Stephanie Nebehay
Reuters
June 28, 2005

Geneva: Iraq called on Tuesday for an end to a United Nations-run program that diverts part of its oil earnings to pay compensation for damage caused by its 1990 invasion of Kuwait and the 1991 Gulf War.

However, it said it was ready to negotiate claims on a bilateral basis with individual countries, notably Kuwait.

Iraq still owes $32.9 billion in awards approved by the U.N. Compensation Commission (UNCC), whose Governing Council is this week considering a further $50 billion in demands for environmental damage. Five percent of Iraqi oil revenues goes to finance the awards.

“We suggest we stop the payments of five percent from oil revenues … it is too much for us,” Iraqi Deputy Foreign Minister Mohammed Hamud Bidan told Reuters.

“We think it is time now to stop and leave Iraq to negotiate directly with the states concerned,” he added before addressing a council meeting.

These states should heed the example of the Paris Club of Western countries and Russia which agreed last November to slash 80 percent of Iraq’s debt to it, he added.

Like Iraq’s former foes Kuwait and Iran, ordinary Iraqis were also “victims of the Saddam Hussein regime,” and the country needed funds for its own reconstruction, he said.

However, in a speech to the closed-door talks obtained by Reuters, Kuwait called for “political support … to ensure uninterrupted payments” to all successful claimants.

It is the last session of the council, composed of the same 15 member states as the U.N. Security Council, to approve further payouts. Those already authorized will take decades to complete at the current payout rate of $200 million per quarter.

The commission has received $354 billion in claims from individuals, corporations and governments and has approved $52.1 billion since beginning work in 1991.

It has paid out $19.2 billion. The bulk of the “backlog” of $32.9 billion is owed to Kuwait, UNCC officials said.

U.N. internal auditors, in reports made public last January, alleged that the Geneva-based body overpaid up to $5 billion to claimants – charges that the UNCC strongly denies.

Environmental damage

Final mega-claims are still on the table. Demands for $50 billion in compensation for damage to the environment are being sought by six of Iraq’s neighbors – Kuwait, Saudi Arabia, Iran, Jordan, Syria and Turkey – at the three-day session.

“A modest amount will be approved,” a UNCC source said.

The Iraqi delegation held 30-minute talks with Khaled Ahmad Al-Mudhaf, chairman of Kuwait’s Public Authority for Assessment of Compensation for Damages Resulting from Iraqi Aggression.

“Their reaction now was positive but we need to speak about details case by case. Maybe they will accept to speak about government compensation but not individuals,” Bidan said.

However, the Kuwaiti delegation appeared surprised by the move, which came ahead of a donors’ meeting scheduled for mid-July in Amman to discuss aid to Iraq.

“We do not agree to dropping compensation completely … The issue of compensation is in the hands of the U.N.,” Al-Mudhaf told Reuters.