UN extends Iraq oil regime

Iraq wants more control over its oil revenues

The United Nations Security Council has voted unanimously to extend Iraq's oil-for-food programme for another six months, just hours before the current regime expired.

The humanitarian programme allows Iraq to sell some of its oil under UN supervision, and use the proceeds to buy food, medicine and other goods.

Any other oil exports are banned under sanctions imposed about Iraq's 1990 invasion of Kuwait.

The extension, agreed after days of intense debate, includes a new provision which will allow Iraq to spend some its oil revenue locally - until now, the money has been held by the UN to pay for imports.

List extended

Some funds can now be used to pay Iraq's oil workers and fund repairs to its petroleum infrastructure.

The UN move comes just days after Iraq halted its oil shipments in response to the UN's rejection of its proposal to charge customers a surcharge outside the oil-for-food programme.

Baghdad argued that it was not getting enough from its sales under the programme and needed extra funds to maintain its oil fields and equipment.

The BBC's correspondent at the UN says some diplomats had predicted that Baghdad would not resume its supplies until after it had the chance to analyse the details of this latest renewal of the UN programme.

There was no immediate response from Baghdad.

Smuggling

The security council has also extended the list of goods which Iraq can import without seeking special approval to include electrical and housing supplies.

During the negotiations on the renewal, the UK and the United States had proposed that there should be a formal report on the level of oil smuggling by Iraq through routes not authorised by the UN.

But this proposal was dropped after extensive discussions between council members.

Since the programme began in December 1994, it has generated $37bn.

Some $24 billion if this amount has gone to humanitarian programmes.

Currently, contracts valued at $2.5bn have been placed on hold, mainly by the United States and there is $4.7 billion available to purchase goods.