IRAQ SANCTIONS MONITOR Number 158 Tuesday, November 21, 2000 LATEST NEWS++++++VHS copies of the film 'Big Ben to Baghdad', the epic account of last year's journey in a 37-year-old Routemaster bus from London to the capital of sanctions-engulfed Iraq. The 65-minute-film costs �9.99 from the Mariam Appeal, 13a Borough High Street, London+++++++++++++++++LATEST ______________________________________________________ Patrols to avoid Iraqi civil aircraft. US Department of Defense spokesman Kenneth Bacon announced on 7 November that US and UK pilots patrolling 'no-fly zones' in Iraq have made "appropriate changes" to avoid accidentally shooting down Iraqi civilian aircraft. Volume 034/021 (c) Jane's Information Group Limited 2000. ______________________________________________________ Iraq confronts U.N. with oil sales to Syria. DUBAI, Nov 21 (Reuters) - Iraq has begun pumping oil through a pipeline to Syria, apparently outside the terms of the United Nations oil-for-food arrangement. A Syrian oil official said that about 150,000 barrels a day of Iraqi crude was flowing through the line, disused since 1982. "Iraq started pumping on November 16 and the flow is now up to about 150,000 barrels per day of Basrah Light," the official told Reuters by telephone from Damascus. Iraq earlier this month vowed to start selling crude to Syria in what appears to be part of a sustained effort by Baghdad to break the straitjacket of U.N. Gulf War sanctions. Oil-for-food allows Iraq to sell as much crude as it likes in return for humanitarian goods as long as the revenues remain under strict U.N. control. Iraq's customers pay direct into an escrow account in New York with 30 percent of the proceeds earmarked for Gulf War reparations. Washington has said it does not object to sales via Syria as long as the revenues remain under U.N. control. The Syrian oil source said the crude was moving into storage tanks at Syria's Homs and Banias refineries but had not yet been processed. Iraq has been exporting about 2.3 million barrels daily via export terminals on its Gulf coast and through Turkey, both monitored on behalf of the U.N. by Dutch agent Saybolt. "We've been in intense discussion with the government in Damascus," Richard Roth, U.S. principal deputy assistant secretary of state for Near Eastern affairs told Reuters in New York last week. "We are not opposed to oil going through the pipeline as long as it meets the export regime controls," Roth added. "As long as the money is put into the U.N. system we don't have a problem." Iraq has not notified the United Nations of the possible reopening of the pipeline, U.N. officials said last week. Iraq aims to eventually stabilise the pipeline throughput at 200,000 bpd said and there we no immediate plans to increase flows beyond that level, the Syrian official said. Industry sources said Syria will purchase the Iraqi crude oil at a discount to international oil prices and will be able to sell the equivalent amount of its own Syrian Light crude oil at world oil prices. When asked whether Damascus would start exporting the equivalent amount of Syrian Light immediately the official said "we have one or two extra cargoes for November." Lifters of Syrian crude said they had not been offered firm additional barrels of oil on top of November or December term volumes, which have already been confirmed. "They have expressed to us the possibility that they may have additional volumes but they have not offered anything," said one trader at a European company. Baghdad already is allowed to sell some oil direct to its neighbour Jordan outside the terms of oil-for-food. Iraq has raised a number of other issues with the United Nations on oil-for-food. They include the demand that buyers pay an extra 50 cents over official selling prices into an account outside U.N. control. ______________________________________________ Russia lost USD 30bn through sanctions. MOSCOW, Nov 21 /Prime-TASS/ - Russian Foreign Minister Igor Ivanov has written to UN Secretary General Kofi Annan detailing real and potential losses sustained by Russia from ten years of sanctions against Iraq. Speaking on Russia's ORT television channel on Monday, he said the losses totaled some USD 30 bln. These are real losses and it is natural that we would like the sanctions to be lifted as soon as possible... Our stand is not based on purely selfish interests. The sanctions should be lifted to end the suffering of the Iraqi people in the first place. At the same time, when taking this or that step in the sphere of foreign policy, the first thing we should take into consideration is our own interests, including economic and financial ones," Ivanov said. The minister visited Baghdad on November 13-14 and discussed with Iraqi leaders how to end the economic embargo. According to diplomatic sources, Iraqi Deputy Prime Minister Tareq Aziz will visit Moscow on November 25. They said Aziz and Russian