IRAQ follows up threat to halt oil exports

Monday, June 4th 2001, 12:00 am
By: News On 6

BAGHDAD, Iraq (AP) _ Iraq followed up on its threat to halt most oil exports, stopping the flow Monday to all but neighboring Turkey and Jordan.

The indefinite halt was meant to protest a U.N. Security Council decision to extend by one month instead of the usual six months the program under which Iraq can sell oil. Baghdad has chafed at U.N. controls over its oil exports _ its sole foreign exchange earner _ that stem from sanctions imposed for Iraq's 1990 invasion of Kuwait.

War and sanctions have crippled the Iraqi economy, leaving many Iraqis dependent on government rations financed by the U.N.-supervised oil exports. Iraq needs the oil revenue to buy food. It has cash reserves, but it was unclear how long it could survive without further sales. It had been pumping about 3 million barrels a day.

Iraqis see the U.N. oil-for-food program as an attempt to control what the government can buy, including food. The United Nations set up the program to allow Iraq to buy humanitarian goods, but not weapons.

Iraqi Oil Minister Amer Mohammed Rashid said pumping oil through an Iraqi-Turkish pipeline to Turkey's Mediterranean port terminal at Ceyhan stopped on Monday morning. Rashid made a statement in Kirkuk, Iraq's northern oil field and the pipeline's starting point, according to Iraqi TV. Exports through Iraq's southern al-Bakr oil terminal were also shut off, sources close to the Oil Ministry said on condition of anonymity.

The sources said oil exports by road tankers to Turkey and Jordan were not affected.

In New York, U.N. oil-for-food spokeswoman Hasmik Egian confirmed Iraq had stopped pumping oil. As of May 29, Iraq had $2 billion and $2.2 billion in the U.N. escrow accounts that it can be use for humanitarian goods.

In addition, $10.4 billion worth of humanitarian supplies are on order, plus $800 million worth of oil spare parts and equipment, Egian said.

She said similar moves by Iraq in December led to a $2.6 billion loss in revenue and resulted in ``erratic oil exports.''

Saudi Arabian Oil Minister Ali Naimi said Saturday that the Organization of the Petroleum Exporting Countries was ready to cover any shortfall in world oil production following Iraq's halt. Other OPEC nations are pumping at top capacity, but Naimi said Saudi Arabia alone is capable of covering any shortage.

A delegation headed by the Iraqi Oil Ministry's senior undersecretary, Taha Humud Musa, was dispatched to Vienna, Austria, for a regular OPEC meeting that starts Tuesday.

Rashid said Saturday that the Iraqi oil exports would not resume until the Security Council agreed on the usual six-month extension of the oil-for-food program. Rashid said Iraq has produced 3 million barrels of oil per day for the past two years, of which 2.3 million barrels per day were exported under the U.N. oil-for-food program.

The one-month oil-for-food renewal announced Friday was a stopgap to give council members time to study a plan _ proposed by Britain, backed by the United States and rejected by Baghdad _ to amend the sanctions against Iraq.

The so-called smart sanctions proposal would allow civilian goods to flow freely into Iraq _ except for goods that appear on a U.N. list of items that could be used for military purposes.

Iraq wants all sanctions lifted.

In New York, Western diplomats said Monday the United States and Britain would continue to push for a new resolution to overhaul the sanctions. They said they hoped to complete talks by July 3, when the one-month extension expires.