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Iraq: British-U.S. Plan For 'Smart' Sanctions Faces Resistance

A U.S.-backed British plan to impose so-called "smart sanctions" on Iraq has run into obstacles at the UN Security Council, where Russia says it needs more time to consider the question. RFE/RL correspondent Charles Recknagel looks at the difficulties facing the British-U.S. proposals and why they now look unlikely to be passed before the two countries' original self-imposed deadline of the end of this week.

Prague, 31 May 2001 (RFE/RL) -- Signs have been growing throughout the week that the new U.S.-supported British proposals for imposing so-called "smart sanctions" on Iraq are running into serious resistance from Russia.

Yesterday, U.S. State Department spokesman Philip Reeker summed up progress by saying that "it may take some time to work out" a compromise. Reeker told reporters: "Some countries, including Russia, have raised some concern which may take some time to work out. But we believe that [the] issues can be resolved if everyone is serious, and we're focused on making controls more sustainable and manageable without weakening controls on Iraq."

Reeker's remarks appeared to confirm reports that the U.S., British, French, and Russian foreign ministers had been unable to find a common position on modifying sanctions when they discussed the proposals on the sidelines of a NATO ministerial meeting in Budapest on 29 May.

Diplomats in Washington and London had hoped the meeting might provide a breakthrough that would allow the UN Security Council to approve the sanctions changes before the start of the next six-month phase of the UN oil-for-food program, which comes up for renewal 3 June.

But news reports now quote U.S. and British diplomats as saying the Security Council will be asked to extend the current phase of the oil-for-food program to give more time for discussions. The U.S. and British officials say they want only a one-month extension, while Russia is seeking a six-month extension and France is suggesting a compromise of three months.

The differing attitudes toward an extension are a measure of the difficulties that London and Washington still have to surmount as they seek to replace the leaky current sanctions regime on Iraq with new "smart" sanctions.

The smart sanctions would ease restrictions on Iraq importing goods for its civilian economy while tightening controls over Baghdad's ability to bring in products that could have military uses.

But a precise list of banned and questionable supplies that the U.S. and Britain have distributed to the three other permanent Security Council members -- China, France, and Russia -- for consideration is proving extremely difficult to agree upon. Russia and China have said they need more time to analyze the list and France is supporting their request.

While the permanent Security Council members are now dealing with the list, other problems loom ahead. Some analysts say that even if the major powers can agree on a modified sanctions regime, the real test for the smart sanctions policy will be to convince Iraq's neighboring states to implement it.

Gerald Butt, a regional expert with the Middle East Economic Survey in Nicosia, Cyprus, says the most uncertain point regarding the smart sanctions is whether Turkey, Syria, and Jordan will enforce them.

Butt says the problem for these countries is that Iraq has clearly warned it will cut off all trade ties with them if they cooperate with the smart sanctions policy, which -- unlike the existing sanctions program -- is being defined without consulting Baghdad. Butt says the Iraqi threat is a serious one for the neighboring states because each regards Iraqi oil as an important component of its economy.

The analyst says that Jordan sees as vital the subsidized oil which the UN currently allows it to import from Iraq under a special exception to the sanctions. Iraq provides Jordan with 100,000 barrels per day of crude oil and petroleum products, half of it free and the other half at discount. Butt says:

"Jordan, in particular, [will be affected]. Its economy has been hard-hit ever since the Gulf War of 1991 and it really relies totally on getting subsidized supplies of oil from Iraq . And it is very hard to see, in the short term at any rate, where a substitute could be found as a source of oil if indeed Iraq stopped sending it across the border."

Turkey obtains a steady supply of Iraqi oil smuggled into its southeast region, which has been hit hard by the loss of legitimate Turkish-Iraqi trade under the sanctions. Butt comments:

"[Turkey] has got used to some 100,000 barrels a day of petroleum products and some crude coming across the border from northern Iraq into Turkey and playing a major role in the Turkish economy." At the same time, the analyst says Syria now also is obtaining large quantities of smuggled Iraqi oil at low cost. That enables Damascus to export more of its own locally produced oil at high profit.

"New on the scene also is Syria. Syria is now getting about 100,000 barrels a day of subsidized oil from Iraq and the Syrians indicate that they have no intention of agreeing to any arrangement that would stop that supply."

The trade ties mean that each of the three Iraqi neighbors must now determine how much it can afford to cooperate -- or not cooperate -- with smart sanctions.

The British and U.S. proposals would require the neighboring states to cooperate in monitoring Iraq's borders against smuggling to cut off any source of funds from Baghdad outside of UN control.

To assure the states could still get Iraqi oil, the proposals would allow them to legally import up to 150,000 barrels per day, with payments to be made to an Iraqi escrow account in each country. That would effectively solve their oil supply problems, but Iraq's threat to cut off all oil to them if they agree to the smart sanctions makes the point moot.

So far, officials in Jordan, Syria, and Turkey have said little publicly about how they feel about the smart sanctions proposals.

Jordan only has said it wants the UN to work toward a full lifting of sanctions. Syrian officials have said nothing but in recent months have visited Baghdad to strengthen their economic and political relations with Iraq. Turkey -- rocked by a recent economic crisis and seeking IMF loans and Western investment to recover -- is considered likely to cooperate with the smart sanctions but to demand sizeable compensation to do so.

U.S. and British diplomats have said that if Iraq cuts off oil to its neighbors, some compensation would have to be included in the smart sanctions package, either through the World Bank or through Iraq's oil revenues under the UN oil-for-food program. Iraq has sought to counter that compensation strategy by saying it is ready to cut off all oil exports if the smart sanctions proposals are adopted. Such a step would send oil prices higher but also destroy Iraq's civilian economy.

With the stakes over smart sanctions running high, it is now hard to predict how long the UN Security Council and Iraq's neighbors will need to determine their positions on the new proposals. The only certain thing is that both London and Washington remain determined to press for modifying the sanctions regime, a goal U.S. Secretary of State Colin Powell has made a priority since taking office in January.

Powell showed no signs of lessening his determination after the NATO foreign ministers' meeting in Budapest this week. Speaking to reporters, he summed up the latest Iraqi crisis by saying only that "we are hard at work in New York at the UN [and] you will see the results of these consultations in the near future."