officials would continue to discuss the problem then. _____________________________________________________ Private Dubai airline to start regular flights to Iraq. Dubai (AFP)-21Nov2000/404 am EST/904 GMT A private airline in the Gulf emirate of Dubai will start regular flights to sanctions-hit Iraq from Wednesday, a company source said Tuesday. Nada al-Sharq International will organize four flights a week to Iraq, three leaving from the neighboring emirate of Sharjah and one from Dubai International Airport, the source said. The first flight, a Boeing 727 carrying a delegation of 167 Emirati personalities and the Iraq consul to the United Arab Emirates as well as a cargo of medicines, will leave Sharjah early Wednesday. Nada al-Sharq International was created almost one year ago and is headed by Sheikh Maktoum bin Hashr bin Manae al-Maktoum, a member of Dubai's ruling family. Iraq and the UAE formally renewed diplomatic relations in July after a 10-year break following the Iraqi invasion of Kuwait. ______________________________________________________ PUTIN, IVANOV DISCUSS WAYS OF SETTLING MIDDLE EAST, IRAQI PROBLEMS MOSCOW. Nov 20 (Interfax) - Russian Foreign Minister Igor Ivanov informed President Vladimir Putin of the results of his Middle East and Gulf tour during a working meeting in the Kremlin on Monday, presidential spokesman Alexei Gromov has told Interfax. Ivanov spoke about the efforts being made by Russian diplomacy on the president's instruction to normalize the situation in the Palestinian territories and to settle the Iraqi problem, he said. Putin instructed Ivanov to continue active cooperation with the United Nations, the United States and European and other states in order to curb the escalation of tensions in Israeli-Palestinian relations, normalize the situation and resume the talks. Regarding the Iraqi settlement, Putin and Ivanov said that Russia will continue its work to ensure that the resolutions of the U.N. Security Council be implemented "with a clear view on the future lifting of sanctions from Iraq," Gromov said. _____________________________________________________ RUSSIAN FOREIGN MINISTER CRITICIZES U.S., GREAT BRITAIN FOR VIOLATING INTERNATIONAL LAW IN IRAQ. MOSCOW. Nov 20 (Interfax) - Russian Foreign Minister Igor Ivanov has said that members of the UN Security Council must show an example by implementing all of the Security Council's international norms and resolutions instead of breaking them. Russia "has always called for the implementation of the UN Security Council's resolutions on Iraq along with a concrete time for lifting the blockade and sanctions on that country," Ivanov said at a briefing in Moscow on Monday. At the same time, Russia "has always opposed the no-fly zones and the ongoing bombardment of the Iraqi territory by the United States and Great Britain, as it thinks that these actions violate the UN Charter and international legal norms, and complicate the settlement of the Iraq problem," he noted. "If the international community demands that Iraq implements the UN Security Council's resolutions, members of the Council, especially the permanent members, must show an example of strict compliance with the UN Charter and international law," Ivanov said. ______________________________________________________ Iraq may suspend exports to loosen UN hold. Dow Jones IRAQ is seeking to deal a sharp blow to United Nations trade sanctions, and is willing to reduce or suspend oil exports to do it, sources said. Emboldened by recent successes in loosening the UN embargo, Iraq would push ahead with a plan requiring firms that buy its oil to pay a 50-cent a barrel premium into an account outside the UN's control or lose their contracts, an industry source said. The source, who spoke on condition of anonymity, said Iraq's State Oil Marketing Organisation (SOMO) would ask the UN to approve a December selling price for Iraqi crude that is 50C a barrel below market prices. Lifters were being asked to make up the difference in side agreements with the Government. SOMO wanted the payments in advance of deliveries, and would not deliver oil to lifters who balk, the source said. "There are buyers who are ready to pay, there are buyers who are not," the source said. "Those not ready to pay will not take oil." Iraqi will press the issue in the UN Iraq Sanctions Committee when it submits the December price formula for approval. If below-market prices were approved, side agreements on the 50 cent premium would then take place outside the sanctions committee's view, the source said. If the sanctions committee, where both the US and UK have veto power, did not approve SOMO's December prices, Iraq would blame the West for interrupting its 2.2 million barrels a day of oil exports, the source said. Observers cautioned that the current six-month phase of the oil-for-food programme expired on December 5, and that Iraq had pressed for concessions