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Iraq Threatens U.N. Program

May 23, 2001 / 9:11 AM EDT / CBS/AP

Iraq will not sell any oil through the U.N. oil-for-food program if the United Nations adopts a British proposal meant to ease U.N. trade sanctions, a state-run newspaper on Wednesday quoted Deputy Prime Minister Tariq Aziz as saying.

The proposed plan, already rejected by President Saddam Hussein, is "a big lie," Aziz was quoted as saying.

"Not a single barrel of oil shall be sold through the (oil-for-food) program if the Security Council adopted the draft resolution with the American elements and American ideas recommended," Aziz told foreign diplomats in Baghdad on Tuesday night. His comments were reported in Al-Thawra daily.

Iraqi President Saddam Hussein rejected the British proposal Monday.

Leo Drollas, deputy director of the Center for Global Energy Studies in London, said if Iraq carried out its threat, the Organization of the Petroleum Exporting Countries oil price basket, already in the $27 range, will break the $28 level.

"But then OPEC will either increase output in an emergency meeting officially or leak more to deal with the issue. Then the Iraqis will come back to the market after a couple months, as it is all a game they are playing," Drollas said.

The British proposal, endorsed by the United States, seeks to reform what goes in and what is kept out of Iraq by detailing prohibited items rather than goods that are allowed to be imported. British and U.S. diplomats say the plan is designed to keep Saddam from rearming 11 years after he invaded Kuwait and lobbed missiles at Saudi Arabia and Israel.

Learn more about the aftermath of the Gulf War.

The British and Americans are pushing to have the easing of sanctions incorporated into the next extension of the U.N. oil-for-food program early June. The program was established in late 1996 to help ordinary Iraqis cope with sanctions imposed after Iraq's 1990 invasion of Kuwait.

Aziz, however, said the British proposal was a "cover for the continuation of sanctions."

"America is trying to choke Iraq's economy and harm its sovereignty as well as the independence of countries trading with it," Aziz was quoted as saying.

His remarks came two days after he announced that Iraq would suspend the oil-for-food program if the United States interferein its renewal when the current six-month phase expires in June.

The oil-for-food program began as a one-time relief effort but has been renewed regularly for six-month periods.

The West Ourna oil plant

Under the program, Iraq is allowed to sell oil, provided the money goes for food, medicine and other humanitarian supplies and equipment to rebuild its frayed oil infrastructure. The United States and Britain — the two strongest supporters of the sanctions — have often vetoed contracts for items that could have a dual, military use.

Iraq produces 3 million barrels of oil a day and has said it would like to increase the figure to 3.5 million. In the past year, Iraq has exported about 1 million to 2 million barrels of oil a day.

Iraq sold more than $16 billion worth of oil in 2000, roughly what it earned annually before the war. However, the United Nations takes almost 30 percent of that amount for war reparations and to cover the operating costs of the U.N. oil-for-food program.

By Waiel Faleh
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