Tracking Number:  197746

Title:  "Security Council Approves Iraqi Oil Sales Plan." Seeking to provide for the humanitarian needs of the Iraqi people, the UN Security Council formally authorized a one-time sale of Iraqi oil raise funds for that purpose. (910919)

Translated Title:  Consejo de seguridad aprueba plan ventas. (910919)
Date:  19910919


09/19/91 HSECURITY COUNCIL APPROVES IRAQI OIL SALES PLAN SH(Funds to be used to meet civilian needs) (1240) BYBy Judy Aita BIUSIA United Nations Correspondent

TUnited Nations -- Seeking to provide for the humanitarian needs of the Iraqi people, the U.N. Security Council September 19 formally authorized a one-time sale of Iraqi oil to raise funds for that purpose.

In a resolution adopted by a vote of 13 to 1 (Cuba), with Yemen abstaining, the council also set up an escrow account to be administered by the U.N. to handle the profits from the sale and oversee the purchase and distribution of food, medicine and other humanitarian supplies to the Iraqi people.

In adopting the resolution, the council accepted the recommendations of Secretary General Perez de Cuellar and his staff on how the oil sales should be handled.

After the council voted approval of the oil-for-food plan, which it had authorized in August, U.S. Ambassador Thomas Pickering described the resolution as "a key step in bringing the gulf crisis to a close and having Iraq meet its responsibilities."

Pickering said, "This resolution will implement the international community's concern for providing Iraqi civilians humanitarian assistance. The way is open now to Iraqi authorities to allow that process to begin."

The U.S. ambassador stressed, however, that the resolution provided only limited authorization for the sale of Iraqi oil "within the existing sanctions regime, which remains firmly in place." The oil sale "does not in any way represent a weakening of sanctions," he said.

In drawing up the resolution, the council "made a conscious effort throughout to take Iraq's legal standing into account," the ambassador said. The resolution "sets up mechanisms to implement resolution 706, supports the secretary general in his implementation role, and provides for ongoing review and assessment of the needs and requirements in Iraq."

In August the Security Council (in resolution 706) authorized a special one-time sale of $1,600 million worth of oil. However, the council imposed stringent restrictions, including requiring that the sales be approved by its Sanctions Commission and that the money go directly into a U.N.-administered escrow account.

The U.N. must also supervise the purchase and distribution of the humanitarian supplies to ensure that Baghdad does not divert the money to military uses. According to the council's formula, a little less than $1,000 million will go to purchase the supplies. The remaining $660 million will go toward the cost of the weapons destruction, monitoring the oil sales, return of Kuwait property, the expenses of the border commission, and war reparations.

The resolution adopted September 19 (number 712) sets out the legal basis for the oil sale, stipulating that the oil and oil products sold under the current authorization are immune from any other legal actions or garnishment and asking states to take the steps necessary to ensure the profits are not diverted. It also sets up the escrow account administered by the secretary general, gives diplomatic immunity to the inspectors and other experts needed to carry out the plan, and demands that Iraq allow the U.N. personnel full freedom of movement and all necessary facilities. The council also instructed that the escrow funds be made immediately available to buy food, medicine and other humanitarian supplies.

In a speech to the council before the vote, Iraqi Ambassador Abdul Amir Al-Anbari called the resolution "unrealistic." He said it will lead to instability in the oil market and is an illegitimate intervention in Iraq's bilateral agreements with such countries as Turkey.

Accusing the council of "political hypocrisy," Al-Anbari said that "some members fully realize the impracticality of the plan and are trying to escape their political and humane responsibilities while keeping the Iraqi people under siege and placing the blame on Iraq itself."

But Soviet Ambassador Valentin Lozinskiy pointed out that the resolution "opens the way to early implementation of a plan of action (to help Iraqi civilians), since Iraq's practices have not given the Security Council a basis for removing or reducing the sanctions against it."

And British Ambassador Sir David Hannay, stressing that "this council has never had any quarrel with the people of Iraq," noted that the resolution "achieved the necessary balance" between maintaining sanctions and taking account of concerns for the suffering Iraqi civilians.

In the report now approved by the Security Council, Perez de Cuellar proposed that Iraq immediately sell 515,000 barrels of oil a day for the next six months from its main Kirkuk oil field. The most efficient way of selling the oil is for the Iraqi state oil company, SOMO, to handle the sales instead of the United Nations, he said, noting that Iraq "knows best" how to market its oil and has long-term clients.

The payments, however, will go directly into the U.N. escrow account to be administered by Perez de Cuellar.

The secretary general said Iraq now produces 300,000 to 500,000 barrels of oil a day and has an estimated capacity of 1.45 million barrels a day. He said the facilities in the Kirkuk area in the north and the pipeline to Yumurtalik in Turkey are operational. That would allow about one million barrels of oil a day to be exported.

Using the price of $17 per barrel, he said, Iraq would have to sell 94 million barrels for six months (or 515,000 barrels a day) to earn the $1,600 million the Security Council is allowing.

Perez de Cuellar also asked the council to consider allowing Iraq to sell more than the $1,600 million authorized last month. He pointed out that, according to U.N. estimates, Iraq will still need $800 million in food, medicine and agricultural supplies after the oil sale. (The U.N. has estimated that Iraq needs $1,100 million in food imports, $250 million to re-establish basic health services; $27 million for an emergency mother-and-child feeding program; $120 million for water and sanitation facilities, and $300 million for agricultural supplies.)

The secretary general noted that $666.6 million of the money raised will go to administering the oil sales, the boundary commission, the special commission destroying Iraq's weapons of mass destruction; the return of Kuwaiti property, the start-up of the compensation fund, and the monitoring and distribution of the humanitarian supplies. Thus, only $933.7 million will be available to buy and transport the urgently needed supplies.

Although the council did not increase the amount, the new resolution provides for periodic reviews so that the amount of oil sold can be increased if the needs escalate.

The secretary general also recommended that Iraq purchase and arrange for the delivery of goods with the Sanctions Committee's approval. The committee will then notify the secretary general, who will authorize payment from the escrow account. U.N. inspection agents will monitor the purchases and the U.N.'s special delegate for gulf aid will oversee the distribution.

The Sanctions Committee will monitor the process with the help of independent inspection agents, the secretary general said. Every sales contract between SOMO and a purchaser must include provisions that the contract enter into force only after receiving Sanctions Committee approval; the proceeds are to be deposited into an U.N.-administered escrow account; and the purchaser must open a letter of credit from a reputable international bank for each transaction. NNNN

File Identification:  09/19/91, PO-402; 09/19/91, AE-408; 09/19/91, AR-419; 09/19/91, EP-405; 09/19/91, EU-409; 09/19/91, NE-404; 09/20/91, AS-504
Product Name:  Wireless File
Product Code:  WF
Languages:  Spanish
Thematic Codes:  1NE; 1UN
Target Areas:  AF; AR; EA; EU; NE
PDQ Text Link:  197746; 197898