Not About The Oil Huh.

By EDITH M. LEDERER
Associated Press Writer

April 4, 2003, 2:02 AM EST


UNITED NATIONS -- The United States will have to go back to the bitterly divided U.N. Security Council for approval to tap Iraqi oil revenues for reconstruction or to award contracts to modernize the oil industry, a senior U.N. official said.

The Bush administration has made oil central to its postwar plans, choosing a former U.S. oil executive to resuscitate Iraq's oil industry and saying it wants to use the nation's vast reserves to finance rebuilding.

But Mark Malloch Brown, administrator of the United Nations Development Program, said Thursday the United States as an occupying power in Iraq doesn't have authority over its oil riches.

Iraq's oil is currently sold under the U.N. oil-for-food program, which is controlled by the Security Council. The proceeds go into a U.N.-run escrow account and are used primarily to buy food, medicine and humanitarian supplies. Even though no oil is being shipped at the moment, only the Security Council can change how it is sold -- and what the money is used for.

Similarly, any U.S.-run administration in Iraq would not be entitled under international law to award American companies major contracts to modernize and run Iraq's oil industry, Malloch Brown said.

"Under the Geneva Conventions, which will be the only international legal framework unless and until there is a new Security Council resolution, you are only as the occupying power able to deal with day-to-day administrative decisions," he said.

For the United States, going to the Security Council to divert oil money to reconstruction or reward U.S. companies will be not be easy, not least because France and Russia have extensive oil concessions in Iraq.

France, Russia, Germany, China and other countries on the 15-member council opposed the U.S. and British rush to war, arguing that Iraq could be disarmed peacefully through strengthened U.N. weapons inspections.

The strong opposition forced Washington and London to drop a resolution that would have given U.N. backing to the war. But days later, they attacked Iraq without council authorization.

Malloch Brown said "emotions are still high" and "a lot of damage has been done" but he held out hope that council members will return to the table to agree on post-conflict arrangements for Iraq.

The United Nations, he said, will be pushing for quick restoration of Iraqi civil authority to control the people and the country's resources, including its oil.

"In the interim, we will equally be pushing for as international and broad-based as possible a management of both the humanitarian and reconstruction (problems)," Malloch Brown said.

He said he believes "the overwhelming consensus of the international community" is that the best way to get from occupation to self-government in Iraq is through U.N. management and a U.N.-brokered political process.

The French, Germans and even the British, the closest U.S. ally, agree that a U.S.-British occupation of Iraq "is going to create huge problems," he said.

Malloch Brown questioned the wisdom of U.S. plans to install an American ministerial team in Iraq rather than rely on Iraq's highly trained bureaucracy.

Philip Carroll, who was president and chief executive of Shell Oil Co., the U.S. arm of the London-based Royal Dutch/Shell Group, from 1993 until his retirement in 1998 confirmed to the Houston Chronicle Thursday that he had been asked by the Defense Department to restore oil production and create new production capacity if needed.

"If you take the oil sector, any potential American oil company investing in the modernizing of those fields will need legal assurance that the concessions that it's granted are secure for a 10-20 year horizon, a kind of payback period for this industry," he said.

But Malloch Brown said Washington has no right to authorize such concessions.

"You are not able to either change the constitution or make legal commitments with the country going ahead many years of any major kind," Malloch Brown said.
Copyright © 2003, The Associated Press
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