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U.N. Allows Iraq to Double Oil Spare Parts Spending

By Anthony Goodman

UNITED NATIONS (Reuters) - The U.N. Security Council on Friday unanimously approved a doubling of the amount of money Iraq may spend on equipment and spare parts for its dilapidated oil industry, to $1.2 billion from $600 million over a 12-month period ending in June.

The council also expressed its intention ``to consider favorably'' a future renewal of that increase.

The council voted, without any speeches, on a resolution that was drafted by the United States and agreed by all 15 council members after minor amendments.

Under a council resolution adopted last December, Iraq is allowed to sell as much oil as it wishes under a U.N. ''oil-for-food'' program that began in December 1996. The program permits Iraq to sell crude to buy food and other necessities to ease the effects of punishing sanctions in force since its 1990 invasion of Kuwait.

Secretary-General Kofi Annan recommended in a report earlier this month doubling the $600 million Iraq has hitherto been allowed to spend on oil industry spare parts over a 12-month period ending in June.

Otherwise, the dire condition of the industry could deny ordinary Iraqis the full benefits of the ``oil-for-food'' program.The parts are paid for with some of the proceeds of the program, under which about two-thirds of the money raised through Iraqi oil sales goes for the U.N.-monitored purchase of civilian necessities.

The remainder of the money is siphoned into U.N. accounts to pay reparations and meet other costs stemming from the 1991 Gulf War, when a United States-led coalition expelled invading Iraqi troops from Kuwait.

Report On Condition Of Iraqi Oil Industry

Annan said in his report he was ``very much concerned with the deteriorating condition of the oil industry of Iraq,'' as reconfirmed by a recent survey conducted by a group of experts that he established.

``It is apparent that the decline in the condition of all sectors of the industry continues, and is accelerating in some case,'' he wrote.

``This trend will continue, and the ability of the Iraqi oil industry to sustain the current reduced production levels will be seriously compromised, unless effective action is taken immediately to reverse the situation,'' Annan said.

The latest Security Council resolution also expresses willingness to consider expeditiously other recommendations in Annan's report for improving the ``oil-for-food'' program.

From the start of the program more than three years ago until last December, Iraqi oil exports totaled more than $20 billion.

This provided more than $13 billion for the purchase of supplies, though not all had yet been delivered because some were still in the pipeline while contracts worth about $1.5 billion were placed on hold by the U.N. sanctions committee, mostly because of U.S. queries.

Iraq regards the program as a poor substitute for the lifting of sanctions. That can be done only when the Security Council is satisfied that Baghdad's weapons of mass destruction have been scrapped and cannot be rebuilt.

U.N. arms inspectors have not been allowed back into the country since withdrawing in mid-December 1998, shortly before the United States and Britain launched an air campaign in response to Iraq's failure to cooperate with U.N. weapons teams. 

Iraqi Currency    

Bit by Bit, Iraq Emerges From Isolation

Economic Ties Are Growing With Its Previously Hostile Neighbors

BAGHDAD - As neighbors in the Middle East, Syria and Iraq have shared little in recent years except a closed border and enmity between their leaders.  Yet at this city's international trade center, the Syrian flag is again flying and
a freshly painted sign advertises the offices that Syrian trade representatives will soon occupy.

Likewise, Saudi Arabia was a pillar of the coalition that battled Iraq in the Gulf War in 1991, providing the platform from which allied troops drove Iraqi forces from Kuwait. But late last month, for the first time since the war, Saudi companies were back in Baghdad doing business, signing an estimated $100 million in contracts for food and medicine.

Sanctions have devastated living standards

The combined effects of war and sanctions have devastated living standards in a country that a UN official said ranked obesity as its primary nutrition problem before the invasion of Kuwait. Notwithstanding any improvements in living conditions here, more than half of Iraqi children under five still suffer some degree of malnutrition.

'Things are better, but it's still expensive,''

said Mohammed Abbas, a corner grocer, explaining that the street prices of staples have swung wildly in recent
years. He said that a kilogram (2.2 pounds) of sugar, for example, has cost as much as 1,800 dinars ($1.50), but is currently about 600 dinars.

Iraqi investments in Jordan reach JD30.3m

AMMAN (J.T.) — According to official statistics from the Ministry of Industry, Trade and Supply, Iraqi investments in Jordan have reached JD38.55 million until the end of June 1998. Of this amount, invested in 657 companies, JD30.29 million flowed to the Kingdom after the Gulf War. Spread over 536 companies, the amount represents 78.4 per cent of the total Iraqi investments in the country.

The statistics show that investments totalling JD6.93 million and accounting for 18 per cent of the total Iraqi investments flowed to the Kingdom between 1980 and 1990 during and after the war between Iraq and Iran. Observes say that most of the investments are concentrated in the fields of land transport, pharmaceuticals, foodstuffs and vegetable oils. The observers expect the volume of individual private investments and the joint Iraqi-Jordanian ventures to increase.