at the UN ahead of the Security Council's anticipated extension of the programme in the past. Under oil-for-food, proceeds from Iraqi exports are held in escrow, and dispersed only with sanctions committee approval. But, with over $11.3 billion in the UN escrow account in New York, Iraq would suffer no loss of humanitarian supplies by disrupting oil sales, the source said. "They are very serious," the source said of the Iraqi Government. "This is not negotiable." The US is also serious about maintaining sanctions imposed in 1990 for Iraq's invasion of Kuwait. Washington has agreed to loosen sanctions to improve living conditions for ordinary Iraqis, but has drawn a red line at allowing Saddam Hussein to directly control revenues from oil sales. If the sanctions committee allows the 50 cent premium, what would stop SOMO from seeking a much larger cut, observers asked? On the other hand, with US heating oil stocks the lowest end October level on record, and crude supplies tight, "how far is the (US) willing to go if it means no Iraqi crude?" asked one buyer of Iraqi crude. If there is a break in Iraqi exports, oil prices could likely challenge the post-Gulf war high of $41.15. Even if below-market prices were approved for December, major oil companies would balk at the new terms, the industry source said. However, smaller companies from Russia and other countries that oppose the UN embargo would accept the conditions, the source said. Initially, at least one third of Iraq's recent export volume was jeopardised by the move, the source added. In Baghdad, officials believe there was no chance the US would agree to lift the UN embargo, and that chipping away at sanctions was their only option, the source said. ______________________________________________________ Putin, Ivanov discuss situation in Palestine, Iraq. President Vladimir Putin had a working meeting with Foreign Minister Igor Ivanov on Monday to discuss the results of Ivanov's trip to the Middle East and the Persian Gulf. Ivanov briefed Putin about the efforts taken by Russian diplomats to normalise the situation on Palestinian territories and settle the Iraqi problem, presidential spokesman Alexei Gromov told Itar-Tass. The president instructed the minister to step up work together with the United Nations, the United States, European and other states in order to stop the escalation of tension in Israeli-Palestinian relations, normalise the situation and resume talks. On the Iraqi problem, Russia will insist on the implementation of U.N. Security Council resolutions linked with the upcoming lifting of sanctions against Iraq. (c) ITAR-TASS 2000. ______________________________________________________ Iraq objects to Arab women's summit declaration The Iraqi delegation to the first summit of Arab women in Cairo said on Monday that the final declaration of the summit had not reflected delegates' true support for the lifting of sanctions against Iraq, Iraqi radio reported. Delegation leader Dr Manal Yunus Abd-al-Razzaq "said that the statement read by the Arab League secretary general contained nothing of what the majority of the delegations had agreed upon in terms of lifting the unjust embargo imposed on Iraq", the report said. "While we condemned the way of preparing the statement and its exposed bias, the Iraqi delegation did not walk out of the conference out of respect for the delegations which demanded the lifting of the unjust embargo and out of appreciation for their countries, Arab and Palestinian women, and holy Jerusalem," it quoted Yunus as saying. Speaking after the conference, she added that the statement had been watered down from that originally prepared in order not to offend Kuwait. Source: Republic of Iraq Radio, Baghdad, in Arabic 20 Nov 00. ______________________________________________________ UN Won't OK Below-Market Oil Prices For Iraq - Diplomats. NEW YORK -(Dow Jones)-In a blow to Iraq's latest effort to gain some control of its oil revenues, Western diplomats and U.N. officials said Monday the United Nations will reject any request by Baghdad to set its official oil export price at a discount to market rates. The U.N. position sets the body up for a possible confrontation with Iraq, which reportedly wants to lower its U.N.