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Last Updated: Tuesday, 18 May, 2004, 13:18 GMT 14:18 UK
Iraq 'wants control of oil money'
Iraq oil refinery
Iraq has some of the world's biggest proven oil reserves
Iraq will ask the United Nations to cut the amount of money it pays in war damages, as well as granting it complete control of oil revenues.

An Iraqi delegation will meet the UN on Wednesday, according to Reuters.

Deputy Foreign Minister Hamid Bayati is quoted as saying that Iraq will push for a reduction in war reparations, currently set at 5% of oil revenues.

Mr Bayati argues that Iraqis should not be held responsible for wars started by deposed leader Saddam Hussein.

Reclaiming power

He also claims that Saudi Arabia and Kuwait, the two countries which are owed the majority of damages, have benefited from a ban on Iraqi oil exports between 1990 and 1996.

"We will negotiate on the basis that Iraq must be fully in charge of its resource wealth and the 5% oil revenues we pay must be reduced further," Mr Bayati told Reuters.

Iraq must be fully in charge of its resource wealth
Hamid Bayati, deputy foreign minister

At present, any money earned from oil sales is paid into an account at the Federal Reserve Bank of New York controlled by the US.

Iraq is expected to take control of the funds after the Coalition hands formal power to Iraqi leaders on 30 June, though the US wants to keep an international board in place to monitor the account.

Mr Bayati said that Iraq must play a full role in any decision making process.

Iraq has so far paid about $20bn (11.3bn) in war reparations and the UN last year cut the percentage of oil revenue it hands over to 5% from 25%.

Pipeline progress

But money from the sale of crude oil is set to play a vital role in financing the rebuilding of Iraq, as well as helping the nation re-establish its independence, analysts said.

Burning oil well in Kuwait
Setting fire to Kuwait's oil wells has proven costly for Iraq

Since the US-led invasion of Iraq last year, revenue from oil sales has totalled more than $9 billion.

The subject has proved controversial in the past and the UN is currently investigating allegations of corruption linked to its oil-for-food aid programme.

Under the plan, set up in 1995, Iraq was able to sell oil to finance purchases of medicine, food and other essential humanitarian supplies.

In a separate report on Tuesday, Iraqi officials were quoted as saying that a sabotaged oil pipeline in the south of the country had been repaired.

Oil ministry spokesman Assem Jihad said: "We began experimental pumping this morning and it was successful".

He continued: "The crude reached the Basra terminal and if everything goes according to plan, we will quickly return to our normal export levels".

Following the attack, oil minister Mohammed Bahr al-Ulum highlighted the difficulties in protecting the 7,000 kilometres (4,375 miles) of pipelines stretched across Iraq.

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