Cut Off From World, Iraq Signals It Might Make Oil-for-Aid Deal

HIS country smothering under a heavy blanket of international sanctions, President Saddam Hussein has agreed to talk with the United Nations about a plan that would allow Iraq to sell oil to earn money to purchase humanitarian supplies.

During on-and-off negotiations since the end of the Gulf war in 1991, Saddam has refused to allow stringent conditions on any oil-for-aid deal, as demanded by the UN. Iraq has insisted that the conditions infringe on its sovereignty.

But apparently persuaded that UN sanctions are not likely to be lifted anytime soon, Saddam has decided to send negotiators to the bargaining table tomorrow in New York, a move that UN and American officials say may or may not signal a breakthrough.

"The general sense is that Iraq has implicitly accepted [Security Council Resolution] 986 as the basis for discussion with the secretary-general," says one senior American official.

The resolution would permit the sale of limited quantities of Iraqi oil to earn hard currency to purchase food, medicine, and other humanitarian supplies. "But experience has shown that it's foolhardy to guess what the Iraqis are going to say when they actually get here," the American official adds.

Security Council holds firm on sanctions

UN sanctions, including a complete ban on oil exports, were imposed on Iraq after its 1990 invasion of Kuwait and subsequent defeat in the Gulf war. Since then, Saddam has been banking on pressure from countries eager to do business with Iraq, including France and Russia, to get the sanctions repealed over American objections. Iraq owes Russia more than $7 billion. It has promised to repay Russia once sanctions are lifted.

But after a UN team charged with investigating and closing down Iraq's chemical, nuclear, and biological weapons programs encountered widespread evidence of coverups and falsehoods, UN Security Council members closed ranks.

Further damage to Iraq's case was inflicted when some members of Saddam's inner circle defected to Jordan last August and provided new information on Iraq's weapons programs.

"Even Iraq's supporters on the Council realize that so much cheating and lying has gone on that the prospect of an early change in the sanctions is virtually nil," the American official says.

Resolution 986, passed in April 1995, allows Iraq to export $1 billion worth of oil every 90 days, but places conditions on how the proceeds are to be spent. One-third of the income is to be taken off the top to help compensate companies and individuals displaced by Iraq's invasion of Kuwait and to pay the costs of the UN arms-inspection team. Of the balance, between $130 million and $150 million is earmarked to provide humanitarian supplies for Kurds living in northern Iraq. Under the resolution, the aid to the Kurds is to be distributed by the UN. The UN would also oversee and monitor the distribution of aid to the rest of Iraq.

Iraqi children malnourished, report says

To simplify verification of the oil exports, the resolution mandates that the oil be exported by pipeline through Turkey rather than by ship through an Iraqi port.

Requiring use of the pipeline means that Iraq will be unable to exact concessions that could ordinarily be demanded of Turkey, which will profit from use of the pipeline. "We object to Iraq using a humanitarian resolution designed to serve the people of Iraq to advance their bilateral interests with Turkey," the US official says.

The UN sanctions, which also prevent imports into Iraq, have taken a devastating toll on Iraq's economy and population, increasing pressure on Saddam to agree to the terms of the UN's oil-for-humanitarian aid resolution. According to a report published last August in a British medical journal, The Lancet, as many as 600,000 Iraqi children have died since the end of the Gulf war because of the sanctions. Many more are malnourished.

The US insists that to be freed from the sanctions Iraq must come clean on its programs to develop weapons of mass destruction. It must also fulfill other obligations, including compensating war victims, ending its repression of its Kurdish and Shiite minorities, and renouncing terrorism.