-approved export prices to create room for buyers to pay a surcharge the country could spend at will. "It's a non-starter," a Western diplomat said of the scheme. ______________________________________________ Military spokesman details 20th November allied air activity. Text of report by Iraqi radio on 20th October The US and British ravens of evil have resumed their treacherous combat sorties over our peaceful towns in an attempt to inflict further harm on the march of our mujahidin people under the historic, courageous leadership of victorious leader President Saddam Husayn. In a statement to the Iraqi News Agency [INA], a military spokesman for the Air Defence Command said: At 1130 [local time] today, the US and British ravens of evil violated the sanctity of our airspace through the Turkish airspace, with direct support from the Turkish side. Aided by an AWACS aircraft flying in Turkish airspace, the ravens conducted 14 combat sorties. They flew over areas in the Governorates of Dahuk and Arbil before leaving our airspace to the bases of evil and aggression in Turkey. The spokesman added: This brings to 5,538 the total number of combat sorties staged by the ravens from Turkish airspace since the Day of Conquest on 17th December 1998. The total number of combat sorties conducted by the ravens from Saudi, Kuwaiti and Turkish airspace becomes at 26,993. Source: Republic of Iraq Radio, Baghdad, in Arabic 1700 gmt 20 Oct 00. ______________________________________________ 20Nov2000 IRAQ: Iraq - Key developments. COUNTRY BRIEFING FROM THE ECONOMIST INTELLIGENCE UNIT OVERVIEW The Iraqi regime, led by Saddam Hussein, faces few external challenges. The country's relations with its neighbours and the Arab world are expected steadily to improve. Further afield, the UN Security Council remains divided over how to deal with Iraqi non-observance of its resolutions, while unilateral US military reprisals have never posed a serious threat to Mr Hussein's position. Sanctions will continue to soften over time, as pressure from Russia, France and China undermines the hard line of the US and the UK. The exiled opposition remains fragmented and ineffectual, with the US wary of providing meaningful support. Reports that Mr Hussein has cancer have focused interest on the succession process. Potential for strife exists between the president's sons: Qusai, who has been appointed heir, and his elder brother, Udai, who has already sought to challenge Qusai's position. In the event of the president's death, regime survival would depend on a smooth transition process, which is by no means assured. However, Mr Hussein currently shows no sign of loosening his grip on power, and the regime will remain united while he is president. Key changes from last month Political outlook Iraq's regional and international environment will continue to improve, as an increasing number of states become willing to challenge the UN's policy of sanctions against this potentially rich oil producer. Economic policy outlook Iraqi economic policy remains concerned with the expansion of oil-smuggling routes. Fiscal and monetary policy will continue to be erratic, ineffectual, and driven by political expediency. Economic forecast The EIU's oil-price forecast for 2001 stands at US$25.36/barrel, falling to US$19.13/b in 2002. This will enable Iraq to register total exports of US$21.5bn in 2001 and US$17bn in 2002. _____________________________________________ Jordanian medical team arrives on board Jordanian plane. Text of report by Iraqi radio on 20th November At 1750 [1450 gmt] today, a Jordanian Boeing 737-400 landed at Saddam International Airport. The plane is carrying 150 figures, representing several Arab medical associations and organizations and Arab and world medical figures. The delegation is led by Dr Ahmad al-Qadiri, president of the Jordanian Dentists Association. The delegation is making a five-day visit to Iraq to attend the 22nd conference of the Iraqi Dentists Association. The conference has been named "Jerusalem Support Conference". The delegation was received by Dr Ghalib al-Jasim, secretary-general of the Arab Dentists Federation and president of the Iraqi Dentists Association, members of the Iraqi Dentists association Council, and several Iraqi dentists. ____________________________________________ Sanctions on Iraq 'could go in six months'. By Richard Beeston Diplomatic Editor, The Times. Britain has extended an olive branch to President Saddam Hussein, promising to lift sanctions "within six months" and to help Iraq to reintegrate into the international community if Baghdad allows UN weapons inspectors back into the country. In a move that could cause serious friction with the United States, which is working for the overthrow of the Saddam regime, Peter Hain, the Foreign Office Minister responsible for the Middle East, said that he wanted to see the decade-long embargo lifted. "I want to say it clearly now, because it has not been said as clearly before," he told The Times. "I want to see sanctions suspended so that everything can move forward. Iraq can move forward, the region can move forward. "But the only vehicle for that is (UN Security Council Resolution) 1284, which in return for allowing inspectors back would trigger within months, literally within 180 days, sanctions suspension." Although his message was a broad restatement of existing policy, the tone was vastly different from earlier statements. Britain has been under growing pressure from moderate Arab countries to ease the ten-year embargo on Iraq, which is being broken almost daily by