Iraq suspends oil exports

The US wants to crackdown on oil smuggling

Iraq has announced that it is stopping all oil exports from Monday morning.

The move is in protest at Friday's resolution by the United Nations Security Council extending by a month the existing sanctions regime under which Iraq is allowed to export oil in exchange for food and medicines.

The new sanctions regime is designed to tighten grip on the Iraqi authorities

Baghdad had rejected the extension - part of a review of international sanctions against the country.

Saudi Arabia says it will offset the shortfall resulting from the Iraqi move, which it is estimated will wipe around 2.2 million barrels per day off the world oil market - about 8% of total Opec output.

Justifying its decision, Baghdad said the Security Council had failed "to respect, in spirit or in letter" a memorandum of understanding which launched the oil-for-food programme in December 1996.

Baghdad had wanted to continue with the six-monthly extension of the deal that has been in use since then.

"Iraq will halt exports of crude oil from ports on the Arab Gulf and the Mediterranean as of 8:00 a.m. local time (0400 GMT) until further notice," the official news agency INA said.

Turkey says Iraq has already stopped pumping oil to its Mediterranean port of Ceyhan.

Tariq Aziz rejected the deal before the vote

The Security Council resolution - passed unanimously by its 15 members - is intended to allow more discussion of a new sanctions regime proposed by the United States and United Kingdom.

They want to abolish the embargo on civilian trade, while tightening a ban on weapons and controls on smuggling.

The Iraqi authorities, who many believe profit from illegal oil sales, have threatened to stop selling oil altogether if the so-called "smart" sanctions are adopted.

Sanctions' slide

The five permanent Security Council members - the US, UK, France, China and Russia - agreed the one-month extension after much dispute.

The last three, which have supported moves to ease the embargo, want more time to study the US-UK plan. All five have veto power in the council.

The oil-for-food programme is an exemption for humanitarian reasons to stringent sanctions imposed after Iraq's 1990 invasion of Kuwait.

Under the programme, proceeds from Iraqi oil sales go to a UN escrow account out of which suppliers of medical goods and foodstuffs ordered by Iraq are paid.

The escrow account would stay in place under the new plans, thereby denying Iraq free use of its oil revenues.

International support for the embargo has dwindled amid a growing perception that they hurt the Iraqi people more than President Saddam Hussein.