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Iraq oil money retains US protection"

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1 Iraq oil money retains US protection" on Mon Jul 04, 2011 4:17 pm


1 GREAT NEWS-End of Chapter 7-Iraq is now free from U.N. Security Council sanctions for the first time in more than two decades Today at 2:39 pm

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Join date: 2011-06-20


BAGHDAD – Iraq is now free from U.N. Security Council sanctions for the first time in more than two decades – both a measure of the country’s progress and a harbinger of the challenges that accompany full sovereignty.

“This arrangement has come to an end,” said Iraqi Foreign Minister Hoshyar Zebari, who has orchestrated Iraq’s gradual fiscal liberation “to give Iraq its full freedom to manage its resources.”

It’s a double-edged sword. Iraq is no longer bound by international restrictions and oversight and can mainstream its economy by joining the World Trade Organization and rating its sovereign debt. But these restrictions were accompanied by international legal immunities preventing claims on Iraqi funds – all of which ended on June 30.

Iraq retains some protections under an American executive order, which was signed by President George W. Bush in 2003 and extended under President Barack Obama, most recently through May 20, 2012. Unlike the former U.N. immunities, however, the American protection does not cover Iraqi funds held outside the U.S.

Beyond the boundaries of the remaining American immunity, Iraq’s assets are now exposed to countries, companies and individuals who claim they are owed billions of dollars.

Much of Iraq’s debt was either waived or discounted in post-2003 agreements orchestrated by the United States. But Iraq still has an estimated $30-plus billion in outstanding bills – mostly reparations due to Kuwait from the 1990 invasion and war, but also sovereign and business debt.

An unknown number of bill collectors have been waiting for the day, which has now arrived, when they can take their claims to courts around the world. That uncertainty is the biggest risk for Iraq going forward, experts said.

“They (Iraqis) are not sure what claims are out there,” said a U.S. official familiar with Iraq’s finances. “If they are not aware, they are not sure how much they owe.”

Under the U.N. sanctions regime, Iraqi oil revenue flowed directly into the Development Fund for Iraqi (DFI), which was overseen by a U.N.-mandated body called the International Advisory and Monitoring Board (IAMB). Among other responsibilities, the IAMB ensured that five percent of revenues went towards paying Kuwaiti war reparations.

Kuwait and Iraq have a contentious relationship. The two countries recognize mutual interests – such as the need to delineate land and water borders and negotiate the development of cross-border oil and gas fields – but haven’t been able to reach agreements.

As part of the deal removing the U.N. sanctions, Iraq has agreed to continue setting aside 5 percent of its oil revenues, most of which goes to Kuwaiti reparations. Although Iraqi officials have complained this percentage is too high, they can’t dismiss it altogether: if Iraq reneges on those installments, Kuwait could turn to the courts for an immediate payout.

“Through our successor agreement, we made sure the five percent will still be paid” as talks continue, Zebari said.

Kuwait has recently angered Iraq by moving forward on a massive commercial port which, though in its own territories, could have a negative impact on Iraq’s plans to build a port on the Fao peninsula.

And Kuwaiti Airlines, which claims a $1 billion-plus tab is due from Iraqi Airways for theft of planes and parts in 1990, has said it will enforce a British court order by seizing any assets outside of Iraqi territory, including oil.

Such a move is unlikely because Iraqi crude, once it leaves Iraqi territory, is typically in the custody of another country or an international company.

And it won’t happen in the United States. “Any sovereign account has immunities,” said the U.S. official. “And the executive order gives extra immunities on top of that.” If the money stays in the United States, it is protected from attachment because no lawsuits can be filed in the United States and decisions by other country’s courts won’t be honored.

Iraq is now in charge of its own finances. Its central bank has taken control of the DFI, which consists of an estimated $50 billion held at the Federal Reserve Bank of New York, and an Iraqi Committee of Financial Experts (COFE) will play the oversight and auditing role previously performed by IAMB.

Like IAMB, COFE is subcontracting much of its auditing work to PricewaterhouseCoopers.

Iraq remains unsteady with violence and political disputes hampering development, but the country’s new financial sovereignty will allow it to enter the international marketplace and receive a sovereign debt rating, potentially spurring further investment.

Iraq has the third-largest proven oil reserves in the world and has already opened up to foreign oil investment. Exports have earned more than $30 billion so far this year – an enormous sum which nonetheless pales in comparison to the country’s reconstruction needs.

“The way investors look at Iraq is purely, purely, purely an oil play,” said Farouk Soussa, chief Middle East economist at Citibank, in a recent interview. He said the protection of Iraq’s money was key, as investors “just look at whether the cash flow is going to be sufficient.”

Ben Van Heuvelen contributed from New York.

Actual Article Title: "Iraq oil money retains US protection"

2 Re: Iraq oil money retains US protection" on Mon Jul 04, 2011 6:01 pm


Unfortunately, Chapter VII is not gone, it is still in effect as there are still Chapter VII resolutions that have not been resolved. Chapter VII will not be removed until the original resolution, 661, has been declared "null and void."

There should be a Security Council meeting this month regarding the renewal of the UNAMI resolution which I believe expires either at the end of July or first part of August. UNAMI was not set up under Chapter VII. It is a separate program from the Chapter VII resolution setting what sanctions are in effect. Unami personnel have, however, been playing the lead role in attempting to resolve the remaining Chapter VII resolutions. The UNAMI report due to the Security Council this month should provide information regarding the progress of the remaining Chapter VII items.

