Online NewsHour: Oil-for-Aid

READY TO DEAL?

FEBRUARY 7, 1996
TRANSCRIPT
The Iraqi government has agreed to begin negotiations on selling oil to buy humanitarian aid for its people. Three experts discuss why Saddam Hussein has reversed his opposition to such talks. (Charlayne Hunter-Gault has a background report on conditions inside Iraq)

CHARLAYNE HUNTER-GAULT: Raghida Dergham covers the United Nations as senior diplomatic correspondent for the London-based Pan-Arabic newspaper "Al-Hayat." Christine Helms is director of country analysis for the Petroleum Finance Company, a Washington-based consulting firm, and Kenneth Katzman is an analyst with the Congressional Research Service specializing in Iraq and Iran. And, Mr. Katzman, I know you're here not representing any of your official attachments tonight, so let me--but let me just begin asking you: Why has Iraq come to the table now after so long insisting that agreeing would be an infringement on their sovereignty?
KENNETH KATZMAN, Congressional Research Service: Well, basically, their friends on the U.N. Security Council, France and Russia, have told them not to expect a lifting anytime soon of the oil embargo which would allow them to sell oil unfettered, without any monitoring at all. That provision is linked to the outcome of the weapons inspections. And from the defections of Saddam's, some of Saddam's inner circle, new revelations were made--this was in last August--new revelations were made--
CHARLAYNE HUNTER-GAULT: Son-in-law--
MR. KATZMAN: His son-in-law defected to Jordan.
CHARLAYNE HUNTER-GAULT: To Jordan.
MR. KATZMAN: New revelations then came out which showed that Iraq even after the embargo was imposed had continued to procure components for missiles, test-prohibited missiles, design-prohibited missiles, and that had not been forthcoming on virtually any of its weapons of mass destruction programs. And therefore, the Council would not anytime soon lift the oil embargo.
CHARLAYNE HUNTER-GAULT: So was it France and the other country--
MR. KATZMAN: Russia.
CHARLAYNE HUNTER-GAULT: --Russia--who told them to straighten out now and come, or was it--
MR. KATZMAN: Well, yeah--
CHARLAYNE HUNTER-GAULT: --how--
MR. KATZMAN: They basically said we can't support, we can't push in the Council for any lifting because of these new revelations, and they had previously been telling Iraq that if you continue to comply and the U.N. weapons inspectors get finished, we will push for a lifting in the oil embargo, but now with these new revelations we can't support you on that now.
CHARLAYNE HUNTER-GAULT: So what's got them to the table now?
MR. KATZMAN: Well, essentially, this humanitarian situation has gotten worse. The dinar has continued to plummet. Prices have continued to rise, and they realize they're not going to be able to resolve that situation anytime soon.
CHARLAYNE HUNTER-GAULT: Ms. Helms, do you have anything to add to that?
CHRISTINE HELMS, Petroleum Finance Company: Well, yes. I think the defections were a very significant factor from Saddam's point of view. It completely changed the political landscape for him in one very significant--
CHARLAYNE HUNTER-GAULT: Because why?
MS. HELMS: --In one very significant way--because after the Gulf War, King Hussein of Jordan was isolated in the Arab world because of his sympathies for Iraq and because he had tried to end the crisis without full-scale hostilities. His country had been isolated, economically hurt by the return of workers from the Gulf region. In 1993, he moved towards the U.S., joined the Arab-Israeli peace process.
CHARLAYNE HUNTER-GAULT: All of this is King Hussein.
MS. HELMS: Exactly. And of course, the defections accelerated his moves to re-establish relations with Saudi Arabia and with Kuwait before, in fact, Iraq agreed to enter into a willingness to--with a dialogue on the oil sales, the Saudis, in fact, indicated they would sell oil to Jordan, and this opened the fear from Iraq's point of view that Jordan, which is it's major lifeline to the outside world, would sever relations, further isolating Saddam Hussein.
CHARLAYNE HUNTER-GAULT: Raghida Dergham, does this mean what you've been hearing, if you agree, does this mean that Saddam is ready to swallow the affront to his sovereignty now?
