ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, May 21, 1996 TAG: 9605210095
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
DATELINE: UNITED NATIONS
SOURCE: Associated Press
NOTE: Below
Facing economic collapse after nearly six years of U.N. sanctions, Iraq accepted a U.N. offer Monday to sell limited supplies of oil to buy food and medicine for its 20 million people.
The agreement, which would curb gas prices worldwide, allows Iraq to sell $1billion worth of oil every 90 days to ease suffering brought about by sanctions imposed after Baghdad invaded neighboring Kuwait in 1990.
``This resolution is based on one of the most important objectives of the United Nations, which is to alleviate the problem of poverty and the poorest of the poor who are suffering in Iraq,'' U.N. Secretary-General Boutros Boutros-Ghali said. ``I hope that the adoption of the resolution will encourage the government of Iraq to implement all the other resolutions.''
``At last our efforts have been fruitful,'' Iraq's chief negotiator, Abdul Amir al-Anbari, said Monday after signing the agreement with U.N. legal officer Hans Corell.
Al-Anbari said Iraqi oil could begin flowing in a month, but Western diplomats thought it would take six to eight weeks. Corell said several steps must be completed first: For example, a bank must be selected to hold the oil revenues, and the Iraqis must submit their plan for distributing the supplies.
Oil prices, which have fallen more than $4 per barrel in recent weeks in anticipation of a deal, dropped immediately after the accord was announced but recovered quickly.
Stock prices roared ahead Monday as investors, buoyed by the prospect of cheaper oil, pushed the Dow Jones industrial average to a record close for the first time in seven weeks. The news drove oil company shares higher. That helped drive the Dow up 61.32 points to close at 5,748.82, finishing above the 5,700 mark for the first time. The market's previous high was 5,689.74, set April 3. Other indexes, including the Standard & Poor's 500 stock index and the Nasdaq composite index, also ended the day with record highs.
Oil had been Iraq's chief export, and the ban on sales devastated the Iraqi economy. Italy's U.N. ambassador, F. Paolo Fulci, told the Security Council on Monday that infant mortality in Iraq had risen to 40 percent and brought ``suffering almost beyond belief.''
For years, Iraq repeatedly refused to enter into negotiations with the United Nations, because it wanted full control of where the proceeds would go. Baghdad changed course in February, however, apparently because its economic plight worsened and it realized the U.N. embargo was unlikely to be lifted any time soon.
In addition to buying humanitarian supplies, revenues from the oil sale will also be used to pay war reparations to Kuwait, help Iraq's Kurdish minority and cover the costs of U.N. monitoring operations in Iraq.
Sanctions will remain in place until the Security Council believes Iraq has complied with demands to dismantle its weapons of mass destruction and comply fully with U.N. inspectors.
Britain and the United States, which had strongly opposed earlier drafts of the proposal, hailed this agreement. Al-Anbari said the two sides had reached a tentative agreement last month - at least until U.S. and British officials objected, saying it contained loopholes that Iraqi President Saddam Hussein could exploit to keep aid from his opponents and illegally import weapons.
``It's an excellent day for the people of Iraq,'' said U.S. Ambassador to the U.N. Madeline Albright, adding she was satisfied the agreement provided sufficient controls to preclude Iraqi cheating.
Iraq's return to the oil markets would be good news for the Clinton administration, because high gas prices have emerged as an issue in the U.S. presidential campaign.
In Washington, White House spokesman Mike McCurry called the oil sale ``long overdue'' and an important victory in the United Nations' efforts ``to meet the humanitarian needs of the Iraqi people.''
``We're satisfied the proceeds from this sale will go to the people who are suffering,'' McCurry said.
He said Iraq should comply with all other Security Council resolutions as well, but added that would ``be incompatible with Saddam Hussein's continued tenure in office.''
Under Monday's agreement, Iraq pledged to guarantee equitable distribution of humanitarian supplies. U.N. monitors will confirm the arrival and distribution of the goods and have unrestricted freedom of movement and immunity. They also will be responsible for distributing goods in Iraq's Kurdish areas.
U.N. monitors also will oversee the flow of oil, and review all Iraq oil sales documents to make sure the money was spent for humanitarian supplies, not weapons or other banned products.
The flow of Iraqi oil onto world markets could lower gasoline prices in the United States by a nickel or more a gallon at the pump this summer.
``Gasoline prices will probably stay up for another four to six weeks. Then, after the July 4th weekend, you may see a slight decline,'' said Thomas H.L. Curtis, an energy analyst for the Computer Petroleum Corp.
LENGTH: Medium: 94 lines ILLUSTRATION: PHOTO: (headshot) Boutros-Ghali. color.by CNB