The U.N. Security Council unanimously approved Friday the expansion of its existing ‘oil-for- food’ programme on Friday and Secretary-General Kofi Annan arrived in Baghdad to mediate a tense standoff over weapons inspections.

The Council vote will allow Iraq to be partially exempted from seven-year-old U.N. sanctions so that it can sell more than 5.25 billion dollars worth of oil over a six-month period and use the proceeds to buy humanitarian goods and rebuild infrastructure.

In addition, Iraq will also be exempted from sanctions to pay for “reasonable expenses related to the Hajj pilgrimage,” the Muslim obligation to visit the Saudi Arabian city of Mecca.

At the same time, the Council also requests Annan “to enhance the United Nations observation process in Iraq” to ensure that the food and medicine purchased through the programme will be distributed fairly and that no funds will be diverted to unauthorised projects.

Annan also is authorised to send a team to Iraq to study whether it is even capable of pumping enough oil to earn the amount of money approved by the Council, and to recommend adjustments if Iraq’s deteriorating infrastructure is not up to the challenge.

Iraq has never agreed immediately to the ‘oil-for-food’ arrangements, preferring instead to seek an end to the embargo – and it is likely that Saddam Hussein’s government will not promptly accept the current deal. Iraqi Ambassador Nizar Hamdoon already has raised some objections to the scope of the programme, arguing that it may violate Iraq’s sovereignty.

Still, at a time when the United States has massed thousands of troops and aircraft in neighbouring countries and the Persian Gulf in preparation for a possible attack on Iraq, the wide support for the humanitarian deal is loaded with symbolism.

For Iraqi supporters in the Security Council, including France and Russia, the unanimous vote is a conciliatory gesture designed to show Saddam the benefits of agreeing with Annan over the next few days to open up eight presidential sites to U.N. weapons inspectors.

For the United States – which has threatened strikes on Iraq if the sites are not opened up promptly – support for the oil-for- food expansion shows that Washington is not eager to harm Iraqi civilians.

“The United States is deeply concerned about the welfare of the Iraqi people, and we want to do everything we can to make sure their basic needs are met,” argued U.S. Ambassador Peter Burleigh. Such humanitarian support of the Iraqis “stands in stark contrast to the policies of Iraq’s leadership…while Iraqi children have gone hungry, Saddam Hussein has diverted scarce resources to build more palaces and weapons of mass destruction,” he said.

The existing oil-for-food programme, however, has been criticised within the United Nations as insufficient to meet Iraq’s humanitarian needs after the dramatic damage following the 1991 Gulf War and U.N. sanctions.

The expanded deal was developed only after a U.N. team determined that the current exemption, under which Baghdad sells two billion dollars of oil every six months, had done little to avert sickness and malnutrition in the country.

“In almost all sectors, food, nutrition, health, electricity and others, the situation is described as grave and deteriorating,” noted Swedish Ambassador Hans Dahlgren. “It has been clear to all of us that something had to be done urgently to address the alarming humanitarian situation and alleviate the plight of the Iraqi population.”

Many Council diplomats also hope that the unanimous support for expanding the humanitarian programme sends, in Dahlgren’s words, a “clear and important signal to the Iraqi government” that could help Annan’s talks in Baghdad.

After his arrival in Baghdad Friday, Annan met Deputy Prime Minister Tariq Aziz and both men voiced confidence that they could find a peaceful solution to the dispute over the presidential sites.

Before leaving Paris, Annan told reporters that “we have all the elements to succeed if everyone works conscientiously and with goodwill and the determination to avoid unnecessary bloodshed for the Iraqi people, who have suffered enough.”

U.N. officials said that Annan is likely to meet the Iraqi president over the weekend, and expects to return back and report to the Council early next week.

U.S. officials have insisted they will reject any deal struck with Saddam that does not uphold Security Council resolutions and U.S. national interests – leaving many diplomats here to speculate an attack could be launched by the end of February.