RAGHIDA DERGHAM, Al-Hayat Newspaper: (New York) Because they are hurting in Iraq and because of the two points made earlier, the position of some members of the Security Council and the shift in Jordan's position, it seems that Iraqis really need to do something. They need to import oil, and they need to take care of this devastating economic situation and humanitarian situation.
CHARLAYNE HUNTER-GAULT: Just how bad is it?
MS. DERGHAM: Well, like you said in your report, it's apparently quite bad, and the trouble is that it's having an impact not only on the civilians but on the whole structure of the country, and as it is expected that Jordanians might stop importing their oil from Iraq, it seems that the Iraqis need to export their oil so that they can take care of their immediate needs, and that is why a lot of people feel their sincerity in this particular round of talks, that they are keen on implementing the resolution you refer to as Resolution 986, and they are here to, to negotiate and arrangements, the mechanisms of implementing that resolution, there's been a general feeling or general reporting that they are here to renegotiate that resolution, which is absolutely not correct, because--
CHARLAYNE HUNTER-GAULT: Well, in fact, the United States said in, you know, the spokesman speaking for Amb. Albright in a way warned Iraq, as I understood it, that they weren't there to renegotiate the contract.
MS. DERGHAM: Well, both the Secretary General of the United Nations and the Iraqi sides understand very well that there is no room whatsoever to renegotiate that resolution. Boutros-Ghali, the Secretary General, in his invitation, in his official invitation to the Iraqis, he said that he is coming out of his concern for the humanitarian situation and that he would like to discuss arrangements for implementing 986 because this is entrusted to him, and the Iraqis I spoke to, many Iraqis, and they seem to be quite clear on this, that there is no way that they are coming here to renegotiate that resolution. But--
CHARLAYNE HUNTER-GAULT: Let--
MS. DERGHAM: --arrangements of implementation.
CHARLAYNE HUNTER-GAULT: Okay. Mr. Katzman, what is your understanding about the sanctions and how it's affecting the people? Is it affecting all people in Iraq equally? I mean, is it affecting the military as well as the people we've seen in the tape?
MR. KATZMAN: To a much less extent it's affecting the military and the security forces, but even there I think over the past year or so we've some erosion in Saddam's ability to buy off the military, support his proteges, his main supporters, and I think to some extent this led to tensions within his family, the Teqriti clan from which he comes, and even before the defections we talked about earlier, he had started moving the family out of the power structure a little bit and restoring the Baath Party loyalists that he had relied on previously.
CHARLAYNE HUNTER-GAULT: Ms. Helms, the point of the sanctions was to bring down Saddam Hussein initially. I mean, is that any closer to happening and will the lifting of these sanctions, if it happens, how will that affect this?
MS. HELMS: Well, there are several views on it. I mean, from the U.S. perspective, obviously, the defections gave them hope that, in fact, if they could continue the sanctions that there would be sufficient pressure either for a military coup or a popular uprising; however, from inside Iraq, what you find is growing frustration, anger directed a lot towards the United States, that they see this as a political ploy to overthrow Saddam, but the argument is that it's basically hurting the population as a whole. And it's an unequal hurt, because obviously the poorest people are the most affected by sanctions, but I would say that as the U.N. has themselves noted, the Secretary General's office, there are something like 2.4 million children under the age of five who are severe risk of malnutrition and death, and there is no preventive medicine, and there is protein deficiency on the part of even adults now.
CHARLAYNE HUNTER-GAULT: Raghida Dergham, what is your sense of the strength of the Hussein--Saddam Hussein regime at this point?
MS. DERGHAM: Well, the whole region, the countries of the region and the United States, they are searching for ways to see, to assess that strength and to see various ways of weakening it. What's different between a 986 adoption in April, back in April, and its talk about it now, is the political circumstances, at that time, like Ms. Helms mentioned earlier, the Jordanians on good terms with the Iraqis. Now they are not. There is an idea of encircling the Iraqis, so that the Iraqi regime would weaken, and, and so that there will be a consensus in the Arab world to bring down a substitute. The trouble is where there is a dilemma for many people and many countries is that the suffering of the Iraqi people, the real--the real need for alleviating that suffering, and that is why the idea--
CHARLAYNE HUNTER-GAULT: So you're saying that the Security Council wants to be able to lift these sanctions now, wants a deal?
