U.S. Seeks End of Iraq Trade Sanctions at Biden-Led UN Meeting

The Obama administration wants to use a meeting of the United Nations Security Council, to be chaired by Vice President Joe Biden, to end trade sanctions on Iraq that were a response to Saddam Hussein’s 1990 invasion of Kuwait.

The U.S. is seeking agreement at the Dec. 15 meeting on three draft resolutions that would write a “new chapter” in Iraq’s history, according to Ambassador Claude Heller of Mexico, a Security Council member. “It is to show there is a new Iraq,” Heller said.

One resolution would lift trade sanctions imposed in 1991 to prevent Iraq from acquiring materials that could be used for chemical, biological or nuclear weapons. While no such weapons were found after the U.S.-led invasion in 2003 toppled Hussein, the sanctions have restricted Iraq’s ability to obtain certain chemicals and other goods needed to develop its agriculture and industry.

The two other resolutions would give Iraq a six-month extension of UN protection of $800 million in oil revenue from potential creditors and would close the remaining accounts of the oil-for-food aid program, which allowed Hussein’s regime to sell $64 billion worth of oil from 1996 to 2003 to obtain food and medicines.

‘Very Real Progress’

“It’s an important opportunity for the international community to recognize the very real progress that Iraq has made, both in terms of government formation as well as the significant steps that have been taken to terminate its Chapter VII obligations,” U.S. Ambassador Susan Rice told reporters on Dec. 2.

The Security Council adopted resolutions following Iraq’s Kuwait invasion under the authority of Chapter VII of the UN charter, which authorized the sanctions and the military action that liberated Kuwait.

The resolution on trade sanctions faces resistance from China, a veto-holding permanent member of the Security Council, according to Yang Tao, political director of China’s mission to the UN.

Yang said China wants to see the Iraqi government accept a higher level of scrutiny from the International Atomic Energy Agency before the sanctions are lifted. This so-called additional protocol would give the Vienna-based UN nuclear watchdog agency access to more information and sites in Iraq.

“We think it is better to let Iraq’s congress approve the additional protocol first, to show their sincerity, legally,” Yang said. “We have no questions about the sincerity of the Iraqi government but, legally, we need something.”

Extension Sought

Iraq’s government won’t get the one-year extension of UN protection it sought for the Development Fund for Iraq, an account held by Paris-based BNP Paribas SA, the world’s biggest bank by assets. The fund, into which Iraq deposits 5 percent of all oil revenue, was established after the 1991 Gulf War to pay off debts incurred by the Hussein regime.

The Security Council extended the fund’s immunity from creditors for a year last December and said then that it was the last time such protection would be granted. In late October, Iraqi Foreign Minister Hoshyar Zabari made the case for another year of immunity in a report to the Security Council that cited the delay in forming a government following elections in March and concern that previously “unidentified commercial creditors may attempt to seize Iraqi funds and assets.”

At a Security Council meeting last month, the U.S. and the U.K. resisted the requested extension of immunity, then compromised on a six-month period in acknowledgment of the delay in forming a new government.

Biden has focused on Iraq since the Obama administration took office in January 2009. The U.S., which holds the presidency of the Security Council in December, has invited leaders with similar rank to Biden’s to the Security Council meeting.

To contact the reporter on this story: Bill Varner at the United Nations at wvarner@bloomberg.net

To contact the editor responsible for this story: Mark Silva in Washington at msilva34@bloomberg.net

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