Bush Lifts Curbs on Iraq

President Bush announced Wednesday that the United States would suspend its restrictions against Iraq on technology exports, humanitarian assistance and cash remittances to people in that country to help speed reconstruction efforts.

In addition, Bush said the U.S., Britain and Spain were preparing to circulate a draft U.N. Security Council resolution this week calling for the removal of international sanctions that restrict the ability of foreign governments and private-sector companies to conduct business in Iraq.

The moves are designed to remove legal restrictions that have become major impediments to postwar reconstruction by limiting the sale of Iraqi oil and blocking shipments of computers and other material needed by contractors. The rebuilding efforts are to be funded by oil revenues that are now controlled by the United Nations.

“Today, I have moved to ease sanctions imposed by the United States against Iraq’s old government,” Bush told reporters after meeting at the White House with Spanish Prime Minister Jose Maria Aznar.

“The regime that the sanctions were directed against no longer rules Iraq, and no country in good conscience can support using sanctions to hold back the hopes of the Iraqi people,” Bush said.

In August 1990, the U.N. imposed broad economic sanctions in response to Iraq’s invasion of Kuwait. In recent years, the restrictions were eased somewhat, but all contracts to buy oil and sell nonmilitary goods to Iraq required approval by a U.N. committee. All revenue was held in an escrow account in an effort to keep the money out of Saddam Hussein’s hands and was to be used for specific items such as food and medicine.

In addition, Washington imposed its own sanctions prohibiting U.S. assistance and trade with Iraq, and it specifically forbade the export of certain types of technology.

The unilateral actions outlined by the administration Wednesday were “wholly consistent” with the U.N. restrictions, U.S. officials said, and were not an attempt by the United States to preempt U.N. authority.

But they appeared likely to send a strong signal of U.S. impatience to Security Council members who have been reluctant to lift international sanctions until U.N. inspectors certify that Iraq is free of banned weapons. France, Russia and some other council members, fearing that a U.S.-supported government in Iraq would cut them out of reconstruction efforts, have wanted to keep Iraq’s oil resources under U.N. control.

‘An Essential Step’

Treasury Secretary John W. Snow called Wednesday’s initiative “an essential step” to remove U.S.-imposed bottlenecks that have slowed the postwar reconstruction effort.

Snow said Bush suspended restrictions contained in the 1990 Iraq Sanctions Act on the export of sensitive technology and other controlled items.

As an example, U.S. officials said that the dredging of the harbor at Umm al Qasr, Iraq’s main seaport, has been delayed because the sanctions act prohibits equipment such as laptop computers from being sent to Iraq to help carry out the work. As a result, large ships carrying humanitarian goods have been unable to dock there.

At the same time, Snow said the Treasury Department had issued four general licenses permitting many previously prohibited transactions.

The first license authorizes all forms of government-financed humanitarian assistance to Iraq. A second allows U.S. residents to send cash remittances of up to $500 a month to any person in Iraq.

Potential Benefit

The flow of private money could be substantial, Snow said, noting that the U.S. is home to 143,000 Iraqis.

“If half of them remitted $500 this month, that would generate over $30 million for their friends and families,” Snow said. “This applies to non-Iraqis as well, so the potential benefit to the Iraqi people is truly immense.”

Another license authorizes activities paid for with government funds that fulfill U.S. obligations to Iraq under international law, including the work of reconstruction contractors.

Under that waiver, private-sector companies will be able to carry out any activities related to reconstruction or humanitarian assistance, officials said. But they still will be barred from engaging in other forms of commercial activity in Iraq.

The fourth license allows privately funded humanitarian activities by U.S.-based entities acting independently of the government.

Snow said the Bush administration had decided to lift the U.S. restrictions now instead of waiting for the United Nations to take up the broader issue of international sanctions.

“There is no requirement to do so, and we want to get on with the humanitarian and reconstruction program,” he said.

Although U.S. officials have discussed the possibility of disregarding the U.N. sanctions, Treasury Department general counsel David Aufhauser said none of the actions outlined Wednesday undermined U.N. authority. “The actions taken today are wholly consistent with the U.N. sanctions program,” he said.

The U.S. actions will have no impact on Iraq’s current inability to export oil to generate money for reconstruction and alleviate domestic shortages of gasoline and cooking fuel, Aufhauser said.

Meanwhile, the administration moved on other fronts to build support for lifting the U.N. sanctions.

Meeting in New York with U.N. Secretary-General Kofi Annan, Secretary of State Colin L. Powell said U.S. officials would circulate a draft of a resolution to lift U.N. sanctions to all Security Council members this week.

Powell and other top officials have already begun consulting with a number of European, Latin American and Middle Eastern countries on the issue.

A senior State Department official, who asked not to be named, said the resolution would provide for a U.N. coordinator to help with reconstruction and with the effort to set up a new Iraqi political authority. European countries have pushed for a greater role for the United Nations in Iraq, and U.S. officials hope this aspect of the proposal will reduce their opposition.

French, German and Russian officials have resisted the lifting of sanctions until Iraq can be declared fully free of banned weapons. But in recent days, German and French officials have said they wanted to cooperate with the United States in helping Iraq return to normal.

U.S. Assistant Secretary of State Kim Holmes has left on a three-day trip to Berlin and Moscow to give officials a preview of an American proposal for lifting sanctions, State Department spokesman Richard A. Boucher said. Germany is a rotating member of the Security Council, and Russia is a permanent member.

U.S. officials have also been in touch with officials of Mexico, Pakistan and Spain, all of which are rotating council members.

One official said the administration was confident that other U.N. members would see the virtues of the resolution.

“We think the resolution speaks for itself. We’ve gone more than halfway, and it won’t be that controversial,” he said.