By the OGJ Online Staff
WASHINGTON, DC, Nov. 7 -- US efforts to retool the United Nations' oil-for-aid program are being put on hold for at least 6 months, industry and US government sources said.
Proposed last summer, the US plan would have relaxed some economic embargos against Iraq only if the UN were allowed to perform more vigorous weapons inspections and restrict military equipment (OGJ Online, July 19, 2001).
The aid program is the only legal way Iraq now can sell oil, the country's key revenue source. But US officials have wanted to change the program for several months because they suspect Iraq has been able to smuggle enough oil out of the country to start rebuilding its weapon stockpile.
Nevertheless, US officials have decided that for diplomatic reasons it would be wise to avoid a dispute with Russia, a country that opposes the US sanction reform plan. Russia has become a key ally in the US military campaign against the Taliban in Afghanistan.
Last July, the UN extended the aid program for 5 months following a month-long impasse with Iraq and Russia over the US "smart" sanctions plan. During the summer Iraq refused to sell its 2 million b/d export quota until the US withdrew its sanctions plan. About 1 million b/d reaches US markets.
Instead of the US proposal, the UN Security Council on Dec. 3 is expected to seek a 6-month renewal of the current UN-administered program, which earmarks oil revenue for food, medicine, and certain supplies.
US officials say they will continue to resist efforts by Russia, France, and China to repeal a decade-old trade embargo against Iraq that the UN imposed following the invasion of Kuwait.
