Iran has agreed to give Iraq food and medicine in exchange for oil and cash, according to a well-informed source in Tehran. Such a deal could puncture the U.N. embargo that aims to force Iraq out of Kuwait.
Speaking in a telephone interview late Tuesday, the Iranian source said Iran's leaders had agreed to Iraq's request for the trade deal, which he said would involve shipments of 200,000 barrels of refined oil a day.
There was no official comment from Tehran or Baghdad on the reported agreement. But the source, who spoke on condition of anonymity, said it was struck during a visit Sunday by Iraq's foreign minister, Tarik Aziz.
The Tehran Times reported in an editorial today that Iran was "studying the issue of providing food and medicine to Iraq."
It made no mention of receiving oil in return.
The source in Tehran said Iran refused an offer made by Iraq on Monday of full payment in oil for the items but agreed to take up to 200,000 barrels of refined oil a day--about $6 million worth.