Iraq extends anti-dollar campaign to oil

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Iraq extends anti-dollar campaign to oil

London (Reuters) - Sanctions-bound Iraq plans to ask customers to pay in euros for its oil, apparently extending a politically-inspired campaign to end dealings in the U.S. greenback. The Opec producer is consulting the United Nations about the possiblility of making the switch from dollar payments, an Iraqi oil official said by telephone yesterday. "Iraq this month has asked the U.N. to open another separate euro account in addition to the present dollar account," the official said from Baghdad.

"From November all letters of credit for the exports must be opened in euros and payment made in euros," the official said.

A Western diplomat said he did not anticipate any objections to the setting up of a euro account for Iraq, whose revenues from an oil-for-food deal with the United Nations are deposited in a dollar U.N. escrow account in a French bank in New York.

"If it's just a case of setting up a new account, I don't see why there would be a problem," he said.

A major lifter of Iraqi crude oil said the potential euro payment switch "shouldn't create a problem for anyone. They will just have to define the conversion rate."

The Iraqi government decided late last month to halt trading with the dollar and replace it with the euro or any other currency.

The Iraqi government, in a statement after a September 14 cabinet meeting which originated dropping the dollar, said the move was to confront the "daily American-Zionist aggression", an apparent reference to U.S. support for sanctions.

The Iraqi official said he knew nothing about any plan to halt the exports, which amount to five percent of crude traded internationally, if the United Nations declined to cooperate.

Abdulillah Putrus, deputy governor of the Iraqi Central Bank, was quoted by the weekly al-Zawra as saying Baghdad might halt oil exports unless a bank account holding its UN- monitored revenues was changed from dollars into euros.

The reported statement runs counter to an announcement by Iraqi Vice-president Taha Yassin Ramadan at an Opec summit in Caracas on September 28 that Baghdad would not hold back its crude from the world oil market.

Asked what would happen if the United Nations declined to arrange euro payments, the Iraqi oil official in Baghdad replied: "This is not my domain."

The official said a clause stipulating payment in euros would be included in sale contracts for November loading crudes.

"We are still talking about November prices now. We have not notified our customers about anything directly," he said, adding: "We do not anticipate any problems with our customers paying in euros."

"We are talking with the UN about this now."

UN sources said in May that the Banque Nationale de Paris account had a record $7.8 billion from proceeds of Iraqi oil sales under the UN humanitarian oil exchange.

http://www.gulf-news.com/

-- Martin Thompson (mthom1927@aol.com), October 13, 2000


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