Global Policy Forum

By Evelyn Leopold

The United States and Britain proposed on Monday that foreign companies be allowed to provide services for civilian projects in Iraq but not make investments in Baghdad's oil industry as France wanted, according to a revised resolution on Iraqi sanctions.

But the new draft, which makes minor changes, is not different enough from the previous one to please Iraq, whose officials said they would not deal with it. Baghdad has shut off oil sales to protest the so-called "smart sanctions.''

France and others are lobbying for foreign investment in Iraq's oil industry, which countries like Ireland also support. But the United States and Britain still oppose this.

Other provisions altered in the text, include alternatives for money Baghdad has to pay for compensation to Gulf War victims. The draft also gives less detail on how to monitor Iraq's borders to stop smuggling and calls for consultations with Jordan, Syria and Turkey.

The new measure says that services, previously prohibited, would include maintenance of equipment, such as water pumps or vehicles, by companies that sold Iraq the items in question.

At issue are U.S.-British proposals that would ease bans on civilian supplies going into Iraq. But the plan would continue to bar military materiel outright and draw up a list of items that could have military uses for council approval.

The controversial list, which Russia, France and China say is far too long, is being discussed in Paris on Tuesday and Wednesday by technical experts from these three nations and the United States and Britain.

All five nations are permanent security council members with veto power and Iraq has urged Moscow, which has reservations about the entire resolution, to use its negative vote to kill the measure.

The U.S.-British plan is a revision of the oil-for-food program, an exception to the sanctions imposed in August 1990 when Iraq invaded Kuwait. That program allows Iraq to sell oil and order food, medicine and other goods under U.N. supervision.

The United States and Britain hope to complete negotiations by July 3, the date set in a previous resolution that extended the U.N. oil-for-food program for Iraq by a month.

The draft still calls for each of Iraq's neighbors including Syria, Turkey and Jordan, to be allowed to purchase up to 150,000 barrels a day of Iraqi oil.

The effort to stop trading outside of the oil-for-food program is now less detailed and no longer speaks of border monitoring. Instead, it leaves Secretary-General Kofi Annan to make recommendations as in the original draft and stresses he has to consult with the neighboring states.

Annan, in both versions of the resolution, also has to draw up recommendations on selecting companies and trading organizations to purchase Iraqi oil. The purpose of this provision is to eliminate traders who are paying Iraq an illegal surcharge outside of the U.N. system.

The new draft also signals the U.S.-British willingness to allow Tunisia and Jordan to return Iraqi aircraft they have held since the Gulf War. This provision is still in dispute but a previous one saying Tunisia and Jordan should sell the planes has been deleted from the text.

On the compensation fund, the new resolution reflects a dispute over whether Iraq should continue paying 25 percent of its oil revenues to compensate Kuwait and other Gulf War victims.

France wants this reduced to 20 percent and the resolution also gives an alternate rate of 30 percent. But diplomats said this is for negotiating purposes and the final figure would be no higher than 25 percent.