>From: Mark Clement <[EMAIL PROTECTED]> >Delivered-To: mailing list [EMAIL PROTECTED] > >IRAQ SANCTIONS MONITOR Number 123 >Tuesday September 19, 2000 > >LATEST NEWS+++++++++++++LATEST+++++++++++++++++++ > >Rising Oil Prices Provide Iraq With New Weapon. >(Wall Street Journal) An international pariah for the past decade, Iraqi >leader Saddam Hussein now has the world over the proverbial barrel. > >Iraq exports about 2.3 million barrels a day of crude oil into a world >market so thirsty for oil that prices have soared recently, spurring an >international wave of consumer backlash. The Iraqi exports are significantly >more than the combined spare production capacity of all other producers at >this time. So, the world now depends on Iraqi oil, right? > >"You're damned right," snaps Amer Rasheed, Iraq's oil minister, during an >interview in his hotel suite after a ministerial meeting of the Organization >of Petroleum Exporting Countries in Vienna last week. > >Mr. Rasheed wouldn't say whether Iraq is likely to use its newfound oil >weapon - by threatening to halt oil exports - to seek an end, for instance, >to United Nations sanctions imposed a decade ago. > >But no sooner had he returned to Iraq last week than he accused Kuwait of >stealing oil from Iraq's southern oil fields through wells drilled >horizontally across the border. The accusation seemed ominous because it was >the same charge that Iraq leveled against its neighbor before invading >Kuwait in 1990. Mr. Rasheed said Iraq would take unspecified action to >protect its oil riches. > >As oil prices spiked Monday to $37.15 a barrel on the New York Mercantile >Exchange, the Iraqi press reported that Saddam Hussein told a cabinet >meeting Sunday that even Saudi Arabia, the world's largest oil exporter, >didn't have enough spare capacity to relieve the world of worries about an >impending oil shortage. > >"This is one of those serious times when the threat of a suspension of Iraqi >(oil) exports needs to be taken seriously," said Raad Alkadiri, country >analyst at Washington-based Petroleum Finance Corp. > >Nobody knows just what the Iraqi leader may decide to do with his newfound >oil power. Some diplomats and industry officials figure Saddam Hussein may >seek some gains by using the threat of a halt in oil exports, while others >say he may reckon that things are going his way anyway, with support for the >longstanding U.N. sanctions growing increasingly weak. > >There's little doubt that Iraq is getting more assertive. An Iraqi fighter >jet last week flew over part of Saudi Arabia for the first time in a decade, >leading U.S. officials to warn that Washington would strike back if Baghdad >provoked neighboring Kuwait or Saudi Arabia. U.S. officials have also warned >against any thought that they are too distracted by presidential politics to >react. > >Yet diplomats at the U.N. acknowledge that any concerted effort to get arms >inspectors back into Iraq won't advance until after the U.S. presidential >election in early November. Hans Blix, head of the new inspection team, made >the same point to reporters Monday, saying "nothing serious will happen" >until U.S. voters go to the polls Nov. 7. > >No one at the U.N. suggests that the Clinton administration has put a hold >on Iraqi diplomacy. But a spike in tensions with Iraq, especially if it led >to steeper gas prices, could easily ripple through the presidential >campaign. > >European oil executives familiar with Iraq, meanwhile, said the U.N. >sanctions against trading with Iraq are breaking down in the region. Turkey, >Jordan, Qatar, Dubai and Oman are all openly trading with Iraq, says a >senior European oil executive. "There is a feeling that except for bombing >(against radar sites), the U.S. is turning a blind eye" to these >transgressions, this executive said. > >Western diplomats and industry officials said a potential flashpoint is a >Sept. 26 meeting in Geneva of the U.N. Compensation Commission, which was >set up after the Gulf War to decide on claims of losses resulting from >Iraq's invasion of Kuwait. The body's governing board is scheduled to >consider a claim of some $16 billion (18.66 billion euros) by state-owned >Kuwait Petroleum Co., a claim that irks Iraq and that may have provoked the >counterclaim that Kuwait has been stealing Iraqi oil. > >The Commission has already paid out more than $8 billion to claimants. The >U.N. supervises Iraqi exports of oil and directs 30% of the receipts from >such sales to fund the Commission and finance the awards. Depending on oil >prices and Iraqi export levels, the Commission is getting some $400 million >every month from the Iraqi oil sales. Claims on Iraq total more than $320 >billion. Though the Commission's awards are expected to be significantly >below that, Iraq has long argued that it wouldn't pay damages for decades to >come. > >If there is a political flare-up now that results in Iraq halting exports, >the consequences could be serious at a time when supplies are tight, oil >prices have bolted to fresh 10-year highs of $37.15, and consumers have been >protesting across Europe. "It would be devastating ... the price of a barrel >would double," the European oil executive said. > >Most OPEC countries are producing flat-out to meet strong world demand for >oil. Kuwait, for instance, has made clear it can't even meet the latest >quota increase it was allocated as part of last week's OPEC agreement. The >agreement aims to raise the group's output by 800,000 barrels a day to help >meet world demand running at some 76 million barrels a