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US releases $800 million worth of holds.



As predicted in our March newsletter the US has begun to release large
volumes of 'holds.' In what is sure to be an effective propaganda move, the
US will now gain credit for simply scaling down the extent to which it
obstructs the humanitarian programme!

Here's a few other news items from yesterday and today.

Best wishes,

Gabriel
voices uk


* U.S. To Allow Sale of Goods to Iraq, 1st June
* Security Council Agrees on Iraq Sanctions, Washington Post, 1st June
* U.S. Releases $800 Million Worth of Iraqi Contracts, Reuters, 1st June
* Iraq Says Suspending Oil Sales in Protest Against UN, Reuters, 2nd June
* Rumsfeld to Look at Zone Operations, AP, 1st June
*  5 Powers Delay Vote on Easing Iraq Trade, New York Times, 1st June

**********************************************

Friday June 1 6:08 PM ET

U.S. To Allow Sale of Goods to Iraq
By BARRY SCHWEID, AP Diplomatic Writer

WASHINGTON (AP) - The Bush administration removed curbs Friday on the sale
of $800 million in goods to Iraq, following through on its abandonment of an
11-year campaign.

The so-called dual use items had been on hold out of concern they might help
Iraq's weapons programs.

Now the items can be sold to Iraq for the benefit of the Iraqi people.

Oil-drilling machines, water pumps, welding equipment, steel-reinforced
aluminum conductors, earth-moving equipment and heating and cooling systems
for housing construction are among the dual-use items that have been held
back for more than a decade and now can be sold to Iraq.

Unless withheld goods have a ``clear application'' to military programs,
they will be available for sale to Iraq in what a senior U.S. official said
was a show of good faith to other nations on the U.N. Security Council.

The United Nations extended for 30 days its oil-for-food program Friday in a
humanitarian move that stops short of a joint effort by the United States
and Britain simultaneously to tighten curbs on arms and weapons technology
while permitting free flow of civilian goods.

Proceeds from oil sales are to be used strictly for consumer purposes.

It was a compromise that followed hard lobbying by all sides.

Here to report to Secretary of State Colin Powell, U.N. Secretary-General
Kofi Annan said he hoped the Security Council would come up with a plan
soon.

``The council is working as a team,'' Annan told reporters.

State Department spokesman Richard Boucher said, ``There is a lot of detail
work that needs to be done, but the direction is set clearly by this
(oil-for-food) resolution that was passed this morning.''

As a result, Boucher said, ``A broader range of civilian goods will be
approved, and restrictions will focus more tightly on items that the Iraqi
regime might find necessary to develop its military capabilities.''

Reviewing contracts that had been placed on hold, Boucher said $800 million
worth would be released, on top of almost $400 million worth already
approved.

The senior official, who spoke on condition of anonymity, said the United
States has been applying U.N. sanctions against Iraq far more strictly than
any other nation. In some cases, he said, 10 times as many items were on
U.S. hold than on any other country's list.

Powell, who spearheaded the policy change within the administration,
congratulated American diplomats in New York and at the State Department for
shaping a resolution.

Whether the road ahead will be all that smooth remains unclear.

Historically, only Britain stood with the United States on tough sanctions.
Russia, China and France, all of whom can kill by veto any council
resolution, took a softer line.

The U.S. policy shift took four months to crystallize as Powell vied with
the Pentagon and other sectors of the administration over items with
potential application to Iraq's military.

The debate continued within the administration even as it did in the halls
of the United Nations.

Powell is inclined to take a lenient view of such items as water pumps and
refrigerated trucks, which theoretically could be used for military purposes
but are much more likely to lessen the pain of everyday Iraqis.

``This is a good move,'' said Lee Feinstein, former deputy director of
policy planning at the State Department. ``The idea is to keep our eye on
the ball, which is to deny the most sensitive items to Iraq and keep
controls on the way oil proceeds are used.''

