U.S. STANDS FAST ON IRAQI SANCTIONS

The Clinton administration expects to persevere in its campaign to retain the international ban against Iraqi oil exports.

The United Nations Security Council is under increasing pressure to relax the ban and is due to routinely review it this week.

Three of the five permanent security council members-Russia, France, and China-want the ban lifted. The U.S. and U.K. want it kept in place.

SANCTIONS ENDORSED

U.S. Ambassador Madeleine Albright recently visited other countries sitting on the 15 nation council and secured pledges from the majority required-nine-to prevent the economic sanctions from being lifted.

If necessary, the U.S. said it would exercise its veto power on the council to retain the oil export ban, imposed after Iraq invaded Kuwait in 1990.

The U.S and U.K. argue that the U.N. should not change the sanctions until Iraq complies with a series of U.N. resolutions.

Next month, U.N. inspectors are expected to deliver a crucial report regarding Iraq's compliance with resolutions requiring it to dismantle its weapons industry

In visits with leaders of other nations on the security council, Albright shared satellite photographs showing Iraqi President Saddam Hussein is rebuilding missile and chemical weapons plants in violation of the resolutions.

France and Russia argue that the oil sanctions are creating shortages of food and medicines that punish Iraqi civilians.

Although the ban blocks all trade with Iraq, it does allow exports totaling $1.6 billion/year if the U.N. oversees the oil sales and verifies that the proceeds are used for humanitarian purposes. Iraq has balked, saying such oversight would violate its sovereignty.

Albright said if Iraqis are suffering, their government could do more to help them. U.S. intelligence shows in the last 2 years the Iraqi regime has spent as much as $2 billion to rebuild 17 palaces and build 48 new ones for government leaders.

But Albright conceded the U.S. would agree to change the resolutions to allow increased oil sales with less monitoring if the proceeds were used for humanitarian purposes.

EXPORT RESUMPTION

Anticipating eventual lifting of the sanctions, foreign firms have been assessing what must be done to restore Iraq's oil productive capacity (OGJ, Feb. 27, Newsletter).

Iraq might be able to export as much as 1.5 million b/d at first and perhaps double that within a few years. That is oil the world market doesn't need.

Deputy Energy Sec. Bill White underscored that fact last week while testifying before the Senate energy committee on the state of the U.S. oil industry.

White stressed that the U.S. wants the ban maintained solely to force Iraq to comply fully with the U.N. resolutions, and domestic considerations aren't a factor.

But he said the administration's resolve on the issue has done more to benefit "the health of the oil industry in the near future than anything else I can think of."