U.S. Offers Plan For Iraq To Sell Oil For Food, Medicine Germ Weapons Report Makes Repeal Of Sanctions Unlikely

The United States and its allies on Thursday offered Iraq a plan to let it sell oil to buy food, medicine and other humanitarian supplies for its people.

The Security Council was expected to vote on the proposal today.

Iraqi Deputy Premier Tariq Aziz, who is in New York, was consulting with his government on whether it would accept terms of the draft resolution, a British diplomat said on condition of anonymity.

The plan aims to deflect criticism that ordinary Iraqis are suffering from U.N. economic sanctions in place since Saddam Hussein’s army invaded Kuwait in August 1990.

Chances for lifting sanctions - which include a ban on oil sales - dimmed this week after U.N. weapons inspectors said Iraq may be making germ warfare agents.

In contrast, the top U.N. nuclear weapons inspector for Iraq said documents published Sunday by a British newspaper suggesting that Iraq is secretly working on nuclear weapons appear to be fake.

The oil sale proposal, backed by the United States, Britain, Argentina and Oman, would let Iraq export $2 billion worth of oil over 180 days despite U.N. sanctions.

Iraq rejected a similar proposal in 1991 for a one-time sale of $1.6 billion in oil to raise money for humanitarian supplies, saying its conditions infringed on its sovereignty.

The new proposal would allow oil exports to continue as long as U.N. monitors certify that Iraq is ensuring “equitable” distribution of the supplies to its 18 million people.

It also includes language affirming Iraq’s sovereignty.

Of the proceeds, 30 percent would go to a U.N. fund to compensate victims of Iraq’s invasion of Kuwait, and up to 15 percent is earmarked for U.N. aid to Kurds in northern Iraq. Iraq would receive up to two-thirds.

Iraq would be required to export most of the oil through a now-dormant pipeline running to Turkey’s Mediterranean Sea coast.

Iraq has not indicated whether it could accept the latest U.N. offer.

But oil prices tumbled for a second day Thursday as traders speculated that Iraqi crude would soon be adding to world supplies.

In New York, light sweet crude oil for May delivery tumbled 40 cents to $19.15 a barrel after a 33-cent decline Wednesday.

President Clinton on Thursday denied a link between the U.N. sanctions and the release of two Americans sentenced to eight-year prison terms in Iraq. “The United States cannot make any concessions on the sanctions issue to get their release. That would be wrong,” he told CNN.