MS. DERGHAM: The Security Council offered the deal in April. The political climate is different right now, and the trouble that some parties may be facing is how to alleviate the suffering without rewarding the regime. By alleviating the suffering right now, there is some fear that this might strengthen the regime of Saddam Hussein and give him a sort of breather, the way out of this encirclement, which is a strategic choice.
CHARLAYNE HUNTER-GAULT: Right.
MS. DERGHAM: So, in effect, there is a rethinking of 986, it's a dilemma for all. If, if Baghdad implements it, it's a dilemma for those who really want the strategy of overthrowing the regime to succeed.
CHARLAYNE HUNTER-GAULT: Mr. Katzman, what is the thinking about whether or not Saddam can be trusted to implement the, you know, to spend the money for the--the way it's intended and the mandate for humanitarian purposes to aid the Kurds to help the Kuwaitis and so forth?
MR. KATZMAN: Well, the issue of trust is always a big issue when you're dealing with Saddam, and that's why the resolution talks a lot about the U.N. is to--if this is implemented, they're to set up a system whereby U.N.-appointed agents will monitor the oil contracts, that they're at fair market value, the distribution to make sure it's equitable, and of course, the Kurds have to get their 13 to 15 percent of the aid, so they've built that into the resolution. The problem I see is that Saddam will be exporting through his Gulf oil terminals. We don't know quite how much, but there will be some exports, and there is a chance I believe that Saddam might try to smuggle Iraqi dates to export dates. We've had a big problem with that recently, and he may try to abuse the resolution.
CHARLAYNE HUNTER-GAULT: Ms. Helms, what impact do you see in the oil markets if this, if the sanctions are lifted?
MS. HELMS: Well, for now, as long as the negotiations are ongoing, oil will probably trade in a very narrow range. WTI will trade probably between $17.25 and $18.50 a barrel. The minute there is announced that there is a breakthrough, assuming that there is, oil prices will probably drop $2, maybe even more, to $12 a barrel.
CHARLAYNE HUNTER-GAULT: Will we feel the impact here in the United States?
MS. HELMS: No, because even gasoline refiners will be processing much more expensive crude, and it would take months for it to have an impact on gasoline. But the important thing really is how soon will OPEC react. The prices will remain depressed as long as OPEC doesn't take an action.
CHARLAYNE HUNTER-GAULT: Raghida Dergham, in New York, what is the sense of whether or not there will be a deal that will result in the sale of oil?
MS. DERGHAM: The head of the negotiating team, the Iraqi head of the negotiating team, Amb. Anbari, he said that there was no problem with the substance, and he described the outstanding issues as marginal. In, in that sense that if there is a political decision by Baghdad to go ahead and implement this resolution in the terms that are acceptable to the Security Council, I don't think that anybody on the Security Council is going to block that.
CHARLAYNE HUNTER-GAULT: In a word, do you think there'll be a deal?
MS. DERGHAM: It depends--it depends if Saddam Hussein finally goes for it or not.
CHARLAYNE HUNTER-GAULT: Okay.
MS. DERGHAM: --the political judgment of Saddam Hussein--it's in their court. It's in the Iraqis' court.
CHARLAYNE HUNTER-GAULT: All right. Just briefly, Mr. Katzman.
MR. KATZMAN: I think there's some evidence that the Iraqis really are going to accept it, because they've been encouraging celebrations in Baghdad. They've announced that they've got their Gulf ports ready to go. Saddam held a meeting, talking about progress on this, and they've gone a really far way, and I think to walk it back now would be very difficult without a deal for Saddam.
CHARLAYNE HUNTER-GAULT: All right. Well, thank you all for joining us.


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