G-khan
03-28-2003, 01:58 PM
Dan Ackman, 03.28.03, 9:10 AM ET
http://www.forbes.com/home_asia/2003/03/28/cx_da_0328topnews.html
NEW YORK - With a war on, Iraq is surprisingly still in position to deliver oil, and while the United Nations may be in no position to deliver food, the U.N. Security Council is at least near an agreement that would permit U.N. agencies to do so as part of the oil-for-food program.
The agreement will allow delivery of $10 billion in food and other humanitarian aid to Iraq, diplomats say. These shipments would be financed by Iraqi oil that is already out of the ground and stored at the Turkish Mediterranean port of Ceyhan, the end of a pipeline from Iraq's northern Kirkuk fields.
The resolution could be voted on as early as today and is being hailed as a resumption of a consensus about Iraq policy after the acrimonious debates failed to lead to an agreement before the war.
For the U.N., this is fast work: the international body first proposed an oil-for-food aid program in 1991. But various resolutions were blocked by Iraq itself and the program did not get under way until 1996; it has been expanded to include medicine and items necessary for infrastructure, including spare parts for the oil industry.
Since the start, $26.8 billion worth humanitarian supplies and equipment have been delivered to Iraq under the program, according to a U.N. report. The program was stopped in recent weeks technically because U.N. officials had to leave the country and therefore could not determine where the food, medicine and other aid were going.
Today's resolution would give U.N. Secretary General Kofi Annan 45 days to oversee the relief shipments. There are, of course, serious problems on the ground. Oil-field firefighters are dousing well fires and removing booby traps at the huge Rumaila fields near the Kuwait border. A military spokesman at U.S. Central Command in Qatar estimated that some oil production could resume in six weeks.
When those shipments resume, the U.N. agreement will apparently allow them to be sold. But there remains a substantial disagreement about what to do with the oil in a post-Saddam Hussein Iraq. The Washington Post reports that France and Russia are determined to head off the creation of a postwar Iraqi oil ministry allied with the United States that might tear up current French and Russian contracts for development of Iraq's vast oil reserves.
Russia and Syria have insisted on wording in the resolution that would not legitimize the war, presuppose a change in Iraq's leadership or give the United States control over the escrow account, which contains billions of dollars built up from past shipments. Russia was also concerned about Iraqi sovereignty over oil resources.
This concern led President George W. Bush, speaking at a Camp David press conference, to say the oil-for-food program "must not be politicized."
Politicized or not, the whole Iraq issue has continued to spur debate at the U.N. while war rages in Iraq itself. More than 80 nations spoke at the first open meeting of the bitterly divided council since the start of bombing. That debate included denunciations of the United States and its allies by Iraq's Mohammed Al-Douri, which led to U.S. Ambassador John Negroponte's walkout of the council Thursday.
But the denunciations and the walkouts did not stop an agreement. "We are glad to have found, I hope, a resolution that accommodates the problems of most of the people involved," said Germany's U.N. Ambassador Gunter Pleuger, who chaired a week of acrimonious negotiations. He was referring to the diplomats in New York.
As for the impoverished Iraqis, Pleuger said the oil-for-food program was "the biggest humanitarian assistance program in the history of the U.N, and that quick implementation was crucial to preventing a humanitarian disaster.
Fear of oil shortages and concerns about the war have led to oil price spikes starting in the months leading to the U.S.-led invasion. While prices have generally come down since the actual shooting started, they have risen on news that the war might take longer than expected for the U.S. to win. One such surge happened yesterday when crude oil for May delivery crossed the $30-per-barrel threshold for the first time in more than a week, closing up 6.1% at $30.37 per barrel. The increase was the third in four days this week.
While Saudi Arabia and other Gulf states have added productions to avoid any actual shortages, Iraqi oil is still flowing to Ceyhan, according to the Post. But storage tanks there are nearly full, and no one wants take the financial risk of chartering a tanker to move oil from the port when that tanker might be barred from loading for political reasons.
