______________________________________ Stratfor's FREE Kosovo Crisis Center - http://www.stratfor.com/kosovo/crisis/ The most comprehensive coverage of the Kosovo Crisis anywhere on the Internet ______________________________________ STRATFOR's Global Intelligence Update May 20, 1999 Plans Debated for Future of Iraq Summary: While the UN debates whether to extend Iraq's "oil for food" program or to replace it with some other plan, Iraq's neighbors are attempting to devise their own plan for containing Iraq without Western interference. The Arab League has called for the U.S. and Britain to stop bombing Iraq, but have not suggested an alternate containment strategy. However, the recent visit of Iranian President Mohammad Khatami to Saudi Arabia may have laid the groundwork for an alternative plan. Analysis: The UN mandated "oil for food program," which allows Iraq to sell $5.2 billion worth of crude oil every six months to pay for humanitarian supplies, expires on May 24. The UN Security Council is scheduled to meet on May 21 to discuss extending the program an additional six months, as well as two alternative proposals that have been recently floated. Russia has put forward a plan, backed by China and France, that would suspend sanctions on Iraq for a period of 100 days. The suspension would only be extended if Iraq verifiably cooperated in disarmament efforts. The Russian plan also calls for unfreezing Iraq's overseas assets. A competing proposal put forward by Britain and the Netherlands would maintain the sanctions against Iraq, but would lift the ceiling on Iraqi oil exports and allow foreign companies to invest in Iraq's oil sector if Baghdad allowed UN weapons inspectors to return to Iraq. Russia has said that it will not support any new resolution that does not involve at least a partial lifting of sanctions against Iraq. The U.S., in turn, rejects any plan involving suspension or lifting of the sanctions. Interestingly, however, an anonymous U.S. official told the Associated Press that the U.S. did not rule out the British-Dutch proposal, depending on how it was implemented. While the U.S. reportedly rejects a major overhaul of Iraq's oil industry, U.S. officials are reportedly receptive to a plan in which foreign investment would help Iraq meet its "oil for food" sales quota. U.S. Secretary of State Madeleine Albright two weeks ago called on Security Council members to consider and develop an earlier draft of the plan. Iraq has reportedly rejected the British-Dutch plan as nothing more than an excuse to maintain sanctions on Iraq, while simultaneously reducing Iraq to "an entity under the trusteeship of the United Nations." Iraqi Foreign Minister Mohammad Said al- Sahhaf sent a letter to UN Secretary General Kofi Annan on May 19, charging that the "oil for food" program had failed and that the humanitarian crisis in Iraq had worsened. Al-Sahhaf said that Iraq was unable to sell enough oil even to reach the UN mandated maximum, due to the deterioration of Iraq's oil infrastructure and low international crude oil prices. Moreover, al-Sahhaf and Iraq's Oil Ministry on May 19 charged that the United States and Britain had blocked 208 contracts Baghdad had signed for repairs of Iraq's oil infrastructure. Under the "oil for food" program, Iraq is allowed to import $300 million worth of spare parts and equipment to repair and maintain its oil infrastructure. Al-Sahhaf concluded that, in the face of U.S. and British hostile interference in the "oil for food" program, the only logical, legal, and moral solution would be for the UN to lift the embargo on Iraq. Al-Sahhaf was echoed by the official Iraqi newspaper Al-Iraq, which on May 19 wrote, "There is no point continuing with this game of oil for food, which amounts to a hemorrhage of Iraqi resources." The newspaper claimed that the program "only serves the imperialist interests of the criminals keeping in place the embargo." As the UN Security Council debates Iraqi sanctions and the possible renewal of the "oil for food" program, Iraq's neighbors may be stepping up efforts to take Iraqi containment into their own hands. On May 19, at the conclusion of a four day visit to Saudi Arabia by Iranian President Mohammad Khatami that marked a major milestone in the two countries' rapprochement, Saudi Foreign Minister Prince Saud al-Faisal declared, "The results of the visit... will have a positive impact on the whole region, with the two countries able to play a key role in resolving conflicts in the region." During the visit, Iranian Foreign Minister Kamal Kharrazi announced that he and his Saudi counterpart had "formulated a long-term mechanism for resolving problems in the Muslim world." According to the Iranian news agency IRNA, during a meeting with Saudi Crown Prince Abdullah bin Abd al-Aziz al-Saud, Khatami noted it was "disturbing to imagine that the big regional states and their nations may have to depend on others to provide security in the region." Khatami reportedly added that Iran and Saudi Arabia, "had the potential to safeguard