Iraq to lose UN protections on oil money

[yota691]

Iraq to lose UN protections on oil money

Iraqi Foreign Minister Zebari takes his seat before the start of a high-level United Nations Security Council meeting at UN headquarters December 15, 2010 in New York City. The Security Council is taking steps to restore Iraq's international standing by lifting sanctions including those that barred the country from obtaining a civilian nuclear program. On July 1, 2011, Iraq was officially free of UN sanctions restricting its oil revenues. (MARIO TAMA/Getty Images)

By BEN LANDO of Iraq Oil Report

Published December 16, 2010

BAGHDAD - Iraq has six months to come to payment terms with creditors and countries to which it owes at least $22 billion before the UN lifts the immunity that has protected Iraq from becoming financially insolvent.

In the aftermath of Saddam Hussein’s regime, Iraq is still subject to old debts and reparations claims. The immunity, first granted in 2003 by the UN, has been given one-year extensions since 2006, as Iraq's new politicians, facing a deluge of violence and reconstruction needs, have struggled both to find agreement with Kuwait and to create an accountable mechanism for monitoring their own revenues.

A simultaneous U.S. executive order of immunity, which expires in the spring, is expected to be extended to the June 30, 2011 UN deadline.

The immunities keep Iraq’s monthly oil revenues of $3 billion to $5 billion from attachment by creditors, as well as Kuwait to which it owes reparations from the invasion that triggered the sanctions. Other known debts account for a few hundred million dollars – though once the immunity is lifted, an unknown number of opportunistic creditors could seek recompense for previously unclaimed Saddam-era debts and grievances.

The immunity extension was one of three resolutions passed Wednesday by the UN Security Council. The others officially ended the graft-plagued Oil-for-Food program and provisionally removed the "weapons of mass destruction" blemish from Iraq’s name. If the country makes good on its International Atomic Energy Agency membership and cooperates with inspections and other protocols, it will be able to develop civilian nuclear energy.

The more than $600 million in Oil-for-Food funds will now be transferred to the Development Fund for Iraq (DFI), the bank account held at the Federal Reserve Bank of New York since the first 2003 UN resolution. All of Iraq's revenues from exported oil and oil products are deposited there, minus 5 percent set aside mostly for reparations to Kuwait.

The two countries are currently negotiating a successor mechanism to the current UN-administered DFI. Kuwait wants to ensure it will continue to receive monthly reparation deposits, while Iraq hopes to avoid any scenario where its neighbor makes wholesale claims to Iraq's funds after immunity is lifted.

The six months are a crucial time for Iraq's politicians, financial authorities and watchdogs.

The country has received relatively high marks by international auditors hired by the International Advisory and Monitoring Board (IAMB), the UN-mandated body that oversees the DFI. Those measures have largely succeeded at ensuring that oil exports are accounted for, that revenues are used to rebuild the country and benefit Iraqis, and that a full 5 percent is set aside to pay war reparations.

But auditors’ annual reports highlight crucial shortcomings, including a less than fully transparent flow between ministries and the DFI. At one point, the Oil Ministry's State Oil Marketing Organization, tasked with exporting and importing oil and fuel, held its own separate bank account in violation of the UN mandate, though it has since been closed.

Iraq has also been slow to implement a metering system for its oil sector. According to the minutes from the Oct. 14-15 meeting of IAMB, auditors PricewaterhouseCoopers said that as of 30 June, 2010, only 75 percent of the meters scheduled to be installed by that date had been installed, some of which were not being properly used or calibrated.

Moreover, Iraq must begin accounting for any fuel sold by the semi-autonomous Kurdistan Regional Government, whose exports have been a poorly guarded secret and receipts for which have never been sent to Baghdad, let alone the DFI. According to the Security Council resolutions and the DFI mandate, all oil, fuel and natural gas sales are to be deposited in the DFI.

Iraq plans to expand oil production capacity from about 2.5 million barrels per day (bpd) currently to more than 13 million bpd within seven years. Most of the expansion will be done in partnership with international oil companies that have been awarded 12 contracts since late 2008. Such plans depend on Iraq’s ability to make a seamless transition to revenue sovereignty and accountability, since the country might have trouble making timely payments to companies if its finances are complicated by the unresolved claims of creditors.

Iraqi and Kuwaiti officials have been meeting over the past several years, but have not come to a final agreement on maritime and land border demarcation, which will affect mostly the port of Umm Qasr, and people living along the border and the oil beneath it. Based largely on this sticking point, Kuwait has opposed Iraq’s being removed from Chapter 7 of the UN Charter.

But the biggest-ticket item is an agreement on the final amount Iraq owes Kuwait and the terms of payment. Iraq has hired international lawyers to design a new payment mechanism that would replace the UN mandates. Meanwhile, Kuwait has been unwilling to budge on its assessment of Iraq’s outstanding debt, despite more than $100 billion paid to date,

The contracts with foreign oil companies include an option to receive a portion of their payment in oil rather than cash. The DFI regulations have thus far prohibited such transactions, largely because Iraq lacked the capacity to perform such accounting and there was no mechanism ensuring that 5 percent of the value of that crude would be set aside for the reparations fund.

On July 1, when the immunities are lifted, if Iraq hasn't finalized an agreement with Kuwait and other creditors, its funds and assets could be seized around the world. Numerous foreign oil companies, speaking on condition of anonymity because of the sensitivity of the issue, have concerns that oil tankers full of Iraqi crude could be seized as soon as they leave Iraqi territory.

"It's a problem for us," said Iraqi Parliamentarian Haider al-Abadi, an ally to Iraqi Prime Minister Nouri al-Maliki and chairman of the economy committee in the previous parliament. He said $26 billion is still owed, and $3 billion has been allocated in the 2011 budget.

