US, Britain want power to spend Iraq oil money

10.00am - By EVELYN LEOPOLD

NEW YORK - The United States is proposing to end UN sanctions on Iraq and give Washington and its allies the power to spend Iraq's oil money to help the Iraqi people.

The eight-page draft resolution, revealed on Thursday (New York time) would remove all sanctions imposed on Iraq in 1990 except for an arms embargo. This would not be conditional on a report by UN arms inspectors as demanded by other Security Council members.

The draft, obtained by Reuters and circulated to key Security Council members before being formally introduced on Friday, would phase out the current UN oil-for-food humanitarian programme over four months.

It would allow Iraq to sell oil again without UN controls. The monies would be deposited in an "Iraqi Assistance Fund" for humanitarian purposes and reconstruction.

This new institution would have an advisory board that would include envoys from the United Nations, the International Monetary Fund and the World Bank.

But decisions on where to spend the money would be made by the United States and Britain and their allies in the war that deposed President Saddam Hussein, in consultation with an Iraqi interim authority until an Iraqi government is established.

The draft does not call for the return of UN arms inspectors to verify that Iraq no longer has weapons of mass destruction, as specified in some 16 earlier UN resolutions.

US Ambassador John Negroponte, who was briefing council members, said the Bush administration did not see "any role for the UN (inspectors) for the foreseeable future."

"The coalition has taken over the process of inspecting in Iraq for weapons of mass destruction," he told reporters.

The document asks Secretary-General Kofi Annan to appoint a special coordinator to supervise UN humanitarian assistance and "reconstruction activities in Iraq."

This person would operate alongside the United States and Britain, designated as occupying powers, who would have authority in Iraq for 12 months.

The coordinator would play a nominal role in establishing governing institutions, promoting human rights, legal and judicial reforms, and helping build an Iraqi police force.

France, Russia, China and even staunch ally Britain had advocated a stronger UN role, which they said was needed to give a US-backed Iraqi authority international legitimacy.

The resolution would phase out the UN oil-for-food humanitarian programme over four months but honour "priority civilian goods" in contracts already approved. It was unclear whether all approved contracts for supplies, including $1.6 billion ($2.85 billion) in Russian contracts, would be fulfilled.

Without adoption of the resolution, no Iraqi or US entity in Baghdad has the legal authority to export oil. The United States wants the measure passed by June 3, when the oil-for-food programme needs to be renewed.

The programme was designed to ease the impact of sanctions imposed when Saddam Hussein's troops invaded Kuwait in August 1990. It allowed Iraq to sell oil to purchase food, medicine and other civilian goods under UN supervision. Oil revenues are deposited into a UN escrow account to pay suppliers.

The oil-for-food fund now has some $13 billion in outstanding contracts for food, medicine and other civilian goods ordered by the ousted government of Saddam Hussein.

In Moscow, the Interfax news agency quoted Deputy Foreign Minister Yuri Fedotov as saying Russia believed the sanctions on Iraq should be cancelled but that no new UN Security Council resolution was needed."

- REUTERS

Herald Feature: Iraq