The immediate effect of the resumption of the oil-for-food program might be the dissipation of that political risk. The food and aid aspects of the program could resume when the military situation allows.
http://www.forbes.com/home_asia/2003/03/28/cx_da_0328topnews.html
NEW YORK - With a war on, Iraq is surprisingly still in position to deliver oil, and while the United Nations may be in no position to deliver food, the U.N. Security Council is at least near an agreement that would permit U.N. agencies to do so as part of the oil-for-food program.
The agreement will allow delivery of $10 billion in food and other humanitarian aid to Iraq, diplomats say. These shipments would be financed by Iraqi oil that is already out of the ground and stored at the Turkish Mediterranean port of Ceyhan, the end of a pipeline from Iraq's northern Kirkuk fields.
The resolution could be voted on as early as today and is being hailed as a resumption of a consensus about Iraq policy after the acrimonious debates failed to lead to an agreement before the war.
For the U.N., this is fast work: the international body first proposed an oil-for-food aid program in 1991. But various resolutions were blocked by Iraq itself and the program did not get under way until 1996; it has been expanded to include medicine and items necessary for infrastructure, including spare parts for the oil industry.
Since the start, $26.8 billion worth humanitarian supplies and equipment have been delivered to Iraq under the program, according to a U.N. report. The program was stopped in recent weeks technically because U.N. officials had to leave the country and therefore could not determine where the food, medicine and other aid were going.
Today's resolution would give U.N. Secretary General Kofi Annan 45 days to oversee the relief shipments. There are, of course, serious problems on the ground. Oil-field firefighters are dousing well fires and removing booby traps at the huge Rumaila fields near the Kuwait border. A military spokesman at U.S. Central Command in Qatar estimated that some oil production could resume in six weeks.
When those shipments resume, the U.N. agreement will apparently allow them to be sold. But there remains a substantial disagreement about what to do with the oil in a post-Saddam Hussein Iraq. The Washington Post reports that France and Russia are determined to head off the creation of a postwar Iraqi oil ministry allied with the United States that might tear up current French and Russian contracts for development of Iraq's vast oil reserves.
Russia and Syria have insisted on wording in the resolution that would not legitimize the war, presuppose a change in Iraq's leadership or give the United States control over the escrow account, which contains billions of dollars built up from past shipments. Russia was also concerned about Iraqi sovereignty over oil resources.
This concern led President George W. Bush, speaking at a Camp David press conference, to say the oil-for-food program "must not be politicized."
Politicized or not, the whole Iraq issue has continued to spur debate at the U.N. while war rages in Iraq itself. More than 80 nations spoke at the first open meeting of the bitterly divided council since the start of bombing. That debate included denunciations of the United States and its allies by Iraq's Mohammed Al-Douri, which led to U.S. Ambassador John Negroponte's walkout of the council Thursday.
But the denunciations and the walkouts did not stop an agreement. "We are glad to have found, I hope, a resolution that accommodates the problems of most of the people involved," said Germany's U.N. Ambassador Gunter Pleuger, who chaired a week of acrimonious negotiations. He was referring to the diplomats in New York.
As for the impoverished Iraqis, Pleuger said the oil-for-food program was "the biggest humanitarian assistance program in the history of the U.N, and that quick implementation was crucial to preventing a humanitarian disaster.
Fear of oil shortages and concerns about the war have led to oil price spikes starting in the months leading to the U.S.-led invasion. While prices have generally come down since the actual shooting started, they have risen on news that the war might take longer than expected for the U.S. to win. One such surge happened yesterday when crude oil for May delivery crossed the $30-per-barrel threshold for the first time in more than a week, closing up 6.1% at $30.37 per barrel. The increase was the third in four days this week.
While Saudi Arabia and other Gulf states have added productions to avoid any actual shortages, Iraqi oil is still flowing to Ceyhan, according to the Post. But storage tanks there are nearly full, and no one wants take the financial risk of chartering a tanker to move oil from the port when that tanker might be barred from loading for political reasons.
The immediate effect of the resumption of the oil-for-food program might be the dissipation of that political risk. The food and aid aspects of the program could resume when the military situation allows.