3 Re: Iraq oil money retains US protection" on Mon Jul 04, 2011 7:34 pm


From wikipedia definition of 661...it's EXACTLY what Iraq was let out of in December, and TODAY ..I'm pretty sure they are out

In United Nations Security Council Resolution 661, adopted on August 6, 1990, reaffirming Resolution 660 (1990) and noting Iraq's refusal to comply with it and Kuwait's right of self-defence, the Council took steps to implement international sanctions on Iraq under Chapter VII of the United Nations Charter. This was the second resolution by the Security Council over the invasion of Kuwait.

The Council therefore decided that states should prevent:

(a) the import of all products and commodities originating in Iraq or Kuwait;

LIFTED--they are ready to import and impose tarrifs

(b) any activities by their nationals or in their territories that would

promote the export of products originating in Iraq or Kuwait, as well as the transfer of funds to either country for the purposes of such activities;


(c) the sale of weapons or other military equipment to Iraq and Kuwait, excluding humanitarian aid;


(d) the availability of funds or other financial or economic resources to either country, or to any commercial, industrial or public utility operating within them, except for medical or humanitarian purposes.


4 Re: Iraq oil money retains US protection" on Tue Jul 05, 2011 12:37 am


What was terminated in December was specific paragraphs of various resolutions. Yes, 661 was the start of the process, but there were a multitude of resolutions issued after 1990 that added a whole lot of additional Chapter VII mandates (sanctions). Here are a couple of quotes from the Secretary General's last two reports.

S/2011/213 (March 31, 2011)
--paragraph 21--The adoption of Security Council resolutions 1956 (2010), 1957 (2010) and 1958 (2010) on 15 December marked an important milestone in Iraq’s exit from Chapter VII obligations. This leaves outstanding mainly the country’s Chapter VII obligations related to the situation between Iraq and Kuwait. Making progress on these outstanding issues, as indicated in my report of 27 July 2009, pursuant to paragraph 5 of Security Council resolution 1859 (S/2009/385) remains a prerequisite for the normalization of Iraq’s international standing equal to that which it held prior to the adoption of resolution 661 (1990).
--paragraph 64--I welcome the decision by the Security Council on 15 December 2010 to bring to an end a number of Chapter VII mandates, which marked a major step towards the normalization of Iraq’s international status. The onus is now on Iraq to demonstrate tangible and expeditious progress on its outstanding Chapter VII obligations, particularly on issues related to missing persons and archives, and compensation.

S/2011/373 (June 20, 2011)
--paragraph 2--The adoption of Security Council resolutions 1956 (2010), 1957 (2010) and 1958 (2010) in December 2010 lifted several major Chapter VII mandates on Iraq. This mainly left Iraq’s obligations to Kuwait still outstanding.
--paragraph 18--Now that the organizational and logistical aspects of the search for the missing persons appear to be in place the goal of finding and identifying the victims and finally closing their cases is an imperative. Visible and tangible progress in this respect, together with other necessary steps on the part of Iraq to fulfil its obligations towards Kuwait under the relevant Security Council resolutions, should create a positive momentum and enable the Council to take up my report of 27 July 2009 pursuant to paragraph 5 of resolution 1859 (2008) (S/2009/385).

Both reports not only reference that there are still outstanding Chapter VII mandates but also a report that the Secretary General issued in 2009. The 2009 report was in response to the December/2008 resolution which said “go back and review all resolutions starting with 661.” That is what the Secretary General did, reviewed 18 years of resolutions, and his report states exactly what is still remaining in Chapter VII mandates.
2)Iraq-Kuwait boundary maintenance project
3)Return of all Kuwaiti nationals remains, property and archives
5)Development fund
6)Residual activities of the oil for food program
7)SC committee established pursuant to resolution 1518 (2003)
8)Other relevant mandates.

He also states in his last report (June 2011) that it is time for the SC to go back to that report. The SC in their press release (June 22, 2011) said they would consider his request. The concern that I see is that each of the three resolutions which were issued in 2010 included reports that the SG is to submit. There is also monies set back in escrow accounts to be held until 2016 with reports required from the SG. One is for 20 million and the other is for 131 million. How the SC can legally retain Iraqi funds unless Chapter VII continues is a point of law that I have not yet found an answer too. There is also the issue of disarmament in that Iraq has to vote on the additional protocol. To date I have not seen any report stating Iraq has complied. The SC states they want to review this issue in one year (Dec/2011) to see if Iraq has voted on the protocol and the SG is to report back to the SC. Additionally, each of the three resolutions issued in December/2010 have the last sentence as “Decides to remain actively seized of the matter" which in the legal terminology of the SC means these resolutions are still on the table. They have not yet gone away. So all in all, Chapter VII is still definitely alive and well.

It will be interesting to see what the SC does at the UNAMI meeting which should be held this month. They could make significant changes if they so elect. If not, then I would expect that it would be December before we might see further activity.

5 Re: Iraq oil money retains US protection" on Tue Jul 05, 2011 3:47 pm


Gente at J4D sent it to me in a PM.....

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