Iraq Lobbies U.N. for Cut in Gulf War Reparations

07 April 2010 – Reuters

Iraq is seeking to reduce the amount of annual oil revenue it sets aside for war reparations, primarily to Kuwait, by 80 percent, the Iraqi ambassador to the United Nations told Reuters on Tuesday.

Nearly 20 years after Iraq, then under the rule of Saddam Hussein, invaded its oil-producing neighbor, Baghdad is pressing the U.N. Security Council to “forgive this compensation or reduce the percentage.”

Iraq has said it owes $25.5 billion in reparations, with $24 billion due to Kuwait alone.

“We think either to forgive the compensation 100 percent or to reduce it to 1 percent,” Ambassador Hamid al-Bayati said. “We can accept 1 percent,” he added.

Under Chapter 7 of the U.N. Charter, Iraq is setting aside 5 percent of its oil revenues to pay war reparations that resulted from the invasion and occupation of Kuwait in 1990-1991.

Asked what the 15-nation panel charged with overseeing peace and security issues at the world body was considering, al-Bayati said: “I think the Security Council is trying to convince other groups, like the U.N. Compensation Commission, to meet in the middle, something like that.”

Kuwait has opposed ending Iraq’s Chapter 7 status. Baghdad argues it needs the extra cash to help fund rebuilding and investment projects.

Al-Bayati said the government’s budget estimates $72.4 billion this year in oil revenue. That would mean annual payments could potentially be cut to roughly $724 million from $3.62 billion.

Iraq has the world’s third largest oil reserves, but years of neglect and war have left its oil fields dilapidated. It has awarded billions of dollars of contracts to major oil companies seeking to expand production capacity to 12 million barrels per day (bpd) in about six years from about 2.5 mln bpd now.

Nations such as the United Kingdom have previously endorsed Iraq’s request to lower the war reparation payments.

U.N. Secretary-General Ban Ki-Moon has said he would also strongly support Iraq and others to come up with alternative solutions to the payments.

Al-Bayati said the payments are a big burden on Iraq and its “people are paying a heavy price for a crime committed by Saddam.”

“So far we have paid over $27 billion and we still have to pay over $25 billion. So the total would be around $53 billion in compensation, which is a lot for Iraq given our budget,” al-Bayati said.

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