day. Iran's output >actually declined in August, perhaps because of production difficulties at >its fields. Exporters that aren't members of OPEC also are producing as much >oil as they can. Norway and Mexico, for instance, have both said they are >producing to capacity. > >That's not to say that the rest of the world would be helpless. Saudi Arabia >and the United Arab Emirates could produce some extra oil to offset at least >part of any shortfall from Iraq. The surge capacity - the ability to produce >extra volumes for a short period of time - of Saudi Arabia isn't precisely >known. But given its huge capacity base of more than 10 million barrels a >day, the kingdom could produce at a much higher rate for a short period of >time. It also could try to increase its capacity over a few months. > >Meanwhile, the U.S. and other industrial countries that have strategic >reserves of petroleum could release them. The U.S. alone has some 570 >million barrels of oil stored in salt caverns. Altogether, industrial >country members of the Paris-based International Energy Agency have some 112 >days of net import coverage through stocks that can be released in case of a >7% drop in supplies from the average levels of the previous year. This >leaves out Britain, Canada, Denmark and Norway - the four IEA members not >obliged to maintain a minimum of 90 days of imports because they are net >exporters. Including these four, the forward cover available to the >industrial world amounts to 152 days of imports. > >The IEA has released reserves only once in its quarter century of existence. >That was just before the start of the Gulf War in 1991. But the war ended >quickly, and the industry returned to working well within its production >capacity limits. > > >CLINTON ADMINISTRATION urged U.N. to try Hussein. > >The U.S. asked the U.N. Security Council to establish a war-crimes tribunal >to try President Saddam Hussein of Iraq and his aides for the murder of >100,000 to 250,000 civilians in Iraq, Iran, Kuwait and other countries. >World governments are negotiating to create a permanent war-crimes tribunal, >but that may take two years or more, and the court wouldn't have authority >over crimes committed before it was established, an official said in >pressing for a special tribunal to try Saddam. > >There are special tribunals to judge war crimes in Rwanda and Yugoslavia. At >the request of the U.S., an international panel has indicted Milosevic, the >president of Yugoslavia, for crimes in the Balkans. (Wall Street Journal) > >Iran will seize ships smuggling Iraqi oil-paper. >TEHRAN, Sept 19 (Reuters) - The head of Iran's ports and shipping authority >said that ships carrying smuggled oil through Iranian waters could be >confiscated along with their cargoes, the Aftab-e Yazd newspaper said on >Tuesday. >Iran has already impounded a number of tankers using its territorial waters >trying to smuggle Iraqi oil in violation of a United Nations embargo on >Baghdad. > >But the United States, has accused Tehran of lapses in enforcement of U.N. >sanctions imposed on Iraq after its 1990 invasion of Kuwait. U.S. officials >said in June they had observed an upsurge in naval traffic between Iraq and >Iran, which, they said, was part of a large-scale smuggling effort. > >Iranian Ports and Shipping Organisation Managing Director Mokhtar Kalantari >said Tehran had seized 38 tankers, confiscated their oil and imposed large >fines before letting the ships leave. He said now cases would be referred to >the courts which could also decide to confiscate the vessel. Iraq is allowed >to sell oil in the U.N.-administered oil-for-food programme. > > >Russian Stroitransgaz to open office in Iraq. >MOSCOW, Sept 19 (Prime-TASS) - Russian corporation Stroitransgaz is going to >open its office in Iran to assist in development of oil production >technology, Arnold Bekker, a spokesman for the Russian group of officials in >Baghdad, has told this to Iran agency INA, ITAR-TASS reports from El Kuwait. >He said one more group of Stroitransgaz officials will arrive to Baghdad >soon. The Russian businessmen will continue arriving to Iraq as several >companies more from Russia have ventilated the similar project. > >Business delegation with humanitarian aid arrives in Iraq, expected to hold >oil talks. >Source: Ostankino Radio Mayak, Moscow, in Russian 0630 gmt 18 Sep 00 >Text of report by Russian Mayak radio on 18th September >A group of Russian businessmen has arrived in Iraq. The group is headed by >Arnold Bekker, president of the Stroytransgas corporation. They are expected >to have talks at the Iraqi oil ministry today [18th September]. They will >discuss Russia's future involvement in projects to extract hydrocarbons in >Iraq and supplies of equipment, in particular. > >The businessmen also brought five tonnes of medicine in humanitarian aid to >Iraq. The Iraqi government and public responded positively to this new >manifestation of friendship by Russia. > >Islamic opposition claims responsibility for attack on Republican Palace. >Source: `Al-Hayat', London, in Arabic 18 Sep 00 pp 1,6 >Excerpts from report by London-based newspaper `Al-Hayat' on 18th September >London: Baghdad has accused Kuwait again of "stealing" its oil as Washington >reiterated its warning to Iraq that it would not allow it to be a threat to >its neighbours. >Meanwhile, three rockets fell on "residential areas" in Baghdad early >yesterday morning, according to an Iraqi security source. But the Iraqi >Islamic resistance claimed responsibility for the attack and said that it >targeted