the security of this vital region." The first portion of the Abdullah-Khatami meeting, during which Khatami put forward Iranian-Saudi security cooperation as a substitute for U.S. meddling in the region, was attended by Second Deputy Prime Minister and Defense Minister Prince Sultan bin Abd al-Aziz al-Saud, who is close to the U.S. and whose son is the Saudi Ambassador to the U.S. The second half of the meeting occurred behind closed doors, and it was not reported whether Prince Sultan was involved. Prince Sultan later held a banquet for Khatami and the Iranian delegation. In a separate though potentially related development, Iran and the UK announced on May 18 that they were upgrading diplomatic relations, exchanging ambassadors for the first time in 20 years. Still, despite the apparent nod being given to Iranian diplomacy by the U.S. and the UK, the Saudi-Iranian official joint statement at the conclusion of Khatami's visit condemned foreign interference in Iraq's internal affairs. Khatami's stay in Saudi Arabia also included a visit to the headquarters of Saudi Aramco in Dhahran. There, Saudi Oil Minister Ali Ibrahim Naimi stressed that the recent upturn in oil prices was due in large part to the cooperation and leadership efforts of Saudi Arabia and Iran. At a separate meeting with Khatami in Jeddah, Naimi declared that Saudi Arabia and Iran "have reached an agreement," though he did not elaborate. Naimi and his Iranian counterpart Namdar Zangheneh vowed that the two countries would continue to cooperate to maintain and improve oil prices. Khatami and Saudi Crown Prince Abdullah also discussed oil issues in depth. So, Iran and Saudi Arabia appear to have reached agreements to collaborate in resolving regional conflicts and to collaborate in attempting to control oil production and prices. Iraq is a source of regional conflict and a potentially unsettling force affecting oil prices. Despite their condemnation of foreign interference in Iraq, the two countries' rapprochement and joint endeavors appear to have the blessing of the U.S. and the UK. Kuwait, too, has called for closer relations between Iran and the GCC. Additionally, judging by Iraqi allegations and Iranian military maneuvers, "foreign interference" in Iraq can apparently be translated to read "European and American interference." Whether the Iranian-Saudi movement toward regional security cooperation -- evidently focused first on replacing he U.S.-UK effort in Iraq -- is occurring as a result of or in spite of the stumbling NATO campaign in Yugoslavia is unclear. Whether it is occurring at the urging of the U.S. and the UK or with only their grudging acceptance is also unclear. And just how Saudi Arabia and Iran plan to deal with Iraq is downright opaque. Nevertheless, Iraq seems seriously concerned. In recent days, Baghdad has condemned Iran for secretly conspiring with the United States to stab Iraq in the back. Baghdad has also accused Iran of fomenting an uprising in the south in March and of courting the U.S. by training and arming infiltrators of southern Iraq. And Saddam Hussein has reportedly begun to warn his troops and supporters of an impending cataclysmic battle. If Iraq needed more reason to worry, Iran's Revolutionary Guards have launched major military exercises in Khuzestan province, near the southern Iraqi border. The 8,000 troop exercises, which commemorate the liberation of Khorramshahr from Iraqi occupation, include airborne operations and live fire exercises with artillery and tanks. Additionally, a new coalition of Iraqi opposition groups will reportedly travel to the U.S. next week, allegedly with Iran's blessing, to seek U.S. support for another uprising. According to Iraqi opposition sources, cited in the London based newspaper Al-Hayat, Syria too is concerned about Iranian intentions in Iraq, and has requested clarification from Tehran. Interestingly, Khatami visited Syria immediately prior to visiting Saudi Arabia, and Saudi Crown Prince Abdullah has departed on a multi-country trip that will take him to Syria as well. Clearly, Iran is pushing its idea of a regional security grouping to deal with regional unrest without foreign interference. It appears to have received a positive response from Saudi Arabia and Kuwait, and to have at least the tacit support of the U.S. And the proposal is far enough along to have the Iraqis and Syrians concerned. Now it remains to be seen if the traditional forces driving Iran and the Arab states apart can be kept in check long enough to operationalize the Iranian proposal. ___________________________________________________ To receive free daily Global Intelligence Updates, sign up on the web at: http://www.stratfor.com/services/giu/subscribe.asp or send your name, organization, position, mailing address, phone number, and e-mail address to [EMAIL PROTECTED] ___________________________________________________ STRATFOR, Inc. 504 Lavaca, Suite 1100 Austin, TX 78701 Phone: 512-583-5000 Fax: 512-583-5025 Internet: http://www.stratfor.com/ Email: [EMAIL PROTECTED]
