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Iraq questions oil-for-food deal

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November 9, 2000 

BAGHDAD (AP) - An Iraqi leader said in remarks published Wednesday that his government is questioning the benefits of exporting oil while the payments are piling up in a U.N. escrow account.

Deputy Prime Minister Tariq Aziz, in a letter to U.N. Secretary-General Kofi Annan, said more than dlrs 11 billion of Iraqi oil revenues were tied up in the account.

"This is idle and frozen money which the Iraqi people are not benefiting from," said the letter, carried by the official Iraqi News Agency.

Iraqi exports of crude oil and products are only allowed under the terms of a U.N.-authorized oil-for-food program that permits Baghdad unlimited sales provided the proceeds go to a U.N. escrow account and are used to buy food, medicine, humanitarian goods and to pay reparations for the 1991 Gulf War.

"The fact that the money coming from the export of oil is not being used for the purchase of food, medicine and other basic needs ... raises big questions from the Iraqi people," Aziz said without elaborating.

Aziz did not threaten to halt oil exports, but questioned whether exports were still necessary with billions of dollars stashed away in the U.N. account and so many contracts on the shelf.

He said more than 1,328 contracts worth dlrs 3.2 billion were still in limbo, while 541 others worth dlrs 1.3 billion were being held up by a U.N. committee which vets Iraqi oil sales and imports under the oil program.

Last month Annan also complained about the delays and blocking of goods and contracts.

As of Nov. 3, about dlrs 2.3 billion worth of contracts were on hold in the sanctions committee - the vast majority blocked by the United States. Equipment to improve Iraq's transport and telecommunications infrastructure accounted for nearly half of all contracts on hold, according to figures released Tuesday by the U.N. oil-for-food program.

A disruption of Iraqi exports of nearly 2.3 million barrels would send oil prices, already priced over dlrs 30 per barrel, into a tailspin in the jittery oil market.

Crude oil and products futures rose sharply Tuesday at the New York Mercantile Exchange following reports that Iraq had halted exports from its Ceyhan port in Turkey for up to 24 hours.