A list is being compiled of items that will remain off-limits to Iraq, their
value and their use. At the same time, American diplomats resisted efforts
by other governments to go further in the direction of leniency.

The U.N. sanctions on weapons and consumer goods were imposed as part of a
U.S.-led drive to reverse Iraq's annexation of Kuwait in 1990. Powell was
chairman of the Joint Chiefs of Staff during the Persian Gulf War, which
liberated Kuwait but left President Saddam Hussein in power.

-


**************************************************
Security Council Agrees on Iraq Sanctions

By Alan Sipress and Steven Mufson
Washington Post Staff Writers
Friday, June 1, 2001; Page A22


The U.N. Security Council reached agreement yesterday on the broad outlines
of a new set of sanctions on Iraq while giving itself another month to build
a so-far elusive consensus on the technical details.

The council is scheduled to give final approval today to a resolution that
would extend the current oil-for-food program, due to expire June 4, through
early July so members can hash out their differences over a U.S.-British
proposal to overhaul the Iraq sanctions.

Under that proposal, the United Nations would ease restrictions on most of
Iraq's civilian imports while continuing to screen goods that could be used
by President Saddam Hussein's military, in particular weapons of mass
destruction.

Though the resolution marks a formal acknowledgment that the 15-member
Security Council will not close a deal before the June 4 deadline, as the
Bush administration had hoped, it also represents progress toward building a
consensus among the five permanent members with veto power -- Russia, China,
France, Britain and the United States.

The resolution was introduced by Russia, which until this week had refused
to participate in negotiations over a new sanctions program and insisted
until two days ago on a standard, six-month renewal of the current
sanctions.

"It's really quite an achievement. It's a basic agreement on the new
framework," a U.S. official said.

What remains lacking, however, is an agreement over the list of items that
will continue to be restricted. The United States has sought to add a range
of "dual use" goods, which have both civilian and military applications, to
existing lists of banned items that have previously been accepted by the
international community.

France has balked at what it sees as an overly restrictive list, while
Russia had demanded more time for its experts to conduct a highly technical
review. China had also objected.

"We need to do a lot of hard work still to fill in the details, and that is
what we will do over the next 30 days," said U.S. ambassador to the U.N.
James B. Cunningham.

An agreement over the outlines of a new program was obtained by Secretary of
State Colin L. Powell in talks this week with his British, French and
Russian counterparts in Budapest, where they were attending a meeting of
NATO foreign ministers, according to senior State Department officials.

By agreeing to a relatively short, 30-day extension, U.S. and European
officials said they would maintain momentum toward a radical restructuring
of the sanctions, which were imposed on Iraq after its 1990 invasion of
Kuwait.

The resolution also embodies the existing Security Council requirement that
Iraq cannot be entirely free of sanctions until it is cleared by U.N.
weapons inspectors. France, Russia and China had abstained when this
requirement last came up for a vote in 1999, but all five permanent members
indicated yesterday that they would support the new resolution.

The measure faces opposition from Iraq, which threatened yesterday not to
sign any more contracts for the sale of its oil if the resolution is
adopted. Iraq's U.N. ambassador, Mohammed Aldouri, however, said his country
would "honor all contracts" already signed. Baghdad also has warned
neighboring countries of retaliation if they complied with new U.N.
controls.


***********************************************
Friday June 1 1:44 PM ET

U.S. Releases $800 Million Worth of Iraqi Contracts

WASHINGTON (Reuters) - The United States announced on Friday it was
releasing more than $800 million worth of contracts under the United
Nations' oil-for-food program for Iraq that it had previously blocked.

State Department spokesman Richard Boucher said the United States had
decided to unblock these contracts in a bid to help the Iraqi people.

``The release of these contracts will provide civilian goods for civilians
in Iraq. It assists the Iraqi public in their endeavors without assisting
the Iraqi regime in developing weapons,'' Boucher said.

The total represents only a portion of the $3.5 billion in holds Washington
has placed on contracts under the program over the course of many months and
in some cases, years.

