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Ramadhan's visit : UN clears Iraqi oil deal with India |
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The United Nations Sanctions Committee has cleared the Indo-Iraqi food-for-oil deal which had been hammered by the two countries during the visit last week of the Iraqi Vice President Taha Yasin Ramadhan, to New Delhi. The Iraqi ambassador to India, Salah Al-Mukhtar, told a seminar in New Delhi on Dec. 9 that the Committee had also fixed the price at which India would import oil in exchange for foodgrains, but said, the details would be known next week only.
India might be one of the major beneficiaries if Iraq succeeds in implementing recent decisions to change the pattern of its oil exports. Firms from Russia and other countries which have been lifting Iraqi oil could find themselves on a black-list and excluded from further trade if they re-sell Iraqi oil to the US or the UK and are thus under pressure to look for alternative outlets. Russian and Chinese companies had been supplying 750,000 barrels per day to the US refineries alone. Iraq has now said that any company found supplying crude to a “country in a state of war with Iraq, will be put on a blacklist and that there would be a partial or full ban on dealing with that company along with other punishments that may be decided upon. If Iraq also exempts friendly countries from a new surcharge that it is seeking to impose on oil sales then much of the 2.3 million barrels per day [bpd] that it produces could flow to India and points further East. At present, over a third of Iraq’s oil lands up with the US or US companies. If sales to these destinations are banned, there will be over 700,000 bpd available in the market with the holding companies looking around for customers. Since about 40 per cent of India’s oil imports are met from the spot market, there might be an immediate price benefit from this Iraqi decision. Any benefit on this account will be separate from the benefit accruing from the agreement recently signed for a barter trade between India and Iraq under the “crude for food” programme.
In a solution on Dec. 6, the UN Security Council has extended the four year old “oil for food” programme that Baghdad was demanding, including faster delivery of electrical equipment, more funds for the poorest and additional $530 million to help is ailing oil industry.
Outcome of Ramadhan’s visit : Food for oil swap deal
After Myanmar, Iraq became the second country under international sanctions with which India has decided to do business. Close on the heels of the visit of Myanmar’s number two in the ruling military hierarchy, Gen. Maung Aye, last week, India played host to the Iraqi Vice-resident, Taha Yasin Ramadhan. The Vajpayee Government began with low key contact with Baghdad when the Minister of State for External Affairs, Mr. Ajit Panja visited Baghdad recently accompanied by a high level business delegation. The visit of Mr. Ramadhan which coincided with the meeting of Indo-Iraqi Joint Commission meeting in New Delhi, resulted in an agreement “in principle” to buy oil from Iraq and pay in the form of foodgrains. This food-for-oil agreement is, however, subject to clearance by the UN sanctions committee which is running a parallel food-for-oil programme to enable Iraq to meet its humanitarian needs. India hopes to buy crude oil from Iraq at a price below the one fixed by the OPEC and at the same time get rid of wheat glut in the godowns of the Food Corporation of India which are overflowing with wheat stocks from last year even as procurement of wheat from this year’s crop has already begun. The cost of storing the enormous mountain of wheat has been putting an enormous burden on the Government expenditure. Neither the cost of crude and wheat nor the quantity has, however, been specified in the swap deal.
The UN resolution permits countries “confronted with special economic problems arising from the carrying out” of the sanctions to approach the Security Council “with regard to solution of these problems.” India’s need for import of crude oil at competitive prices would thus entitle it to approach the Security Council to permit increased oil imports from Iraq.
After talks with Mr. Ramadhan, India has vowed to work with other countries to get the UN sanctions against Iraq lifted. A Foreign Ministry spokesman pointed out after talks that continuation of the sanctions imposed after the Gulf War was “unjust, unwarranted and detrimental to the interests of the Iraqi people.”
Side by side with the visit of Mr. Ramadhan, a three-day meeting of the Indo-Iraqi Joint Commission was held in New Delhi, co-chaired by the Iraqi Oil Minister Mohammed Rashid and Petroleum Minister of India, Ram Naik. Apart from the meeting of the Joint Commission, private entrepreneurs under the auspices of the Federation of Indian Chambers of Commerce and Industry, signed Memoranda of Understanding with the Iraqi side. Ramadhan urged Indian businessmen to invest in his country. Addressing the FICCI meeting, he said that positive steps and cooperation with Iraq during its difficult times would be reflected in the Iraqi position after the sanctions are lifted.
Indian industry could look into the possibilities of cooperation in the areas of petroleum and petrochemicals, power and infrastructure sectors, he added. The ONGC Videsh of India will cooperate in exploration of oil in Iraq. It is already participating in an international bid for developing the Tuba oilfields in Iraq.
Welcoming the visit of Mr. Ramadhan, political observers call it the first decisive step by New Delhi in reorienting its ties with Baghdad since the end of the Gulf war in 1991. They say, it is an eloquent testimony to India’s empathy for the suffering people of Iraq. The UN sanctions have been kept in force for nearly a decade since the US masterminded eviction of Saddam Hussein’s military forces from Kuwait. In simple but profound terms, the cumulative effect of the sustained UN embargo is an unmitigated humanitarian disaster for the Iraqi population. In the past couple of years, there has been a growing demand from an increasing number of countries that the sanctions against Iraq should be lifted. India has also called for the removal of the sanctions which have caused immense suffering and deprivation to the people of Iraq. Several countries have revived either contacts with Iraq. In recent months, delegations from France, Russia and China have visited Iraq and there have been more senior level visits from Malaysia and Indonesia. Some of the Arab countries have also initiated contacts with Baghdad in recent times. Several countries have made efforts to skirt the UN embargo in their dealings with the Iraqi Government. There has been considerable pressure from a number of countries for the easing of the sanctions against Iraq. Several Arab countries have also called for lifting of sanctions as the public mood in the countries has been affected by the distressing conditions of the Iraqi people. However, the US has been insisting that Iraq should allow the U N weapons inspectors back into the country. The question of the return of the weapons inspectors to Iraq has come to be directly linked to the lifting of the sanctions against the Saddam Hussein regime.
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