Europeans May Ease Iraq Sanctions


By Edith M. Lederer

Associated Press
May 19, 1999

United Nations - The United States is willing to consider a proposal for a new U.N. relationship with Iraq that would allow foreign companies to invest in Iraq's oil industry if Baghdad cooperates with U.N. arms inspectors, a U.S. official says. The proposed British-Dutch resolution circulated Tuesday says Iraq must let U.N. inspectors resume monitoring Iraq's weapons programs and provide unconditional and unrestricted access'' to all facilities and records for four months before any such investments would be considered.

Before the United States gives its approval, it wants to study the exact conditions that Baghdad would have to meet for the U.N. Security Council to consider authorizing any foreign investment, the U.S. official said. "In other words, it's not ruled out,'' the official told The Associated Press, speaking on condition of anonymity. The U.S. willingness to consider foreign investment in what oil industry experts say could be among the most lucrative undeveloped oil fields in the world represents a significant shift in Washington's position.

Only a month ago, deputy U.S. Ambassador Peter Burleigh rejected the recommendation of a U.N. expert panel to allow foreign investment in Iraq's struggling oil sector to help Baghdad buy food and medicine for ordinary Iraqis. He argued that the investments would have the unintended effect of lifting some sanctions imposed after Baghdad's 1990 invasion of Kuwait. U.S. officials have indicated, however, that they're unlikely to back a major overhaul of Iraq's oil sector - but would support limited foreign investment that would increase revenue for the U.N. oil-for-food program. The program allows Iraq to sell $5.2 billion worth of oil to buy humanitarian goods, but Baghdad has been unable to meet the limit because of low oil prices and production problems.

Iraq has rejected foreign investment in the oil sector, saying it would reduce the country to "an entity under the trusteeship of the United Nations.'' The Security Council established three panels in February to chart a new relationship with Iraq, help ordinary Iraqis cope with the effects of sanctions, and restart arms inspections that were halted by U.S. and British airstrikes in mid-December. Iraq also rejected recommendations of the panels - on disarmament, humanitarian problems and Kuwait related-issues - because they did not meet Baghdad's key demand that the oil embargo be lifted. And Baghdad is likely to reject the British-Dutch draft for the same reason.

A rival Russian proposal, backed by China and France, does call for economic sanctions to be lifted once a system to monitor Iraq's weapons programs is in place, but it is strongly opposed by Washington. Diplomats said Russia is expected to discuss a revised draft today with the four other permanent Security Council members - the United States, Britain, China and France.

U.N. arms inspectors must verify the elimination of Iraq's weapons of mass destruction before the council can move to lift sanctions.

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