POLITICS-IRAQ/KUWAIT: UN Grants Huge Payout to Oil Company

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Sep 28 2000 (IPS) - The United Nations Compensation Commission has awarded reparations totalling 15.9 billion dollars to a Kuwaiti oil company for losses suffered as a result of Iraq’s 1990 invasion of Kuwait, the largest award granted by the Geneva-based commission since it was created nine years ago.

The Kuwaiti government had sought compensation for two petroleum corporations, for a total of 21.6 billion dollars, to cover damages incurred during Iraq’s seven-month occupation of the country beginning in August 1990.

But the UN reduced the award for Kuwait Petroleum Corporation to 15.9 billion dollars, reported Iranian diplomat Mojtaba Kazazi, the commission’s governing council secretary.

Thursday’s compensation decision was counterbalanced by a decision reached Wednesday by the UN Security Council in New York, which reduces the quota of Iraqi oil income that goes to the Compensation Commission from 30 to 25 percent.

Diplomatic sources in Geneva said the large award for the Kuwaiti company and the reduced percentage of Iraqi oil export funds earmarked for the UN were the result of deals made in New York, which ultimately won approval by the full 15-member council.

The UN trade sanctions against Iraq, long the source of criticism from non-governmental humanitarian organisations and several nations, were also challenged last week by two permanent members of the Security Council: France and Russia.

Paris and Moscow each sent flights to Baghdad transporting humanitarian aid, claiming the embargo does not cover shipments meant for Iraq’s civilian population.

Joe Sills, the US consultant to the Compensation Commission and serving as its spokesman, declined comment on the possibility that the reduced percentage of Iraq’s oil sales withheld for the Compensation Fund means a weakening of support for the sanctions against Iraq.

He stressed, however, that “the compensation regime which was set up by the Security Council and the embargo are two completely different things.”

The Compensation Fund created by the UN to handle claims for Gulf War losses and damages is fed by the 30 percent portion of Iraqi oil sales and by part of Iraq’s frozen international assets.

The fund’s income has grown slightly in recent months, reaching a monthly average of 400 million dollars due to rising oil prices on the world’s markets. This influx corresponds to the 30 percent formula of Iraqi petroleum exports.

Sills said the new 25-percent quota would mean a decline in income for the fund, but that it would ultimately depend on the performance of oil prices, and would mostly affect the largest claims for compensation.

“At the end of September, the fund will have about 1.2 billion dollars on hand to continue the payments under the timeframe established by the government council. The next payment will be over one billion, and would be made in October,” he said.

Another oil company claim before the Compensation Commission came from Saudi Arabia for the amount of 749 million dollars, but was rejected because it was considered to be outside the commission’s jurisdiction.

The commission did accept Japan’s claim for its Arabian Oil Company, but granted only 22 million dollars in reparations, though the original request had been for more than 562 million.

Prior to this week’s sessions in Geneva, the commission had focused its attention on individuals, government and companies that had suffered losses as a result of the Gulf War, awarding a total of eight billion dollars.

The claims received so far run as high as 2.6 million dollars each, for a combined sum of more than 300 billion dollars.

Sills announced that the Compensation Commission’s next stage of work would target the delicate issue of environmental damages caused by the Gulf War.