Wednesday, December 15, 2010

12-15 Bloomberg Iraq’s Economy Boosted by Lifting of UN Trade Restrictions

Iraq’s economic prospects were aided today as U.S. Vice President Joe Biden led the United Nations Security Council in lifting trade restrictions imposed in response to former dictator Saddam Hussein’s 1990 invasion of Kuwait.

The 15-member Security Council, with Biden acting as chairman, voted to adopt three resolutions that ended the trade sanctions, closed the 1990s UN aid program known as oil-for- food, and gave the government in Baghdad six more months’ protection of its oil revenue from potential creditors.

“The Security Council welcomes the positive developments in Iraq,” Biden said in a statement that also was agreed to by the panel. He said the Security Council “recognizes that the situation now existing in Iraq is significantly different from that which existed at the time of the adoption” of the trade sanctions.

The most important resolution for Iraq ended sanctions imposed in 1991 to prevent Hussein 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, and to begin a civilian nuclear program.

Oil Revenue

Another resolution protects oil revenue deposited in the Development Fund for Iraq, created in 2003 to pay off debts incurred by the Hussein regime. The fund, held by Paris-based BNP Paribas SA, the world’s biggest bank by assets, has been overseen by the International Advisory and Monitoring Board.

The board will be dissolved and Iraq will take full control of its oil revenue on June 30, 2011. Iraq’s government awarded PricewaterhouseCoopers Jordan a contract in July to audit the fund. PricewaterhouseCoopers Jordan is affiliated with New York- based PricewaterhouseCoopers LLP, the world’s largest professional services organization.

Iraq will continue to be required to deposit 5 percent of its oil revenue in a UN escrow account that is used to compensate victims of the invasion of Kuwait. Iraq must also resolve issues with Kuwait relating to the border, missing persons and Kuwaiti government archives.

The other resolution closed 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 medicine. France abstained from the vote on the oil-for-food shutdown; the others measures were adopted unanimously.

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, invited leaders with similar rank to Biden’s to the Security Council meeting.


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