While the downside of the UN action is clear, and Iraq’s debts have been a struggle for years, the country’s successful handling of such challenges could bolster its economic vitality for years to come. For one thing, removing immunity opens the door for Iraq to build a sovereign credit rating and borrow foreign capital for domestic development.

"If we settle our debt with other countries, the Security Council must cancel all chapter 7 resolutions," Abadi said. "Iraq has now become a viable, sovereign state in the eyes of the world and its own citizens."

http://www.iraqoilreport.com/business/economics/iraq-to-lose-un-protections-on-oil-money-5226/ Mods little old but it got alot of INFO

Edited February 6, 2012 by yota691

[Butifldrm]

I believe ths was the last extention granted to Iraq.

19 May, 2011 09:57:00

The American president decided to extend the protection of Barack Obama American Development Fund for Iraq for one year. Obama praised the positive developments in the country, while acknowledging the existence of obstacles to reconstruction in Iraq. 
Obama said in a statement issued by the WhiteHouse: "I decided the continued state of emergency for the protection of the Development Fund for Iraq and other property for a period of one year." Attributed the President why the extension to "the obstacles to reconstruction in an orderly fashion in Iraq and restore international peace and security in the country and maintenance, and development of political institutions and administrative and economic development in Iraq, noting that those obstacles are still constitute a threat to an extraordinary and unusual to national security and foreign policy of the United States. "It was due to end protection of the U.S. Iraqi funds on 30 June. 
Obama also sent a letter to House Speaker and Senate President Americans, which he praised the developments in Iraq and the UN Security Council resolutions relevant.

http://www.alfayhaa....iraq/57993.html

Read more:

[yota691]

No more extension they have to make a deal or pay up!! They gonna have to get off the pot, the older one gets the faster the days fly by, it will be here soon!! its all about the $$$

Edited February 6, 2012 by yota691

[SgtFuryUSCZ]

***///

They're backed against a wall...

Something's gotta give....

and I have a feeling it'll be BIG.

How about a big RV Thursday?

[RodandStaff]

Dang... my pluser is still broke... I think this very significant, they gotta get it together now or really pay a heavy price for their stupidity and arrogance!

Come on boyz... git-r-dun!!!

Good one Yota.... +1, +1, +1, +1+1, +1, +1, +1+1, +1, +1, +1+1, +1, +1, +1!!! (sorry... my "invisible plus'es" don't show up on your counter, but they come from the heart!!!).

GO RV Already Baby!!!

[OregonHopeful]

So, if they got a one year extension, that would take it to June 2012.......... that's the same time when the UN is supposed to vote on their release from Chapter 7 again.

[SgtFuryUSCZ]

***///

I'm thinkin' sooner -- Maliki is in a crap load of trouble at the moment and somethin's gotta give.

[Rubberband King]

AWESOME, AWESOME, AWESOME find Yota :twothumbs:

[redsand]

Maliki wants the eyes of the world watching Iraq when he solves this issue. WHEN is tough to say.

[uncirculd]

quote"raq has also been slow to implement a metering system for its oil sector"

Can you say corruption? Yeah Maliki's attempt to get out of chapter 7 when he still had all these issues. Like we didn't know what they were doing. Give me a break. He will comply and he will not pull the wool over the eyes of the US. Nice try, but Maliki is faced now with put up or shut up.

[Carrello]

http://www.aknews.com/ar/aknews/2/287607/

01/02/2012

Washington will renew the protection of Iraqi funds after next June

Baghdad, The Iraqi federal government, Wednesday, that Washington will renew the protection of Iraqi funds in the banks for another year in Iraq if there is a real need to protect his money in the United States.

He took the White House in June of last year to protect Iraqi funds after a formal request the Iraqi government.

The Legal Adviser to the Prime Minister Fadhil Mohammed Jawad, told the Kurdish news agency (Rn) that "the U.S. government will renew the protection of Iraqi assets in banks with the U.S. government deadline of 23 next May, if the Iraqi government requested it."

He added that "the decision of the Security Council no longer has any

money to Iraqi custody since June last year and ended with the protection of Iraqi funds internationalism."

He explained that "Iraq in the past Ajraeth legal file processing trade creditors Makhhm through negotiation or through the courts or through international debt repayment in accordance with the Paris Club procedures."

Iraq's debt and pay 3500 a commercial creditor worth 2.7 billion dollars as a means to protect his money from the manipulation of foreign trading companies.

It is hoped that Iraq shall submit to the UN Security Council a detailed report in next May, looking the most important pillars of the protection of Iraqi funds.

The Ministry of Finance of Iraq earlier that the government commission a technical Ttolt the development of mechanisms to protect Iraqi funds in foreign banks after the UN Security Council resolution mid-November last, who spent lifting protection for Iraqi assets end of June next work is characterized by secrecy.

The UN Security Council voted unanimously in mid-January of 2011 on the three resolutions concerning the lifting of the embargo imposed on Iraq on the import of nuclear material for peaceful purposes, and cancel the oil for food program, and extended the immunity of and for the last phase compensation imposed under Chapter VII even the end of June next.

The former Iraqi President Saddam Hussein ordered the invasion of Kuwait in 1990, its impact on the sanctions imposed on Iraq from the international community and put under Chapter VII, which makes him the country threatens international peace and security.

Included international sanctions prevented the import of chemicals and nuclear technology that could be used in the programs of secret nuclear, chemical and biological weapons.

Has allowed the United Nations in 1995 for Iraq to sell oil in return for food, called the program "Oil for lunch."