Boucher said he anticipated more contracts would be released in the future,
indicating an overhaul in the decade-old sanctions regime against Iraq
imposed after Baghdad invaded Kuwait in 1990.



*************************************************************
Iraq Says Suspending Oil Sales in Protest Against UN

June 2nd 2001

 Filed at 11:57 a.m. ET

BAGHDAD (Reuters) - Iraq said on Saturday it would halt oil exports from
Monday in protest against a United Nations Security Council resolution
extending the U.N.'s oil-for-food program for 30 days instead of the usual
six months.

``Iraq will halt exports of crude oil from ports on the Arab Gulf and the
Mediterranean as of 8:00 a.m. local time (midnight EDT) until further
notice,'' the official Iraqi news Agencyquoted a source at the Oil Ministry
official as saying.

``Iraq will stop oil exports under the memorandum of understanding because
the Council has violated the spirit and the texts of the memorandum,'' the
ministry said.

Energy officials in Turkey, one of the two export outlets allowed under
oil-for-food, said Iraq had stopped pumping crude via pipeline to the
southern Turkish port of Ceyhan.

``The oil flow was suspended from this morning,'' said one Turkish official.

Iraq is angry that the Security Council voted on Friday to extend the
oil-for-food program for a stop gap period of one month while it considers a
proposal by Britain and the United States to revamp decade-old sanctions
against Baghdad.

The 30 day-period is intended to give council members time to continue
negotiations on the U.S.-British plan that would lift restrictions on
civilian goods imported by Iraq but tighten controls on military-related
supplies and smuggling.

Sanctions have been in place since Iraq's invasion of Kuwait in 1990 and
oil-for-food has provided limited relief for civilians since the program
began in December 1996.

Iraq is worried that a crackdown on oil smuggled through neighboring
countries Turkey, Jordan and Syria will stem cash generated direct to the
government of President Saddam Hussein.

SAUDI SAYS OPEC WILL FILL ANY GAP

Saudi Arabia, the world's biggest exporter, pledged it would step in with
fellow OPEC members to fill any oil shortage that could be created by the
Iraqi decision.

``What concerns us is the stability of the market. This is not the kingdom's
position, but OPEC's position, which is to fill any shortage in the oil
market,'' Saudi Oil Minister Ali al-Naimi told reporters in Riyadh.

But it remains unclear whether Naimi and other OPEC oil ministers, who meet
in Vienna next week for scheduled talks on production quotas, will move
immediately to compensate for the Iraqi stoppage.

OPEC has been widely expected to maintain current supplies to keep prices in
its $22-$28 a barrel target range for a basket of its crudes. The group cut
output by 2.5 million barrels daily earlier this year.

The OPEC basket was valued at $26.56 on Thursday and ministers may prefer to
wait for prices to rise above $28 before triggering extra output. Iraq is an
OPEC member but has no production quota.

Ministers will be wary about increasing supply too quickly because Baghdad
has suspended oil sales in the past and resumed exports within days or
weeks.

Iraq exports 2.1 million barrels a day (bpd) of oil, five percent of world
exports, under the U.N. program which is due for renewal on June 3. Oil
export revenues are controlled through a U.N. escrow account.

U.S. IS IRAQ'S BIGGEST CUSTOMER

The United States is Iraq's biggest customer, buying about a 750,000 bpd,
with exports also flowing to Asia, Europe and Latin America.

Turkey's Ceyhan terminal has 2.5 million barrels in tanks, a Turkish
official said. That's little more than enough for two days worth of normal
exports from the port.Iraq controls sales from the other export point at the
Gulf port Mina al-Bakr.

Baghdad has almost 300 million barrels of oil, equivalent to about 150 days
at current export rates, in outstanding contracts under the U.N. program.

********************************************************


Friday June 1 4:38 PM ET

Rumsfeld to Look at Zone Operations
By ROBERT BURNS, AP Military Writer

WASHINGTON (AP) - Defense Secretary Donald H. Rumsfeld will open a weeklong
European trip Monday in Turkey, where he will get an up-close look at the
U.S.-British effort to enforce a ``no-fly'' zone over northern Iraq.

