May 2, 2003	Friday	Safar 29, 1424

WASHINGTON, May 1: Iraq must be given at least 18 months without any payments on its crippling external debt, US Treasury Undersecretary John Taylor said on Thursday.

“The first thing to do is to make sure that we are not going to start requiring service payments on that debt in, say, the next year and a half,” Mr Taylor told a conference here.

“Certainly for the short term — a year and a half at least — there is really no expectation that payments will be made,” he told the Center for Strategic and International Studies (CSIS).

Mr Taylor, the Treasury Department’s undersecretary for international affairs, said the scale of Iraq’s debt mountain was still uncertain, although it was massive.

Iraq’s total external public debt has been estimated to be around 127 billion dollars, including accrued interest, but exact government figures are lacking.

The Paris Club of rich creditor nations met one week ago to examine the extent of Iraq’s debt and said it would take several months to complete its task.

“Some of our people — our advisers — in Baghdad are going to be going through the records to find out what the debt is,” Taylor told analysts at the conference here.

“It is huge and we are going to deal with it,” he said.

SANCTIONS: Chances are slim the UN Security Council will lift sanctions against Iraq in June despite US President George Bush’s call to get the United Nations out of the multibillion dollar Iraq oil-for food plan, diplomats said on Thursday.

Instead envoys say a suspension or phase-out of the sanctions is more likely when the current tranche of the oil-for-food programme, the heart of the embargoes, expires on June 3.

That programme, which began in 1996, puts Iraq’s oil revenues into a UN-administered fund out of which suppliers of food, medicine and other goods Iraq orders are paid.

Before the war some 60 percent of the population was totally dependent on the programme, designed to ease the impact of sanctions imposed when Iraq invaded Kuwait in Aug 1990.

The United States is not expected to produce a draft resolution for a week or so, with administration officials saying differences still persist between the US military, which wants one “omnibus” resolution, and the State Department, which advocates step-by-step measures.

In addition, staunch ally Britain, which is expected to co-sponsor or at minimum lobby council members for the resolution, has substantial reservations about the US proposals, especially the Bush administration’s disregard for a political role for the United Nations or UN arms inspectors.

The United States wants Security Council support for a resolution that would effectively sideline the United Nations in Iraq and transfer the country’s oil wealth to a new Iraqi government. The measure would ask the Security Council to appoint a UN envoy in an advisory role but it would exclude UN arms inspectors from verifying Iraq is clean of weapons of mass destruction, diplomats said.

Bush administration officials argue that since the sanctions were imposed to restrain the government of Saddam Hussein after he invaded Kuwait, there can be little justification for keeping them in place now that he is gone.—AFP / Reuters