flights, VIP visits and cross-border trade. Across the Arab and Islamic worlds, Britain and America's tough stand against Baghdad has been widely criticised for punishing the Iraqi people and leaving the regime intact. Mr Hain said that in addition to his public appeal to the Iraqi leadership to co-operate with the UN, Britain had been making indirect approaches to Baghdad through friendly Arab governments in an effort to persuade the Iraqis to change their minds. "I have been meeting with a number of key foreign ministers in the region, in the Gulf and other Arab states, who have been seeking to have a dialogue with Tariq Aziz, the Iraqi Foreign Minister, about how 1284 can be implemented," he said. "I am hopeful that if a way can be found for Iraq's dignity to be respected, while allowing the arms inspectors in, then we could see sanctions suspended within six months." Even before that happens, Britain is prepared to show flexibility in other areas. Mr Hain said that talks were under way with the French and Russians at the United Nations to draw up a system that would allow regular flights to resume to Iraq, so long as they were searched before take-off to make sure they were not helping Baghdad to rebuild its weapons of mass destruction. In addition, he hinted that if the Iraqis began to co-operate there could be movement on the question of the no-fly zones, the areas of northern and southern Iraq being patrolled by British and American warplanes. Taken together, Mr Hain's remarks suggest a reorientation of British policy towards Iraq. Although Foreign Office officials are concerned that the Iraqis are still concealing stockpiles of germs and chemical agents used in the manufacture of biological weapons and poison gas, they would evidently prefer to have UN inspectors on the ground rather than the existing situation, where there are no monitors in Iraq at all. One issue in particular - the survival of Saddam - could divide Britain and the US, which have remained united for a decade on their approach to Iraq. Although successive US Presidents have sought the removal of Saddam and have been backing the Iraqi Opposition, Mr Hain insisted that who ruled Iraq was not his concern. ______________________________________________ As more and more countries call for the lifting of the sanctions imposed on Iraq... As more and more countries call for the lifting of the sanctions imposed on Iraq following the end of the Gulf War, Brian Reyes looks at attempts by Jordan to strengthen its historic diplomatic and economic links with Saddam Hussein's country.Jordan strives to win back Aqaba trade THIS week, a large Iraqi trade delegation will visit Jordan and repay the previous visit to Baghdad by their Jordanian counterparts earlier this month. The Jordanian mission to Iraq was led by the country's new prime minister, Ali Abu al-Ragheb, and represented just one of many recent moves to strengthen historic diplomatic and economic links between the two countries. It came at a time when a growing number of countries are urging the lifting of economic sanctions imposed on Iraq following the end of the Gulf War. Critics say the sanctions are failing their original purpose of keeping Iraqi leader Saddam Hussein in check, and are instead hurting ordinary Iraqis. Increased cooperation between the two countries highlights the fact that, although the sanctions were aimed at Iraq, geographic neighbours such as Jordan suffered too. Jordan lost Iraqi business as a result of the sanctions, but now wants it back. Before the Gulf War, the Jordanian port of Aqaba, on the shores of the Red Sea, was a major transit point for goods to and from Iraq. After sanctions were imposed, volumes at the port plummeted. Freight inspections of Iraqi-bound cargo, required by the United Nations and handled in Aqaba by UK-based Lloyd's Register, further damaged the port's competitiveness in the Iraqi market. Businessmen in Amman put the annual losses to the Jordanian economy as a result of the Iraqi sanctions at some $1bn. Iraq was Jordan's biggest trading partner before the sanctions, but exports under the oil-for-food programme are now only a fraction of what they were previously, and the effects can still be felt. Speaking to the Jordanian press recently, Khaldun Abu-Hassan, former president of the Amman Chamber of Industry, said: "The value of our exports to Iraq last year was no more than $74.5m, compared to $106.15m in 1998, which indicates that the bilateral trade has dropped to less than half." Developments such as Mr al-Ragheb's visit to Iraq mark the start of a recovery from the present situation, and the prospect of increased trade has Jordan's business sectors, from finance to transport, optimistic of change. Although Mr al-Ragheb's trip was perhaps most significant at a cultural and political level, particularly at a time of heightened tension in the Palestinian territories, it was economically