America: a Beacon, not a Policeman	How Washington Blocks Rebuilding of Iraq Oil Industry	Americans Against World Empire  Homepage

LONDON FINANCIAL TIMES 2/4/00

IRAQI OIL INFRASTRUCTURE CRUMBLES AS SANCTIONS BITE

Company protests that US and UK action hurts the industry, writes Robert
Corzine

Oil and the army dominate Kirkuk. The birthplace of
the Iraqi oil industry 70 years ago, it is still one of the
world's great natural treasure troves. But it is also a
city that sits uneasily on the edge of rebellious
Kurdistan.

Inside the fence surrounding the sprawling
state-owned North Oil Company compounds, it is as
though a slice of British colonial life of the 1950s and
early 1960s has been preserved in aspic. Broad avenues lined with palm trees
and cypresses lead to the ageing but immaculately maintained offices of the
old British-dominated Iraq Petroleum Company.

Visitors can still enjoy a British breakfast served on English china under the
original high ceiling fans at the NOC clubhouse, where the staff take obvious
pride in a well tended garden. The serenity is broken by the roar of Iraqi jet
fighters taking advantage of some of the air space not denied to them by the
allied no-fly zones to manoeuvre overhead in the deep blue winter sky.

And just outside the compound, the Iraqi military presence is pervasive, with
AK47-toting military police at most intersections, armoured cars outside key
installations and soldiers manning machine-gun towers in the main street.

Although the oil industry and the army exist in such close proximity, NOC
officials dismiss suggestions that equipment needed to maintain Kirkuk's
output could be easily diverted to military use.

This week a team of international oil experts working on behalf of Kofi Annan,
the UN secretary general, completed a survey of Iraq's oil industry suffering
the effects of nine years of UN sanctions imposed after Iraq's invasion of
Kuwait.

Deficiencies in the process that allows Iraq to import limited quantities of
oilfield equipment and services, to sustain a creaking industry whose exports
are needed to finance the multi-billion-dollar UN humanitarian aid programme,
were high on their list of priorities. Oil ministry officials in Baghdad say the UN
team was generally sympathetic to the plight of Iraq's oil industry, but there is
deep scepticism about whether even a glowing report from the experts will
ease the situation.

Baghdad claims the US and UK have deliberately undermined provisions in
the process. Non-oil contracts, covering such areas as power generation and
water purification equipment, have also fallen victim to concerns - again mainly
from the US and UK - over their potential "dual use".

Rarely in the history of sanctions has the international community been faced
with devising a system that sustains and improves strategic civilian industries
while ensuring that a still extensive military machine does not become an
unintended beneficiary.

Iraq says its section of the strategic pipeline linking the giant Kirkuk oilfield in
north-eastern Iraq to the Turkish port of Ceyhan could fail at any time because
the UN has refused to approve the delivery of badly needed monitoring and
controlling equipment.

NOC, which operates the 1m b/d Kirkuk field, says that without a new
"tele-control" system, the risk of an accident or significant spillage on the
pipeline - which runs for 1,000km on the Iraqi side of the border alone - has
risen substantially.

"Without it you are blind," says Adil Al Qazzaz, a senior NOC director. The
problem is worse because the Turks have upgraded control facilities on their
side, and the two systems are no longer compatible. "As far as the
Iraqi-Turkish pipeline goes, we are living on our nerves," says Manaa
Al-Obaydi, NOC's director of engineering.

Earlier this week Iraq warned that it might suspend oil exports if there was no
progress in unblocking hundreds of civilian and humanitarian-oriented
contracts that are either pending or put on indefinite hold by the world body
because of concerns over the potential military application of some of the
equipment involved.

Iraqi officials are especially critical of US and British representatives on the
Security Council's so-called "661 Committee", which controls the flow to Iraq
of foreign-made spare parts and equipment under the UN oil-for-food
programme.

"Out of 377 contracts put on hold by the 661 Committee, 343 are on hold
because of objections from the US representative," according to a senior
ministry official. A further 28 are on hold because of objections by both the US
and UK, and four because of British objections only.

Representatives from the other Security Council members have asked that
only a total of two contracts be put on hold.

"Why bother with all this?" said the exasperated official. "Why not just do
without?"

That view is echoed at the operational level in the oil fields. Although any
decision to suspend oil exports would have to come from the highest levels of
Iraqi government, life in the oil fields would be little affected: "If anything it
would make life easier operation-wise," said one NOC manager as he tucked
a week old copy of Britain's Daily Mirror newspaper into his briefcase. "We'd
just go and play bridge."