Global Policy Forum

Iraq and the United Nations yesterday signed an agreement extending for five months the oil-for-food humanitarian programme, which will allow Iraq to export oil until November 30, the United Nations announced. The deal was another hurdle to surmount before Iraqi oil exports, suspended on June 4, can resume. Baghdad had cut off oil flows to protest discussions of a U.S.-British plan to revamp sanctions.

"Letters were exchanged between Iraq and the United Nations extending the oil-for-food programme for 150 days from July 4," UN spokesman Fred Eckhard said, Iraqi ambassador Mohammed Aldouri told Reuters that the resumption of oil exports was imminent. "Oil will flow soon. Perhaps as early as tomorrow morning," he said.

The 15-nation UN Security Council, after weeks of strife, voted last week to keep the oil-for-food humanitarian programme unchanged until the next phase expires on November 30. The United States and Britain had pushed for a revamp of the sanctions that would ease restrictions on civilian goods imports and tighten them on military-related items.

But Russia, a close ally of Iraq, threatened to veto the measure if it were put to a vote. Iraq exported 2.2 million barrels per day (bpd) before the June 4 suspension. Iraq must now submit to UN officials proposals for selling prices for the crude. Diplomats expect the prices to be submitted by today.

But Baghdad can export crude before the official selling prices have been approved, although no money can exchange hands, the envoys said. Iraq is pushing for a suspension or lifting of the embargoes, imposed after its troops invaded Kuwait. But it will first have to allow UN arms inspectors to return to make sure Iraq no longer has weapons of mass destruction.

"This is a temporary measure and we did it but we are still struggling for the lifting of sanctions in the near future, not the signing of the memorandum of understanding," Aldouri said.

Industry sources say at least four oil tankers are on hand to load at Iraq's Mina al-Bakr port and at least one tanker ready at Ceyhan, Turkey. These are the only two ports allowed to export crude in the UN programme. Iraq supplies five per cent of the world's crude exports when it is at sustainable export capacity of 2.2 million bpd.