Iraq's Trickle of Oil
Iraq will soon be able to sell some of its oil abroad again. The black gold will flow not because Saddam Hussein finally came clean on hidden weaponry and got international sanctions removed, but because he accepted a deal dangling out there for months: limited oil sales to fund humanitarian relief for his people.
Saddam has clearly not relished this deal, worked out with the United Nations. Allowed sales will be small, $2 billion worth over six months. Only a part of the receipts will go to southern and central Iraq, where Saddam holds sway. A set portion will go to the Kurds in the north, and another chunk is earmarked for a compensation fund for victims of the Iraqi invasion of Kuwait. Some of the money will also help pay for the ongoing weapons investigation being carried out by the UN in Iraq.
Moreover, the agreement calls for at least 100 monitors to be stationed in Iraq to make sure aid financed by the oil sales is effectively distributed.
Saddam would have preferred holding out for a complete lifting of economic sanctions. But information made available to the UN over recent months heightened suspicions that Saddam is still trying to conceal the true dimensions of his weapons program. The prospects for a quick removal of the embargo were growing ever dimmer.
On top of that, Saddam's Kurdish adventure in September, backing one warring faction against the other, caused the United States to temporarily withdraw its support for even limited oil sales. But things in northern Iraq have since quieted, with a cease-fire holding among the Kurds. Iraqi troops have withdrawn, but it's anyone's guess how many of Saddam's agents are active in the north.
Washington, in any case, appears happy to have the UN oil-sale deal go forward. The oil revenue should bring at least a measure of relief to average Iraqis, who have suffered under the sanctions. Food prices in Baghdad have declined a bit. But it's not likely that enough cash will flow in to substantially reduce Iraq's economic stress. The humanitarian issue, which has dogged the US and UN, is thus eased, not resolved.
The immediate outlook is for indefinite extension of this six-month oil sales arrangement, in hopes of providing better food and care for Iraq's people while its dictator remains fenced in. Saddam may hope that this opening can be widened into more and more sales as the world rediscovers its thirst for Iraqi oil. Those economic pressures will be felt, but they will be kept under control if enough world leaders stay mindful of the cost of letting Saddam rebuild his dream of military glory and conquest.