- UNITED NATIONS (Reuters)
-- Russia was unable to persuade the United States and Britain on Monday
to break a nearly year-old impasse on Iraqi oil pricing policy, which it
says has resulted in a disastrous drop of funds for the U.N. humanitarian
program for Baghdad.
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- Meeting after meeting among experts at the United Nations
has failed to solve the problem of so-called retroactive pricing, which
pits Russia, Iraq's closest ally in the council, as well as China against
the United States and Britain.
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- Russia's deputy U.N. ambassador, Gennady Gatilov, who
called for Monday's meeting on an ambassadorial level, saying that Iraq
had indicated it would drop a surcharge on every barrel of oil if the pricing
policy were changed.
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- "If they back to the original pricing scheme, then
Iraq drops the surcharges and then we are all set," he said.
-
- But James Cunningham, the U.S. deputy ambassador, said
first the illegal surcharge had to be dropped before any other plans could
be considered. "The surcharge needs to be eliminated as a first step
to dealing with the problem," he told reporters. "Then we are
willing to consider ways others have advanced to maximize exports -- but
without surcharges."
-
- At issue is the introduction by Iraq of illegal surcharges
as high as 50 cents on every barrel of oil as a way of partially circumventing
U.N. control over Baghdad's oil exports, one of its few sources of hard
currency. The surcharge is now estimated at 15 to 20 cents.
-
- To combat this, the United States and Britain last September
made sure Iraq's oil was not priced until after it shipments were made.
Previously, prices were set before buyers contracted for the oil, allowing
Baghdad to take advantage in price fluctuations to impose the surcharge.
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- Proceeds from Iraqi oil sales are to go to the U.N. oil-for-food
humanitarian program to ease the impact of U.N. sanctions, imposed in August
1990 when Iraq invaded Kuwait, on ordinary civilians.
-
- Russia and U.N. officials blame the current pricing system
for a precipitous drop in exports, which is jeopardizing the oil-for-food
program that now has a shortfall of $2.4 billion.
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- U.S. oil companies, for example, until several months
ago, were the top buyer of Iraqi oil. In January, they consumed almost
1 million barrels a day. This has been cut to less than 200,000 barrels
per day.
-
- But Cunningham said this was due to a "combination
of the pricing mechanism and the desire, not just of American, but larger
producers in general, not to be involved in oil that has surcharges attached
to it."
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- The United States wants some kind of mechanism, including
perhaps eliminating some middlemen who are paying the premiums, to make
sure Iraq does not reinstitute the surcharge. Moscow objects cutting out
the smaller firms, many of which are based in Russia.
-
- The oil surcharge is not the only controversy facing
the Security Council. U.S. and British envoys again accused Syria of receiving
an estimated $1.6 billion a year through a pipeline that was resurrected
in late 2000 after 18 years of lying fallow. Cunningham said smuggling
of oil in general was estimated at $3.6 billion a year, much of it overland.
-
- But Syria's deputy ambassador, Fayssal Mekdad, denied
U.S. allegations. He said the pipeline was tested, failed and was not operational.
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- "The old pipeline does not work. Any new pipeline
would be put under the sanctions committee and it will be observed like
any other pipeline," Mekdad said. "Syria has not sent a single
cent to the Iraqi government for anything."
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- He said the committee should listen to the Russian proposal
and the 'difficulties being faced by the Iraqi program."
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- "The retroactive pricing mechanism is the main cause
of the present situation," Mekdad said.
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