Iraq agrees to oil-for-food deal extension

BAGHDAD, Iraq (Reuters) -- Iraq has officially notified the United Nations of its agreement to an extension of the country's oil-for-food deal for another six-month period, the official Iraqi News Agency (INA) said on Monday.

It said Foreign Minister Mohammed Saeed al-Sahaf relayed Iraq's acceptance in a letter to U.N. Secretary-General Kofi Annan in which he reiterated Baghdad's criticism of the program.

The memorandum of understanding which originally set up the programme in 1996 "was supposed to be temporary and for six months only, according to a Security Council resolution," Sahaf's letter, carried by INA, said.

"But America and Britain have dealt and still deal with this memorandum as a substitute for lifting the embargo and its permanent status," it said.

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"But so that our behaviour is not seen as negative and to expose further those with bad intentions, Iraq has agreed to extend the memorandum of understanding...for another six months."

The program allows Iraq to sell oil under strict U.N. supervision to buy food, medicine, oil equipment and other goods to ease the impact of sanctions in place since Iraq invaded Kuwait in August 1990.

The U.N. Security Council voted unanimously on December 5 to extend the deal for a ninth six-month period. The program is a lifeline for 23 million Iraqis living under sanctions.

The Iraqi leadership, at a weekend meeting chaired by President Saddam Hussein, had criticised the extension but did not reject it. The leadership's stand was seen as tacit approval.

There was no immediate sharp price reaction to the Iraqi move, which traders had been expecting. Oil prices have fallen heavily over the past 10 days, despite a 10-day stoppage of Iraqi exports, knocking $6 a barrel off benchmark Brent blend to $27.

News of Iraq's formal acceptance came amid preparations for a resumption of Iraqi oil exports, halted since December 1 after a dispute between Baghdad and the United Nations over pricing.

The dispute was resolved late last week but bad weather had prevented Iraq from loading vessels at its Mina al Bakr port.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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United Nations
  • Office of the Iraq Programme
Iraq energy profile, U.S. Dept. of Energy

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