U.S. Tackles Iraqi Trade

The United States on Thursday circulated a proposed Security Council resolution that would lift U.N. sanctions on Iraq, let the U.S. and Britain run the country for at least a year and allow Iraq to begin selling oil again.

U.S. officials said the draft resolution, set to be released publicly today, was intended to resolve a diplomatic impasse that has prevented Iraq’s interim administrators from using oil-sale proceeds to finance the country’s reconstruction.

Bush administration officials expressed hope that the proposal, which calls for the appointment of a special U.N. coordinator for Iraq, would satisfy France, Russia and other Security Council members that have been reluctant to lift sanctions lest they appear to legitimize a U.S. occupation of Iraq.

Under the U.S. proposal, which Secretary of State Colin L. Powell discussed in detail with U.N. Secretary-General Kofi Annan earlier this week, money from Iraqi oil sales would be deposited in an “Iraqi Assistance Fund” and earmarked for humanitarian purposes and economic reconstruction.

An international oversight board, including representatives from the United Nations, the International Monetary Fund and the World Bank, would oversee the distribution of funds, and a special comptroller would ensure that the money is spent for the benefit of the Iraqi people.

U.S. officials said the proposal is likely to muster enough votes to pass because it incorporates demands from other nations for international scrutiny of the U.S. administration of Iraq.

“That is what they wanted, and that is what they get,” one U.S. official said, speaking on condition of anonymity.

In New York, a spokeswoman for the French mission declined to comment.

“The French seem to have changed quite a bit. They don’t want to pick a fight,” the U.S. official added. “The Russians are silent.” Neither country is expected to use its veto against the measure, the official said.

Referring to the failed U.S. attempt to win Security Council support for a resolution authorizing the use of force against Iraq, another U.S. official who asked not to be identified said, “Our strategy is the same as it was with the last resolution: Buy off the Russians. Co-opt the Germans. Then isolate the French.”

In public, administration officials said the U.S. is working constructively with France and Russia to pass the current resolution.

“You might be surprised about the prospects for this resolution moving forward in a cooperative fashion,” White House Press Secretary Ari Fleischer said Thursday. “I don’t know that you can take too much out of the bitterness that marked the previous debate at the U.N. and apply it to this debate.”

The eight-page resolution would allow Iraq to resume oil exports, which ended shortly before the United States began its military offensive against Saddam Hussein in March.

Annan would appoint a special coordinator to supervise U.N. humanitarian assistance and reconstruction activities in Iraq. The coordinator would work in tandem with interim authorities from the U.S. and Britain for a year.

“Consultation with the international financial institutions and others is fairly well specified in the resolution,” State Department spokesman Richard Boucher said at his daily briefing for reporters. “Everybody would be cooperating to make sure the money went to those purposes.”

Besides authorizing oil sales, the resolution would lift sanctions that bar other countries and private-sector companies from buying, selling or engaging in any other form of commercial activity in Iraq. But it would retain prohibitions on arms sales.

It also calls on all U.N. member states to facilitate the return of looted Iraqi cultural treasures and to deny a haven to any members of the Hussein regime suspected of atrocities.

The proposed resolution would phase out over four months the U.N.’s existing “oil-for-food” program, established in 1996 to let Iraq use oil revenue to buy humanitarian supplies.

Although the oil-for-food program is still channeling some humanitarian goods to postwar Iraq, no oil has been sold since March because there is no recognized government in Baghdad to sign contracts with buyers.

Iraq’s storage tanks and pipelines are full of crude oil, but France, Russia and other nations have been unwilling to authorize renewed exports until other aspects of Iraq’s postwar governance are addressed.

The proposed resolution, sponsored by the United States, Britain and Spain, could end the stalemate. The Bush administration is pushing for a vote on the matter as early as next week.

“There is no reason for a dust-up,” Fleischer said. “This is, after all, about helping the people of Iraq. And any disagreement among allies would get in the way of helping the people of Iraq.”

Fleischer acknowledged that President Bush had been highly critical of the U.N.’s enforcement of previous Security Council resolutions on Iraq. But he said the United Nations had a successful track record in administering humanitarian programs and reconstruction efforts.

In addition to seeking an end to the U.N. sanctions, the administration had announced Wednesday that it was acting unilaterally to lift separate, U.S.-imposed sanctions, including restrictions on humanitarian aid, cash remittances, technology exports and activities by reconstruction contractors.

Meanwhile, Treasury Secretary John W. Snow told a congressional hearing Thursday that the government was starting to use $1.7 billion in Iraqi government assets, frozen in U.S. banks in 1990 as part of economic sanctions, to rebuild Iraq.

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Times staff writer Robin Wright contributed to this report.