The Bush administration is reviewing all aspects of U.S. policy toward Iraq,
including the no-fly zone enforcement that began shortly after the Gulf War
ended in 1991. U.S. military commanders have suggested cutting back on air
patrols, which often are targeted by Iraqi air defense guns and missiles.

After a stop at Incirlik Air Base in southern Turkey to get a briefing on
the northern no-fly zone and talk with U.S. air crews, Rumsfeld will travel
to Kiev, Ukraine, and then visit U.S. troops in Macedonia and Kosovo.

He also plans to stop in Greece, for a meeting of southeast European defense
ministers; Brussels, for a series of NATO meetings; and Turku, Finland, for
talks with defense ministers from Nordic and Baltic nations.

It will be Rumsfeld's first extended trip abroad since taking office in
January. He spent one day in Germany in February to attend a European
security conference but has put off other travel in order to get senior
Pentagon posts filled and focus on a plan to modernize the military.

Rumsfeld held several meetings this week with the chiefs of the military
services, and will meet Saturday with leaders of warfighting commands -
including U.S. European Command, which is responsible for the no-fly zone
over northern Iraq, and U.S. Central Command, which handles the southern
no-fly zone.

The meetings are meant to establish the areas of focus for a broad review of
U.S. military forces, as required by Congress every four years. At the same
time Rumsfeld is working out a proposed Pentagon budget for 2003 as well as
proposed additions to the 2002 budget of $310 billion.

On Friday the White House asked Congress to add $5.6 billion to the current
2001 defense budget of $296 billion.

In his letter to Congress, President Bush said the request ``is primarily
for defense activities related to pay, support, training and quality of life
for military personnel, as well as regular operations costs.''

``It is imperative to reverse the pattern of underfunding these costs,''
Bush said.

**********************************************************

June 1, 2001

5 Powers Delay Vote on Easing Iraq Trade

By BARBARA CROSSETTE

UNITED NATIONS, May 31  The five major powers on the Security Council
agreed today to postpone for 30 days a vote on a more generous trade policy
for Iraq.

The extension is intended to give experts time to evaluate a detailed list
of items that the United States wants to prevent Saddam Hussein's government
from buying unless it obtains international approval.

A meeting on Wednesday in Budapest among Secretary of State Colin L. Powell
and his counterparts from Britain, France and Russia appears to have
resulted in a compromise to extend the existing "oil for food" program for
Iraq for a much shorter period than Russia had been seeking.

Britain and the United States wanted no extension, but aimed for a vote this
week on a new plan that would lift restrictions on the sale of civilian
goods to Iraq while trying to tighten controls on oil smuggling and military
purchases.

The full Council may vote on Friday on temporararily extending the current
program, which faces a renewal deadline of midnight Sunday.

Iraq immediately threatened again to cut off oil production if the extension
is adopted. The program is usually renewed every six months.

"Iraq will not deal with it," Ambassador Mohammed Aldouri told reporters
today as the Council met on the extension. "Consequently Iraq will not
conclude any oil contract based on it, and this resolution will be for us
just another dead resolution."

Diplomats and some United Nations officials say the Iraqi threat, if carried
out, may not disrupt the oil market as much as Mr. Hussein may expect. This
year, Iraq withheld oil from the market, and prices dropped, a diplomat
said.

A temporary extension of the "oil for food" program under which Iraq may
sell unlimited quantities of oil to buy a wide range of goods, will give a
divided Security Council some time for negotiations. Still, diplomats expect
sharp debate over the American list of goods that Washington wants to
monitor so that Iraq cannot reconstruct weapons by diverting material or
equipment that also has civilian uses. The Russians and French have
questioned some items.

Secretary Powell acknowledged to reporters on the plane returning to
Washington from Budapest that "the difficulty, of course, is in the
details," adding that the list of items was "excruciatingly detailed."



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