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Iraq Needs To Upgrade Oil Industry

May 17, 1998

BAGHDAD, Iraq (AP) _ Iraq needs spare parts to upgrade its oil industry so it can take full advantage of the U.N. oil-for-food deal, the top U.N. humanitarian official in Iraq said Sunday.

Denis Halliday also said any interruption of exports by Iraq would hamper the plan to import humanitarian goods worth $3 billion when the current six-month phase of the oil plan ends June 3.

Iraq needs to export $4 billion in oil to achieve that import goal, but has repeatedly said it cannot do so unless the U.N. Security Council allows it to buy spare parts for its ailing oil industry.

Halliday agreed, saying: ``The spares are so important for production and pumping capacity. Without them the government will have great difficulty meeting the $4 billion target.″

He also said a halt to pumping oil could hurt the goal. ``There is no reason to think pumping will stop. That will be another complication if it does,″ he told The Associated Press.

The food-for-oil deal, begun in December 1996, is an exception to U.N. trade sanctions imposed on Iraq for invading Kuwait in 1990. The program’s aim is to alleviate the impact of the embargo on the 22 million Iraqis.

Last week Iraq submitted an aid distribution plan to U.N. Secretary-General Kofi Annan for approval. Halliday said he was still concerned about aspects of the plan and was not sure whether the U.N. Security Council would accept the plan.

During the previous phases, Iraq delayed oil exports until it got U.N. approval of its aid distribution plan.

Iraq’s $3 billion plan, Halliday said, is based on the assumption that the Security Council will exempt the additional income in the fourth phase from reparations. In the past, Iraq has only been allowed to export $2 billion every six months.

Iraq is obliged to allocate 30 per cent of all its oil proceeds to a 1991 Gulf War fund to compensate victims of its invasion of Kuwait.

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