the Republican Palace, one of President Saddam Husayn's >main residences between Al-Jumhuriyah and Al-Mu'allaq Bridges in Al-Kharakh. >Kuwait yesterday urged the international community to "take serious steps >against the Iraqi regime's threats and the necessary measures to ensure that >it will not repeat its threats to the State of Kuwait and other countries in >the region". Kuwaiti Defence Minister Shaykh Salim al-Sabah said on his part >that the Kuwaiti government and people "are capable of confronting the Iraqi >threats". > >A source in the (Iraqi) Islamic resistance said in a telephone contact with >the `Al-Hayat' office in Tehran that the resistance forces fired four 122-mm >Katyushas that hit the Republican Palace. It added that the attack was >carried out at 0200 [local time] on Sunday [17th September], and pointed >out: "The Iraqi regime's forces, especially the Special Protection Forces, >have probably suffered heavy casualties." > >The Iraqi opposition's Al-Intifadah TV [as heard] described the attack as "a >painful blow to the ruling regime in Baghdad". It added that it was a major >penetration that was achieved with the help of "the Iraqi people's sons and >the Iraqi armed forces". > >Baghdad said that the attack targeted a residential building and accused >collaborators with Tehran of perpetrating it. This is the second attack in a >few months. The Iraqi Islamic opposition had earlier claimed responsibility >for a similar attack on 13th May, which, it said, targeted the Republican >Palace and the Iraqi National Assembly's (parliament) former building that >were hit with nine Katyushas. > >These two attacks countered a series of military operations carried out by >the Baghdad-backed Iranian Mojahedin-e Khalq Organization since early this >year that concentrated on Tehran and the Iraqi-Iranian borders... > >Baghdad's move a plot? > >MANAMA (BAHRAIN), SEPT. 18. Is Iraq behaving like a cunning panther or a >novice in reiterating long-standing accusations that Kuwait is stealing its >oil? >At a time when oil prices are at levels not seen in years, the Iraqi growl >has heightened concerns and it could hope that panicky buyers would >intensify their pleas that something be done to solve this problem once and >for all. On the other hand, the countries that are likely to lose heavily in >the event of a further price hike are amongst Iraq's sympathisers and the >threat would not go down very well. > >Baghdad has been levelling accusations over the last three days that Kuwait >is stealing oil from three fields on the Iraqi side of their common border. >At least one Iraqi newspaper has said that this amounts to about 300,000 >barrels a day. A senior member of the ruling Baath party has said that >before 1990, Kuwait had acknowledged the theft though it had disputed the >amount. The Iraqi allegation now is that the theft continues as it did >before the 1990 invasion of Kuwait by Iraq. Kuwait had denied the charge and >warned Iraq that it would militarily resist any Iraqi effort to act on the >accusation. The U.S. Defence Secretary, Mr. William Cohen, has said that his >country's forces in the Gulf are fully prepared to stop Iraq if it makes any >aggressive move. > >The truth of the accusation and its denial is one matter. But the very >levelling of the allegation at this time will put further pressure on the >already super-charged oil markets. Iraq, which is allowed to export 2 >million barrels per day under the U.N.'s "oil for food" programme, does >stand to benefit directly from the price hike which is now hovering around >$33 a barrel for the benchmark Brent crude. > >There are concerns that prices will continue to be high since Western demand >for oil will increase with the onset of the winter. On the other hand, there >are reports that a great part of the oil supplies added by the increase of >production by OPEC a few months ago is still aboard tankers and have yet to >hit the markets. Based on this conjecture, some analysts predict that the >prices could drop. If this analysis is correct, then Iraq has all the >incentive to keep the pressure up. > >A longer term calculation could be that countries fearful of another Gulf >crisis pushing up oil prices would step up their diplomatic pleadings with >the U.S. to resolve its differences with Iraq. While the oil importing >countries would be sensitive to the issue, there is no realistic chance that >the U.S. will soften its stand on Iraq. > >The U.S. is more immune than most others to the threat of reduced supplies >from the Gulf. Although the U.S. is by far the largest consumer of oil world >wide, less than a quarter of its requirements is sourced from this part of >the world. Then again, a rise in the price of oil will increase the demand >for dollars since that is the currency of the oil markets, and it will also >enhance the level of investments in the U.S. stock markets by oil producing >countries. > >Plane from Moscow lands at Baghdad airport. >Source: Radio Russia, Moscow, in Russian 1300 gmt 17 Sep 00 > >An aircraft from Moscow landed at Baghdad international airport today, >bringing a delegation of Russia's Emergencies Ministry. This is the first >foreign aircraft to arrive in Baghdad since the imposition of international >sanctions against Iraq ten years ago. >The Russian side officially notified the UN Sanctions Committee of the >dispatch of its aircraft, the flight of which was of a humanitarian nature. > _______________________________________________________ KOMINFORM P.O. 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