Step 1: agree size of new oil-for-food programme

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By Paul Eedle

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Hundreds and hundreds of trucks cross Iraq’s borders with Jordan, Syria, Turkey and Iran as Baghdad tries to earn money outside the UN framework.

The initial oil-for-food programme, which began in December 1996, lets Iraq sell $2 billion worth of crude oil every six months. The Security Council has offered to increase this to $5.2 billion. But this would mean in effect that the Security Council, dominated by the Western states that defeated Iraq in 1991, would be controlling virtually every cent that Iraq could earn. So Iraq is saying it wants the programme to be no more than $4 billion every six months.

A diplomat following the negotiations told me:
"The Iraqis came back saying they couldn't pump more than $4 billion. That means they can probably pump $6 billion and sell $2 billion discreetly and do something else with the money."

There's a further complication that 30% of the initial $2 billion is set aside for war damages to be paid to Kuwait and other claimants. The Iraqis don't want 30% of the extra revenue paid into the Compensation Fund.

Estimated time to negotiate: it's already been two months since the $5.2 billion figure was approved. Another two months to finalise it?

TWO MONTHS - JUNE 1998?

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