Sunday, August 6, 2000

Iraq now a top oil supplier to U.S.

Hard sanctions otherwise remain. Some veterans and observers see the renewed dealings as inconsistent.

By Andrea Gerlin INQUIRER STAFF WRITER

LONDON - Ten years after Iraq invaded Kuwait, touching off the Persian Gulf war and prompting an international oil embargo, Iraq has returned to its position as one of the United States' leading oil suppliers.

Last year, the nation that Washington considers a rogue regime was the fifth-largest source of U.S. oil imports, and the United States imported more oil from Iraq than it did before the gulf war.

Directly or indirectly, American oil companies bought an average of 725,000 barrels of Iraqi oil a day last year, accounting for 7.3 percent of U.S. imports, according to the Department of Energy. Only Canada, Saudi Arabia, Venezuela and Mexico supplied more oil to the United States last year.

And multinational oil companies are preparing for the time when sanctions are lifted and they have unrestricted access to Iraqi oil, industry analysts say.

Ten years ago today, on Aug. 6, 1990, the United Nations imposed broad economic sanctions against Iraq for invading Kuwait four days earlier, forbidding virtually all trade with the gulf nation. Most of those sanctions remain in place today.

In 1996, the United Nations revised the sanctions to permit oil sales under an oil-for-food program to offset the hardship that sanctions were creating for Iraqi citizens. Under the U.N. resolution, Iraq was allowed to sell up to $5.2 billion of oil on the world market every six months. The number of barrels that it could sell was determined by the price it received, ranging from $19 to $24 a barrel during the last 12 months.

At $20 a barrel, the last 12 months' imports from Iraq to the United States were worth about $4.7 billion. The limit on how much oil Iraq could sell was lifted in 1999.

Money from the sales is placed in escrow accounts monitored by the U.N. Office of the Iraq Program and used to buy food, medicine and oil-production equipment, said Egian Hasmik, a program spokeswoman. The United States has been the largest contributor to those coffers, buying 35 percent of Iraq's exports last year.

The United States bought 265 million barrels of Iraqi oil in 1999, or about one barrel for every American. In the first five months of 2000, the United States purchased 75 million barrels of oil, at a rate of about 500,000 barrels a day.

Iraq's position as a major American oil supplier is a little-noticed exception to the United States' hard-line foreign policy against Iraq. Even the energy industry finds the American purchases surprising.

"If it's not ironic, it's basically hypocritical," said Alexander Wostmann, who publishes an online energy newsletter based in Germany, Alexander's Oil & Gas Connections. "On the one hand, the Americans are making life difficult for the Iraqis by bombing them, and yet they buy the oil."

And some American veterans' organizations said they were unaware.

"I find it a little bit surprising that we get that much oil from the Iraqis," said Bruce Harter, a 27-year Marine Corps veteran who is now the director of national security and foreign affairs for the Veterans of Foreign Wars in Washington. "My preference would be not to buy anything from them until they start cooperating and complying with the sanctions."

A spokeswoman for the U.S. State Department's economic bureau, Rhonda Shore, said that Iraq is "not being paid for the oil; they're getting food instead" and that importing Iraqi oil under the U.N. program is consistent with U.S. foreign policy.

"I think the U.S. is concerned with the people of Iraq and alleviating the hardship, rather than the leadership," she said.

The Iraqi government is similarly sanguine about doing business with the United States.

"Why not?" said Osama Altyi, an aide to Iraq's ambassador to the United Nations in New York. "I know it's kind of contradictory, but under the U.N. program there's no restriction as to who buys it."

The Iraqi ambassador, Saeed Hasan, said Iraq makes most of its oil contracts with Russian, French and Malaysian companies, who resell the commodity to American companies.

"We cannot control the end-user of the oil," he said.

Iraq, in return, buys some of the rice and grain and other goods that it purchases under the U.N. program from U.S. companies.

Since the oil-for-food program began in 1996, Iraq has exported more than 1.92 billion barrels of oil valued at more than $31.1 billion, according to the United Nations. Of these funds, 66 percent went to Iraq's humanitarian needs, 30 percent to a compensation fund for Kuwaiti citizens and businesses, and 3 percent to pay U.N. costs.