crucial too. An agreement was signed, for example, under which Baghdad will supply Amman with 5m tonnes of crude oil and by-products at significantly discounts from global prices. Those exports are exempted from the UN measures. Iraq and Jordan also agreed to build an oil pipeline from the Iraqi pumping stations in Haditha to Zarqa, site of Jordan's most extensive free zone development. The prospect of increased trade with Iraq boosted shares in Amman's bourse following Mr al-Ragheb's visit, with trading focused on industrials expected to benefit from increased sales. The transport sector is also expectant of a much-needed boost, and a host of measures have already been implemented this year. Freight charges for overland transportation from Aqaba to Iraq have been sliced by 22%, and port tariffs for Iraqi-bound freight moving through Aqaba have been reduced by as much as 50% for certain commodities. Now, the Jordanian government has taken a unilateral decision to end Lloyd's Register's inspections at Aqaba port, a move to which the UN is not expected to object. Industry sources in Amman said the inspections had contributed to the decision some years back by many Aqaba-based companies to transfer their operations to other regional ports such as Dubai and the Syrian port of Tartouss. The inspections, they argued, increased clearing time and costs associated with moving Iraq-bound freight through the port of Aqaba. Knock-on effects filtered through Jordan's economy and hit industries dependent on Iraq as a key export destination. Many of those industries, sources said, now operate at only 50% of their available capacity. And although the inspections focused on checking Iraq-bound freight for compliance with UN sanctions, local businessmen suggested they often interfered with domestic trade needs too. "This was a big loss to the Jordanian economy," Rula Dababneh, Lloyd's department manager at Amman-based Lloyd's agents Spinneys 1948. "The inspections by Lloyd's at Aqaba are causing delays to the movement of Iraqi imports and adding costs to the total inland charges through the country to Iraq, at a time when Jordan is suffering from the competition of Syrian ports," another Amman-based shipping source told Lloyd's List. There is uncertainty in Jordan as to when the Lloyd's Register inspections will cease, if at all, and whether or not the UK company will be replaced. While Jordan has the right to end the Lloyd's Register operations at Aqaba under the contract reached with the UN, and provided it gives three months notice, some speculate that the US government might object to this unless the UK company is replaced. There has already been speculation in the Jordanian press that an unnamed Indian company is set to take over the inspections from 2001. Lloyd's Register said the situation had yet to be resolved. "We continue working at this time as we have done since we initiated the solution to the offshore inspections in the north Red Sea," it said in a statement issued in response to questions from Lloyd's List. "We shall continue to support Jordan regardless of any possible decisions on this project." Lloyd's Register added: "We are awaiting instructions from the UN/Jordanian government on how we might best effect any changes they may require." And although Jordan, an internationally respected country and a key player in the region, would only continue to handle Iraqi trade only under UN terms, the general view in the country's maritime sector is that the sooner the inspections are terminated, the better for the economy. The future for Aqaba, inspections aside, looks rosy nevertheless. The Jordanian government is planning to create a massive free zone there, stretching beyond the limits of the port and right up to the borders of the Aqaba region. It is a project that promises to transform the Red Sea town and generate a giant economic boost for Jordan by attracting new flows of foreign capital as companies set up. The Aqaba Special Economic Zone has been personally blessed by Jordan's King Abdullah and, although not due to be implemented until early next year, is already attracting attention from companies outside Jordan. All this is good news for the port and the transport sector, particularly as a quick look at volumes through Aqaba show there is ample room for growth. During the first nine months of 2000, the port handled a total of 466, 227 tonnes of freight, of which only 52,371 tonnes was transit trade. Of the total volume of transit trade, 46,278 tonnes was Iraqi cargo. The second busiest destination after Iraq was Saudi Arabia, with 2,952 tonnes. Sources in Jordan suggested that volumes of transit goods dropped 92% between 1989 and 1999, and that the volume of goods imported and exported through Aqaba fell by 31%. (c) of Lloyd's of London Press Limited 2000. tel: +44 (0)20 7403 5200 fax: +44 (0)20 7403 3823 email: [EMAIL PROTECTED] web: www.mariamappeal.com
