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U.S. and Britain to Tighten Pricing of Iraqi Oil
BAGHDAD, 25 Aug (IslamOnline & News Agencies)- The United States threw its weight behind a British proposal to tighten procedures for pricing Iraqi oil, raising prospects for a new clash with Baghdad at the United Nations after a July U.K. proposal to change the sanctions regime failed, news agencies reported Saturday.
According to the Washington Post, Iraq and Russia oppose any effort to impose changes in a system that diplomats allege has allowed Baghdad to rake in an illegal 10- to 15-cent surcharge on every barrel of oil it sells.
"In principle, we don't like any change in the existing scheme," Gennady Gatilov, Russia's deputy representative to the United Nations was quoted by the daily as saying. "Oil exporters will experience difficulties in signing and fulfilling contracts."
Under the United Nations' "oil for food" program, Iraq is allowed to export as much oil as it desires. But, the revenue must go into a U.N. account and be spent under U.N. supervision, to purchase humanitarian supplies and to pay compensations for parties claiming damage because of the Iraqi invasion of Kuwait in 1990.
Iraq complains the program has failed in fulfilling the essential needs of the Iraqi people.
According to Western diplomats, Iraq has tried to set artificially low prices on its oil and to favor buyers who are willing to pay secret surcharges into offshore bank accounts, circumventing the United Nations' control over Iraqi oil revenue, the middle eastern Al Bawaba news Web site reported.
At present, Iraq and the United Nations jointly set oil prices every 30 days. But, Baghdad also has been permitted to negotiate reductions in its prices whenever the world price for oil drops, ensuring that traders can earn enough of a profit to pay kickbacks.
Britain originally wanted a price review every ten days, but on Wednesday, U.S. State Department spokesman Philip Reeker said Washington had suggested a 15-day interval as a compromise.
Agence France-Press (AFP) quoted diplomats as saying that Britain agreed to postpone until next month a change in the way the U.N. sets the official price of Iraqi oil, so sales can resume under present conditions until August 31.
Iraq had been without an official price since Tuesday after Britain called for more frequent price-setting, claiming that this would limit Iraq's ability to exploit fluctuations in the world market.
One U.N. official said the lack of an agreed price had no immediate effect on exports under the United Nations oil-for-food program, but traders could be put off if uncertainty persisted.
Iraq at present sells about 2 million barrels a day, a volume large enough to cause severe disruption if supplies were halted in a tight market.
Under current arrangements, independent oil overseers recommend an official price to the U.N. Security Council's sanctions committee every 30 days after consultations with Baghdad's state oil marketing organization (SOMO).
The British move came after two months of its failure to obtain support for a plan to change the 11-year-old Iraqi sanctions regime because of what it called the "unjustified, negative and national" opposition shown by Russia.
If adopted, the reforms would have included scrapping the embargo on trade with Iraq while tightening controls to prevent crude oil smuggling and illegal arms imports in addition to technology.
The U.N.-imposed embargo against Iraq has resulted in the suffering of the people of Iraq due to the lack of essential daily requirements such as food and medicine.
According to a documentary video, "Silent Weapon: The Embargo Against Iraq", directed by Charles R. Ausherman, the embargo is being used as part of an overall strategy by the West to control the people and resources of the Middle East.
The video says the U.S.-led blockade of basic necessities for the sustenance of human life in Iraq has been directly responsible for families living and dying daily in unimaginable desperation.
It added that the desire for the U.S. government to contain the regime of Iraqi President Saddam Hussein and maintain control over oil in the Middle East drives a policy that considers the impoverishment, disease, and death of hundreds of thousands of Iraqis to be an acceptable price to pay.
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