Hasan said that the Iraqi government has met the United Nations' conditions and wants the sanctions lifted and the oil-for-food program abandoned. He said the embargo has led to the deaths of 500,000 Iraqi children from starvation and malnutrition since 1991, a condition he likened to "genocide."

"There is no legal reason for the continuation of sanctions on Iraq other than the political will of the United States to topple the Iraqi government," Hasan said.

But the Clinton administration says Saddam Hussein has not complied with U.N. conditions (which require Iraq to respect the boundaries of Kuwait, account for missing Kuwaiti people and property, refrain from making weapons of mass destruction, and refrain from supporting terrorism) and must remain isolated.

"He [Hussein] has always had the option to comply with the U.N. requirements, cease to be a military threat to his neighbors, end his people's isolation, and enable Iraq to once again become a normal, law-abiding country," wrote Secretary of State Madeleine K. Albright in an article for the Financial Times of London last Tuesday. "But he has stubbornly refused to follow this path. Instead, he has chosen to defy the U.N., rebuild his military to the extent he can, and exploit the suffering of Iraqi civilians in order to gain sympathy for lifting sanctions."

An end to the U.N. resolution that imposed sanctions in 1990 is unlikely soon. Only three of 15 U.N. Security Council members - Russia, China and France - have spoken in favor of lifting them.

Iraq's oil fields are believed to contain at least the second-largest reserves in the world, said Wostmann. He said that Iraq is estimated to have 120 billion barrels of oil in the ground, fewer than Saudi Arabia's 216 billion barrels but far ahead of other major producers.

Multinational oil companies are hankering for unfettered access to the Iraqi supply. Keith Morris, an analyst at BNP Equities in London who follows the oil industry, said that some oil companies have "tacit agreements" with Iraq's current regime to proceed with projects whenever the sanctions are lifted.

"It's fair to say that all of the oil companies - with the possible exception of U.S. companies due to the sanctions - would certainly be keeping their seats warm at the table," Morris said.

Mike Shanahan, a spokesman for the American Petroleum Institute, an industry trade group based in Washington, did not disagree.

"Oil companies around the world - especially given the demand these days - are looking for sources everywhere," he said.

http://www.phillynews.com/content/inquirer/2000/08/06/front_page/IRAQ06.htm

-- Martin Thompson (mthom1927@aol.com), August 07, 2000

Answers

Ironic!

-- Uncle Fred (dogboy45@bigfoot.com), August 07, 2000.

What a slap in the face to the veterans who served in that war. Saddam must be laughing himself silly!

It's time for the U. S. to start developing and using alternative fuels, such as crop fuel. The oil industry has a vested interest in not letting this happen, and Congress and the Administration are too addicted to their soft-money bribes.

I think the next time this country has to go to war we should send the politicians!

-- K (infosurf@yahoo.com), August 07, 2000.

It's important not to fall prey to the
propaganda when this country goes to war.
We did not invade Iraq because of its
incursion into Kuwait, but for oil. Iraq
had complained repeatedly that Kuwait was
stealing its oil in the Rumalah oil fields
by using oil drilling rigs that drilled at
a 450 angle under the border. BTW George
Bush is connected with the company that
sold this equipment to Kuwait.

With a half of million children already
killed from the sanctions, it has already
surpassed the bombing in deaths.

If people believe the lies that are reported
in the media, then either they do not use
the internet to break this monopoly on the
news or they are too chauvinist to care.

-- spider (spider0@usa.net), August 07, 2000.

Just wondering ..... Could it be possible for Iraq to place poisonous contaminates in the crude they know we buy , which on combustion are unwittingly released into the air of our our highways and cities ? Sadam " Insane " seems to like poison gas weapons . After all , he didn't hesitate to use them on his own people ; why not on the " Great Satan's " people . This way he gets the money he needs to keep the ' lid on ' at home while atacking the " enemy ". Have a minor in chemistry , but don't know if the crude we purchase in such quanities would be checked for "unusual " compounds. The main worry that we all know would be checked in quality control is sulfur content. Just what the cracking temps effect would be is the mystery , IMHO . Eagle

-- Hal Walker (e999eagle@freewwweb.com), August 07, 2000.