Security Council Permits Limited Oil Sales by Iraq, Sets Compensation Payment Rate: Also Demands Iraqi Compliance with Disarmament Measures

UN Chronicle, December 1991 | Go to article overview

Security Council Permits Limited Oil Sales by Iraq, Sets Compensation Payment Rate: Also Demands Iraqi Compliance with Disarmament Measures


The Security Council on 15 August partially lifted a ban on the sale of Iraqi oil and set compensation payments for damage inflicted on Kuwait during the war at 30 per cent of Iraq's annual oil exports. It also demanded Iraq's compliance with diarmament measures imposed following the Gulf war. It did so in adopting three more resolutions related to the situation between Iraq and Kuwait.

In unanimously adopting resolution 705 (1991), the Council decided that Iraq's compensation payments for losses and damage resulting from the 2 August 1990 invation of Kuwait and the subsequent seven-month occupation should not exceed 30 per cen of the annual value of Iraq's exports of petroleum and petroleum products. That percentage would be reviewed from time to time, the Council stated.

The resolution was prepared during consultations on the basis of the Secretary-General's suggestion.

Resolution 706 (1991), also adopted on 15 August, among other things, stipulated the terms for the limited sale of Iraqi oil and oil products, so that essential civilian needs could be met under strict conditions and with close UN monitoring. The sum to be produced by Iraq's limited oil exports could not exceed $1.6 billion, the Council stipulated.

A recent humanitarian mission to Iraq by the Secretary-General's Executive Delegate, Sadruddin Aga Khan, determined that the present food, health and nutrition situation there was "critical". There were widespread shortages of essential medicines and medical supplies.

On 4 September, the Secretary-General recommended (S/23006) the basic structure and measures for the sale of Iraqi oil, aimed at meeting that country's humanitarian requirements. Noting that there would be a shortfall of approximately $800 million in the amount estimated by the Executive Delegate as necessary to meet the humanitarian and essential civilian requirements, the Secretary-General reported that he would, at the appropriate time, recommend an increase in the maximum figure of $1.6 billion.

Iraq must report monthly on its gold and foreign currency reserves. It will be permitted to sell its petroleum products for a six-month period, with full payment by purchasers deposited into a UN-established and -controlled escrow account. Funds from that account would then be used to purchase essential foodstuffs and supplies for civilian needs, cover the costs to the UN of its roles in this respect and meet Iraq's financial obligations under previous Council resolutions.

Those obligations include Iraq's payments to the UN Compensation Fund to pay claims by victims of Kuwait's invation and occupation; the full costs of destroying, removing or rendering harmless Iraqi weapons of mass destruction, and monitoring Iraq's compliance with its diarmament requirements; UN expenses incurred in facilatating the return of all Kuwaiti property seized by Iraq; and half the expenses of the Iraq-Kuwait Boundary Demarcation Commission, established on 17 May.

The Secretary-General was to report on activities to facilitate the repatriation or return of all Kuwaiti and third-country nationals or their remains present in Iraq on or after 2 August 1990.

Resolution 706--sponsored by Belgium, France, the USSR, the United Kingdom and the United States--was adopted by a vote of 13 to 1 (Cuba), with 1 abstention (Yemen).

On 19 September, the Council adopted resolution 712 (1991) to implement resolution 706 on the sale of Iraqi oil.

Confirming the ceiling of $1.6 billion, the Council authorized the immediate release by the Secretary-General of the first one third of that amount from the escrow account, subject to the availability of funds, to meet Iraq's essential civilian needs.

The Council urged that any provision to Iraq of foodstuffs, medicines and supplies to meet those needs should be undertaken through arrangement which assured their equitable distribution. …

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Security Council Permits Limited Oil Sales by Iraq, Sets Compensation Payment Rate: Also Demands Iraqi Compliance with Disarmament Measures
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