was not clear on Monday. Iraq has said it would resume shipments once the U.N. Security Council renews the program for another six months. But the United States and Britain on Monday talked of another stopgap extension of Phase 6, similar to the one that led Iraq to suspend oil shipments. Phase 6 of the program like the previous five sales phases since the program began in December 1996 was to run for six months. But it was extended by two weeks beyond its original expiration of November 20 as Russia and the United States sparred over Iraq policy. When the two sides agreed to a two-week extension, Baghdad balked, halting oil shipments at least temporarily. Iraq's oil ministry said that its daily production rate for November was 2.95 million bpd, which it said Iraq would exceed in December. Generally, Iraq's export rate is about 550,000 bpd less than its production. __________________________________________________ Do You Yahoo!? Thousands of Stores. Millions of Products. All in one place. Yahoo! Shopping: http://shopping.yahoo.com -- ----------------------------------------------------------------------- This is a discussion list run by the Campaign Against Sanctions on Iraq For removal from list, email email@example.com Full archive and list instructions are available from the CASI website: http://welcome.to/casi