After being permitted to export oil for food, Iraq uses oil to achieve political goals
Iraq, Analysis, 9/1/1997

Iraq has started implementing the second phase of the oil-for-food agreement which it signed with the UN. It also turned a new page with international companies as it decided that economic cooperation with Arab and Western companies will depend on how this cooperation will serve Iraqi political interests.

Iraq had earlier implemented the first phase of UN resolution 986, which gave it the right to sell huge quantities of oil within 180 days for a sum that would not exceed 2 billion dollars. Iraq was to use this money to pay for food and medical supplies and for paying compensation for the damages it caused in the Gulf war. Iraq implemented this phase without attatching anything to political stances because the most important thing for Iraq was just to start implementing the agreement. The United States opposed the agreement for a long time and had been creating many obstacles to prevent its implementation.

Iraq is expected to export the maximum amount of oil allowed by the quota during the three months of the agreement, which ends in December. As the first phase ended and arrangements for the second phase were finalized, Baghdad sought to modify some articles of the agreements that it signed with the international oil companies. It refused to renew certain contracts with some companies.

The decisions to renew or terminate contracts of some companies were not based on technical reasons or on the principle of supply and demand. The decisions were made by the highest authorities for political reasons in order to punish some countries that constantly adopt tough stances in the UN Security Council in order to keep economic sanctions imposed on Iraq. Through the oil companies existing in some countries, the Iraqi officials want to exercise political pressure on the capitals of those countries that support the idea of keeping the sanctions.

As for extending the contracts signed with American oil companies, the Iraqi regime aims to achieve two things: to send a clear message to Washington regarding Iraq's desire to have better economic relations with the USA, and to exercise pressure on the American administration through these companies so that the administration will soften its stances which impact Iraq. The companies are able to exercise political and economic pressure on the American administration in an effective way.

Previous Stories:
  Iraq will participate in the Syrian international trade exhibition   (8/22/1997)
  Iraqi US secret trade transactions   (8/21/1997)
  Iraq asks European Union to put pressure on the United Nations to lift embargo   (8/13/1997)

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