Iraq: April 3, 2002

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There is renewed debate over the $2 billion in frozen Iraqi assets in US banks. The US has held onto the money to use as bargaining leverage against Saddam, but pressure is mounting to release the money for civil claims such as Americans involuntarily held at Iraqi factories as "human shields".--Stephen V Cole

Iraq is increasing pumping of oil as part of the latest six month "oil for food" program authorized by the UN. The current program allows $6.1 billion in sales. But 28 percent of that is set aside, mostly for compensating Kuwait for damage during the 1990-91 war, and to cover the UNs expenses for administering the program. The UN gets all the money for the oil sales and authorizes release of cash for approved government purchases. At the moment, some $5 billion in Iraqi government purchase orders are blocked by the UN sanctions committee because the goods in question are thought to have military value. The Iraqi government constantly plays games with the sanctions committee and these contracts in order to try and obtain forbidden military goods. The Kurds in the north, who get 15 percent of the "oil for food" money (the Kurds proportion of the Iraqi population), spend it all on food and purely civilian goods and have a much higher standard of living than the Iraqis under Saddam's control.

Iraq continues to try and get an oil embargo going. Iran has expressed some interest in this, but the rest of OPEC has not. So Iraq is trying to get Iran to join in a cut back in oil shipments. Some 40 percent of Iraqi oil goes to the United States (via middlemen.) But such a partial embargo would just push the price up a bit before other producers increased their production. The loss of oil revenue to hurt the already troubled economies of Iraq and Iran.


 

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