Iraqi Oil Ready To Roll

Iraq said Monday it has accepted the latest extension of the U.N. oil-or-food program, but it also condemned the United Nations as a "mute devil" for ignoring U.S. and British air strikes on Iraqi soil.

Foreign Minister Mohammed Saeed al-Sahhaf has informed U.N. Secretary-General Kofi Annan of his country's decision in a letter published Monday by the Iraqi News Agency.

"In order to expose the ill-intentioned parties, Iraq has agreed to extend the memorandum of understanding signed between Iraq and the United Nations on May 20, 1996 for another six months," al-Sahhaf said in his letter.

On Tuesday, the Security Council approved a six-month extension of the U.N. humanitarian program for Iraq, aiming to get more aid to its neediest people and provide the country's ailing oil industry with up to $530 million in additional funds.

The resolution will increase the funds available for humanitarian purposes by 5 percent. But whether Iraq actually gets the money will depend on whether it is willing to cooperate with the United Nations, which is required to monitor how the funds are spent.

It took the Iraqi leadership almost a week and three meetings of its top leadership to decide on the deal.

Under the four-year-old program, Iraq is allowed to sell oil, provided that the money goes for food, medicine and other humanitarian supplies and equipment to rebuild its frayed oil infrastructure. The program was launched to help ordinary Iraqis cope with the effects of U.N. sanctions imposed to punish Iraq for its 1990 invasion of Kuwait.

Iraq has long opposed the oil-for-food program, arguing that it only serves to perpetuate sanctions that it wants lifted immediately. Under Security Council resolution, sanctions can be lifted only after U.N. inspectors certify that Iraq's weapons programs have been dismantled. But Baghdad has barred the return of inspectors, who pulled out ahead of U.S. and British air strikes in December 1998.

In his letter, al-Sahhaf reiterated Iraq's criticism of the program, telling Annan that the United States and Britain consider the deal "a permanent measure and an alternative to the lifting of the sanctions," according to INA.

"The Security Council...acts as a mute devil that doesn't demand or call on these two members to stop their daily aggression on Iraq," al-Sahhaf added.

U.S. and British jets have been patrolling no-fly zones over northern and southern Iraq in a program designed to protect Kurdish and Shiite groups against government forces. Baghdad does not recognize the zones and has been challenging the planes since late 1998. Iraq's official notification to the U.N. of its approval ended weeks of speculation over the humanitarian program and the fate of Iraqi oil flow to world markets.

Iraq had cut off its oil flows, about five percent of the world's exports, after U.N. oil overseers rejected Baghdad's original December oil prices for being too low.

The price dipute was finally settled on Friday after a U.N. committee accepted Iraq's revised December oil prices.

There was no immediate sharp price reaction to the Iraqi move, which traders have been expecting. Oil prices have fallen heavily over the past 10 days.

An Iraqi oil official says oil exports are ready to roll as soon as weather permits in the southern port of Mina al-Bakr.

U.N.-mandated paperwork might also be holding up some of the exports.

Industry sources say some of the tankers queued up in the Gulf need to have their letters of credit renewed before loading could commence.

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