Iraq oil delays may prevent further sales
Iraq, Economics, 7/30/1997
Iraq may be unable to sell all the oil authorized under a UN oil-for-food agreement if it does not resume exports soon, a senior US official said on July 29.
Iraq has been holding up crude sales until UN secretary-general Kofi Annan approves its plan for distributing food and medicine purchased with the oil revenues.
Under a plan that went into effect last December, Iraq was allowed to sell up to 2 billion US dollars worth of oil every six months to buy food and medicine. Sales periods are divided into two 90 day phases.
The plan was renewed for another six months on June 8.
Baghdad's action in delaying exports has raised questions about whether it can sell all the 1.07 billion worth of oil allowed during the first 90 days of the renewed plan.
Iraq insists that the timetable for the sales begins when Annan approves the distribution plan. But US deputy ambassador Edward Gnehm said it began when the council renewed the oil-for-food program.
That means the first 90-day period ends September 5. Iraq would have to sell 1.07 billion worth of oil by that date.
Gnehm told reporters there cannot be any significant carry-over of unsold oil during the second 90 day period, which runs from September through December.
Iraqi ambassador Nizar Hamdoun said it would be "premature" to say how Iraq will respond to the US interpretation of the time frame.
Baghdad has not sold any oil since the sales were approved on June 8, saying it would wait until the aid distribution plan for the next six-month phase was approved by Annan. The UN secretary general is waiting for annexes to the distribution plan.
Hamdoun said those documents were expected to arrive from Baghdad soon.
UN officials say Iraq is withholding exports to pressure the US and other members of the security Council into speeding up the delivery of humanitarian supplies.
Last week, Gnehm told the council that Iraq's self-imposed delay has "created a real problem for the Iraqi people because it will ultimately interrupt the delivery of humanitarian goods."
Based on the current market, Iraq would have to pump about 1.8 million barrels a day to sell 1.07 billion US dollars worth of oil by September 5.
Iraq has been barred from exporting oil freely under UN sanctions imposed in 1990 after President Saddam Hussien sent troops into Kuwait, touching off the Gulf war.
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