Weapons of Mass Destruction (WMD)

United Nations -- Iraq is insisting that a "pricing mechanism" for oil sales be agreed upon before other snags in the oil-for-food program can be worked out, the United Nations said October 23.

Speaking with journalists after briefing the Security Council privately, U.N. Undersecretary General Chinmaya Gharekhan said that Secretary General Boutros Boutros-Ghali and the U.N. secretariat have been working with Iraq to resolve the problems that arose after the Iraqi army moved in to quell fighting in the Kurdish area in the north, but Baghdad has imposed new conditions on the program that was devised by the Security Council in resolution 986 to provide humanitarian aid to Iraqi civilians suffering the effect of the six-year-old economic embargo against Iraq.

The U.N./Iraqi talks have "covered good ground but we still have problems," Gharekhan said.

"Iraq has conveyed to us very recently that the question of the pricing mechanism or pricing formula is of primary importance for Iraq. Until and unless the pricing mechanism or formula is settled and is approved by the (Sanctions) Committee, Iraq cannot move ahead with the implementation of 986," Gharekhan said.

The Security Council's Sanctions Committee is responsible for overseeing all aspects of the mandatory, wide-ranging economic embargo on Iraq. The committee was responsible for negotiating "expedited procedures" so it would not have to be involved in every contract.

The procedures, which were accepted by Iraq and the 15 council members in August include "overseers" who will have the power to approve standard oil contracts without committee involvement unless pricing or other details change, Iraq's dealings with Turkey -- whose pipeline will be used to ship the crude; the export to Iraq of humanitarian supplies, parts and other equipment; financial transactions; and approval of expenses.

Council members and other diplomats did not see the absence of an agreed-upon pricing formula as holding up the start of the oil sales. They said it meant that the Sanctions Committee would have to meet and approve the price for the sales until an agreement was reached on a formula.

However, Iraq has now informed the U.N. that it will not proceed until the formula is set. Iraq is expected to present a revised version of its August pricing formula to the committee soon, the undersecretary said.

Iraqi officials "are saying that once the pricing formula has been approved by the (Sanctions) Committee, this would create a better atmosphere, better environment ... for the search for solution of the other problems," Gharekhan said.

In the meantime, he said, the U.N. and Iraq will continue talks on the other issues that have arisen in the last month about the freedom of movement of U.N. staff in the north, whether the current local U.N. staff in the Kurdish area will be replaced, and the number of observers that will now be needed to oversee the aid distribution.

Asked about the security conditions in the Kurdish area, Gharekhan said that the "situation keeps changing day to day, but we have to go ahead" with the plans to implement resolution 986.

Just when the oil sales might begin cannot be predicted, Gharekhan said. "We have so many other issues to settle now. We will see about that later."

The United Nations held up the start of the "oil-for food" program after Iraqi forces entered the northern Kurdish area in September. The plan, under which Iraq will be allowed to sell $2,000 million of crude oil over six months on a renewable basis in order to buy food, medicine and other humanitarian supplies for Iraqi civilians, calls for U.N. monitoring of the distribution of supplies.

However, the original plan did not involve U.N. monitoring in the Kurdish areas because the distribution was to be handled by U.N. and private aid workers already providing assistance to the Kurds. Since the incursion by Iraqi forces, aid workers and their local employees have expressed concern about their safety, their jobs, and whether they would be able to distribute the much needed supplies as they see fit.

NNNN