U.N. Approves Sale of $1.6 Billion in Iraqi Oil : Mideast: Profits would go for food, medicine and reparations. Baghdad sees plan as breach of sovereignty.

Responding to reports of starvation and medical emergencies in postwar Iraq, the U.N. Security Council on Thursday authorized Baghdad to sell up to $1.6 billion worth of oil under conditions that will require every penny to be spent on food, medicine and the costly aftermath of the Persian Gulf War.

The Bush Administration said Iraq’s response to the Security Council’s vote will demonstrate whether President Saddam Hussein’s government really cares about its people. Iraq protested the U.N. restrictions, which will prevent the Baghdad government from receiving any of the money.

“This is a way of feeding and caring for needy people inside Iraq, and if the Iraqi government has any interest in doing that, this is a way of doing it,” State Department spokesman Richard Boucher told reporters in Washington a few hours before the vote was taken at U.N. headquarters in New York.

All the revenue from the sale--the first for Iraq since it invaded Kuwait a little more than a year ago--would go into a U.N. trust fund. About $1 billion would be spent on food and medicine to be distributed by the United Nations, bypassing the Iraqi government.

In other developments:

* Impoverished Iraqis living in Baghdad’s Saddam City suburb lined up for U.N. food handouts as part of a humanitarian program, which has been going on since June. The 100-pound bags of flour, cooking oil, rice, canned fish, powdered milk and sugar were donated, but the distribution program was considered a dress rehearsal for distribution of food purchased with Iraqi oil revenue. Recipients complained that the commodities were not enough.

* U.N. chemical-weapons inspectors arrived in Baghdad as part of the continuing program to determine if Hussein’s regime is capable of producing weapons of mass destruction. The 21 inspectors will stay six days and examine three sites, chief inspector Jean-Paul Peroz of France told the British news agency Reuters.

* A U.N. spokesman announced that Iraqi police fired on Kuwaiti police and damaged their patrol car in the U.N.-patrolled demilitarized zone in southern Iraq. No one was injured in the incident, which involved a joint U.N.-Kuwaiti patrol early Wednesday, the spokesman said. Maj. Gen. Gunther Greindl of Austria, head of U.N. peacekeeping forces in the Persian Gulf, protested to the Iraqi government over the incident.

* The State Department said tension has increased around the northern Iraqi city of Kirkuk, where Kurdish refugees are menaced by Iraqi military and police personnel. Boucher said Washington will “monitor” the situation closely. But he refused to speculate about possible intervention by a U.S.-backed international brigade, based in Turkey, that was created to protect the Kurds from Iraqi oppression.

Iraq’s ambassador to the United Nations, Abdul Amir Anbari, denounced the U.N. formula for oil sales as a violation of Iraqi sovereignty and implied that his government will refuse to go along with it.

“The authors (of the resolution) actually want to hold the Iraqi people as hostages and place it before two options: Either allow those old and new colonialist states to plunder its oil wealth and to control it indefinitely, or to keep the state of starvation and living on the brink of disaster,” Anbari said. “This will not be permitted by Iraq.”

However, the only way that Iraq could avoid the U.N. restrictions would be to refuse to sell any oil. U.S. officials said there is no way to force the Iraqis to produce and market their petroleum. But if Baghdad balks at the conditions, it would be taken as evidence that Hussein’s regime has no interest in feeding its people.

The vote in the Security Council on the resolution--sponsored by Belgium, Britain, France, the Soviet Union and the United States--was 13 to 1, with Cuba voting against it and Yemen abstaining.

The council unanimously adopted a companion resolution requiring Iraq to pay 30% of the proceeds from this and any later sales into a fund to be used for war reparations.

From the allowed $1.6 billion, $1 billion would go for food and medicine, $480 million for reparations and the rest for postwar expenses such as boundary surveys and the administrative costs of returning looted Kuwaiti property.

The United States had earlier sought a 50% diversion for reparations, but it agreed to accept the lower figure. Iraq wanted reparations limited to 10%, which would not be collected until 1993.

A third resolution, also approved unanimously, condemned Iraq for concealing information and materials from U.N. inspectors assigned to destroy the country’s nuclear, chemical and biological weapons potential.

Under the terms of the oil sale resolution, customers would be required to pay for Iraqi oil at regular prices, writing their checks to the U.N. escrow account. Secretary General Javier Perez de Cuellar was given 20 days to propose detailed arrangements for the sale. His report must be approved by the Security Council before Iraq can begin selling petroleum.

Before the war, Baghdad’s oil revenue amounted to about $20 billion a year. But no sales have been permitted since the Security Council imposed sanctions after Iraq’s Aug. 2, 1990, invasion of Kuwait.

Thursday’s vote does not end the economic sanctions. But it allows all nations to buy Iraqi oil, under the specified conditions, during a six-month period to begin within a few weeks, when the Security Council gives final approval to a plan by the secretary general setting up the arrangements for the sales.

The State Department’s Boucher said the U.N. resolution establishes a procedure “for those needs of the Iraqi people truly to be taken care of under an arrangement that meets the concerns that other governments have about the way the Iraqis have acted in the past.”

Boucher said the extraordinary U.N. controls are required because Hussein’s regime lacks all credibility. He cited Iraq’s reluctant and partial revelations of nuclear and chemical warfare programs as an example of why the government cannot be trusted.

“The pattern throughout has been that Iraq has admitted to additional (military) facilities and capabilities only under the pressure of international inspections, and then only in a piecemeal fashion,” Boucher said. He continued:

“In recent inspections, for example, Iraq admitted to having undeclared nuclear material, to having the ‘supergun’ (a long-range cannon capable of firing unconventional weapons) . . . to having a much larger number of chemical munitions and to having a biological- weapons research program for both offensive and defensive purposes.

“Based on the pattern of Iraqi behavior, there is every reason to believe that they have not yet disclosed all their capabilities,” he added.