Iraq: Compliance, Sanctions, and U.S. Policy
approved an award to Kuwait of $15.9 billion for oil revenues lost because of the Iraqi
occupation and the aftermath of the war (burning oil wells), although current payment
schedules will provide only a small fraction of that award (about $50 million) until 2003. In
June 2001, the UNCC approved $243 million in payments to all of Iraq’s immediate neighbors
(except Turkey) for studies of Gulf war environmental damage. Of this amount, $5 million
was approved for Iraq’s legal expenses to counter the expected environmental reparations
claims. On September 27, 2001, the UNCC approved $365 million in payments to
corporations in Turkey, Kuwait, Britain, Germany, and Israel. On March 13, 2002, the
UNCC approved $1.8 billion in claims, of which $1.5 billion is for Kuwaiti business,
government, and individual claims.
Several legislative proposals to distribute Iraq’s frozen assets (about $2.2 billion) in the
United States (separate from the U.N. compensation process) were not enacted, because of
differences over categories of claimants that should receive priority. In the 107th Congress,
H.R. 1632 proposes to distribute Iraq’s frozen assets primarily to U.S. victims of the Iraqi
invasion of Kuwait. Some might argue that this group of claimants is covered under the U.N.
process discussed above and that the frozen assets in the United States should be used for
those with claims resulting from events prior to the Iraqi invasion. (See CRS Report 98-240,
Iraq: Compensation and Assets Issues.)
U.S. Policy, Sanctions, and the Oil-for-Food Program
As international concerns for the plight of the Iraqi people have grown, the United States
has had increasing difficulty maintaining support for international sanctions. The oil-for-food
program, established by Resolution 986 (April 15, 1995) and in operation since December
1996, has been progressively modified to improve Iraq’s living standards, and the United
States has eased its own sanctions to align them with the program. (For a discussion of the
program, see CRS Report RL30472, Iraq: Oil-For-Food Program.) Of the Security Council
permanent members, the United States has been the most resistant to easing sanctions and has
set the highest standards for full Iraqi compliance. The United States rules out dialogue with
Iraq on the grounds that Iraq’s level of compliance does not justify talks.
“Smart Sanctions” Initiative. During a February 2001 trip to the Middle East,
Secretary of State Powell presented a U.S. plan to facilitate exports of civilian equipment to
Iraq in exchange for measures to ensure that no militarily useful goods reach Iraq. The
Administration portrayed its initiative as an effort to rebuild containment by narrowing
differences within the Security Council and limiting sanctions erosion. France, Russia, and
China appear to believe that the U.S objective is to keep sanctions on Iraq in order to
promote regime change, and these and other countries have been increasingly vocal in
promoting an easing of Iraq sanctions.
With phase nine of the oil-for-food program due to expire on June 3, 2001, the Security
Council debated integrating the U.S. plan into an authorization for phase ten. Failing to reach
agreement, the Council adopted Security Council Resolution 1352 on June 1, 2001, extending
phase nine by one month with no changes. Russian opposition prevented Security Council
adoption of the U.S. plan by the July 3, 2001 deadline, leading to a Council decision to
authorize a 5-month phase ten of the program, with no alterations (U.N. Security Council
Resolution 1360). Iraq resumed exporting oil, which it had suspended on June 1, 2001, in
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