UN allows Saddam to export oil again

After months of combative negotiations with the United Nations, Iraq yesterday won its first relief from the trade embargo imposed upon it following Saddam Hussein's invasion of Kuwait nearly six years ago.

Under a preliminary agreement signed at UN headquarters, Iraq is to be allowed to export limited volumes of its crude oil on to the world market; proceeds are to be used only for the purchase of desperately needed food and medicine.

The return of Iraqi crude to the oil markets was expected to accelerate a cooling-off of prices, which have been soaring in recent weeks - possibly leading to lower petrol-pump prices. Iraq's pipelines could be back in action in as little as a month.

The foundation for the agreement was provided by Resolution 986, adopted by the Security Council more than a year ago with strong support from Britain and the United States. Until yesterday, however, Iraq was objecting to the many conditions that it believed violated its sovereignty.

Under the deal, the UN will have the last word on the sale of oil, on the handling of the cash it generates, and on how the food and medicine is distributed. In the northern areas populated by Iraq's Kurdish minority, the UN will take direct charge of distribution.

Even so, Iraq's main negotiator, Abdul Amir al-Anbari, described the agreement finally reached as being "perfect". He also sought to cast it as constituting the first chink in the trade embargo. "It is going to be a long journey but we have to take the first step," he said.

UN diplomats, however, emphasised that the deal be seen as a measure aimed only at alleviating the suffering in Iraq, whose economy remains in tatters. Madeleine Albright, US ambassador to the UN, insisted: "This a humanitarian exception ... The sanctions regime remains fully in place."

Ms Albright, whose government played a pivotal role with Britain during the four-month negotiations to ensure that the conditions of Resolution 986 were not diluted, described the deal as a victory for the "Iraqi people who have been suffering so unjustly under the contorted priorities of Saddam Hussein".

Only when a range of highly sensitive issues between Iraq and the UN are resolved is the Security Council likely to consider a complete lifting of theembargo. Most importantly, Iraq is still under pressure to provide proof that it has abandoned all its programmes for the production of weapons of mass destruction and destroyed any weapons in its stockpile.

The UN is also demanding that Iraq compensate Kuwait for damage inflicted upon it during the Gulf war, return all looted property, and provide full disclosure about prisoners of war.

The signing of the memorandum of understanding yesterday by Mr Anbari and the UN Secretary General, Boutros Boutros-Ghali, followed several days of suspense. The green light was finally given by Saddam Hussein yesterday morning, after he had conferred late on Sunday with senior advisers.

Subject to the drawing up of a detailed implementation plan, the deal will allow Iraq to sell up to $2bn (pounds 1.3bn) of crude oil every six months on a renewable basis.