Global Policy Forum

By Badrya Darwish

A Kuwaiti delegation would leave for France to meet with officials to discuss the Paris proposal regarding a proportional reduction in payment to the Kuwaiti compensation fund from the Iraqi oil revenue, informed sources revealed. The proposal called for a reduction of 5 per cent from 25 per cent to 20 per cent. The sources added that the delegation would leave on this foreign trip this week without informing the media.

The sources said the delegation would listen directly to the French explanation regarding this proposal after obtaining a preliminary explanation from the French ambassador to Kuwait during his meeting with Foreign Ministry Undersecretary Khalid Al-Jarallah last week. The sources said that an official letter from Acting Premier and Foreign Minister Sheikh Sabah Al-Ahmad Al-Sabah outlining that a reduction of percentage payments would harm Kuwait more than any other party, would be handed to the French foreign minister by the delegation.

The letter would remind Paris that Kuwait reluctantly accepted the reduction in percentage payment from 30 per cent to 25 per cent to satisfy France and Russia who presented that proposal. The sources said, Kuwait received positive indicators from Paris that France would not go ahead with its proposal, but intends to guarantee the success of the proposed smart sanctions which were presented by Britain with the backing of the US. Paris reminded Kuwait that they supported the British-American proposal to impose smart sanctions, which made Baghdad launch a scathing media attack on France.

France confirmed that it would drop its proposal if there were better alternatives. The sources said Kuwait had asked London and Washington to reject the French proposal in case it was discussed in the Security Council so that it would not harm Kuwait's interests and its ability to meet its commitments in the future. The sources indicated that both Washington and London gave Kuwait positive responses.

Meanwhile, French ambassador to Kuwait Patrice Paoli called in remarks published yesterday for "careful reading" of consultations currently held at the UN Security Council on a French proposal to cut war compensations from 25 per cent to 20 per cent. Paoli, in remarks to the media said: "These consultations have not been finalised yet and I recommend careful reading of what is being said or written because the truth is complex in this regard." He was alluding to a French proposal, one of several ideas that have been pondered by representatives of the superpowers within quarters of the Security Council, to try find means of softening the blockade on Iraq, with the exception of imported materials that may be used for military purposes.

Paoli noted that Paris played a positive role in favour of Kuwait in September 2000, when the members of the Security Council unanimously agreed to compensate Kuwait Oil Company with approximately $ 16 billion. According to press reports, Kuwait has rejected the French proposal and cautioned of the negative impact on the claimants, individuals and institutions. The UN, through specialised agencies, has compensated Kuwaiti and non-Kuwaiti nationals and institutions for damages resulting from the 1990 Iraqi aggression on the state of Kuwait.

Acting Prime Minister and Foreign Minister Sheikh Sabah Al-Ahmad Al-Sabah has asserted that there is no change in the French stance with regard to Kuwait's causes, and said that the Gulf state would hold contacts with France and other member states of the Security Council to ensure Kuwaiti rights. The council member states were also debating several other ideas. Washington proposed impositions of 30 per cent, the proportion that was in effect in the 8th phase of the oil-for-food agreement before expiry of the 9th phase on June 3. The council member states have recently approved extension of the oil-for-food programme for a month, pending further consultations on prospects of imposing "smart sanctions," designed to tighten the blockade on imports of materials that could be used for Baghdad's armament programme.

Elsewhere, more than 100 flatbed trucks haul huge canisters of Iraqi fuel into Turkey almost every day, part of a massive operation that spans several countries and funnels an estimated $ 1 billion a year into Saddam Hussein's pockets. The United States is pressing to crack down on that trade, which violates UN sanctions. But at the bargain price that Saddam is offering his buyers, the effort may be futile, Turkish oil transporters and analysts say. "If they cut it one way, it will come out the other way," said Bulent Aliriza, an analyst at the Washington-based Centre for Strategic and International Studies. "It is almost impossible to nail the door shut." Ending the trade would hurt US allies like Jordan and Turkey and devastate the economy of an autonomous Kurdish enclave in northern Iraq, where the revenue is one of its only sources of income. Washington has long regarded the Kurds, who have fought Saddam for decades, as key to any anti-Saddam coalition. "The Americans are caught," said Ilnur Cevik, the editor in chief of the Turkish Daily News. "The US, while trying to stop the border trade to scuttle Saddam, has to allow the trade to help the Kurds."

If you cut the trade "you finish off the Kurds and the so-called opposition," Cevik added. The importance of the sanctions-busting trade to Iraq was highlighted last Monday, when Iraq announced that it was cutting off its UN-monitored oil exports but would continue to ship to neighbours who pay the government in violation of UN controls. At Habur, the only border crossing between Iraq and Turkey, hundreds of trucks laden with Iraqi diesel waited Tuesday in a 2-mile-(3-kilometre-)long line. In the first five days of June, 600 of the trucks crossed the border, said Abdullah Erin, the official in charge of the gateway. Each truck carries about 1,300 gallons (4,940 litres).

"Iraq has a very successful programme of sanctions-busting," said Toby Dodge of the Royal Institute of International Affairs in London. "It's partially how the regime gets its money." Before the cutoff, Iraq sold some 2 million barrels per day under the UN-monitored programme, which requires that the money be spent on humanitarian goods like food and medicine, and as reparation for Iraq's 1990 invasion of Kuwait.

The amount of oil that Iraq sells directly to its neighbours is unclear but oil experts and diplomats say that it is likely about 250,00 barrels per day. The neighbouring countries skirt sanctions by paying Iraq directly. Some 150,000 barrels a day flow through Syria, while another 100,000 barrels of oil per day go to Jordan and Turkey, estimates Nathaniel Kern, an analyst with Foreign Reports Inc. a Washington-based oil consultancy company. Kern said Iraq charges around $ 16 per barrel, a 30 per cent discount to the price that the nation charges through the UN programme. Traders said the discount was not that great, but gave no figures. The Turkish trade has been falling recently, but truckers and analysts say that is due more to Turkey's economic crisis and complaints from oil companies about unfair competition than due to any crackdown. Syria denies that it is illegally importing Iraqi oil, saying that it is only bringing in Iraqi crude to test an old pipeline from Iraq. Oil analysts, however, say that Syria is importing Iraqi oil and masking those imports by using the oil at home and exporting an equal volume of its own oil. Turkey emphasised its dependence on the trade, which is estimated to support some 45,000 truck drivers in the southeast, when Prime Minister Bulent Ecevit visited the region yesterday and vowed to increase the trade.

"We know that the primary way to increase the region's income is the diesel trade," Ecevit said in Sirnak, an impoverished town near the Iraqi border where many of the truckers live. "We have decided to expand this, not narrow it," Ecevit added.

Turkey claims to have lost $ 30 billion to $ 40 billion in trade since sanctions were imposed in 1990. A new border gate is expected to be opened within two years, Foreign Minister Ismail Cem said Thursday.