Russia fires first shots in post-war battle for oil wealth

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Russia said yesterday it would resist any "automatic" lifting of economic sanctions against Iraq, exchanging with America the first salvoes in the diplomatic battle for Iraq's oil wealth.

It will be waged in the language of United Nations resolutions. But it is about how the post-Saddam Hussein goverment will be created, who will be its favoured trading partners and, ultimately, who will control Iraq's oil industry: the coalition, a future interim Iraqi government or the UN.

President George W Bush caught British officials by surprise on Wednesday when he said Washington would soon table a UN resolution to end sanctions. "Now that Iraq has been liberated, the UN should lift economic sanctions," he said.

But Igor Ivanov, the Russian foreign minister, insisted yesterday that sanctions could not be removed until Iraq had complied with UN disarmament resolutions.

"This decision cannot be automatic. It demands that conditions laid out in corresponding UN Security Council resolutions be fulfilled," Mr Ivanov said. "For the Security Council to take this decision, we need to be certain whether Iraq has weapons of mass destruction or not."

France, which led opposition to the war, responded more cautiously, but made clear that conditions would be attached. "The lifting of sanctions is an aim which we have supported for a long time. Now it is naturally for the UN to define the modalities for lifting the sanctions," said President Jacques Chirac.

Under UN sanctions, Iraq can export its crude oil only under the supervision of the UN oil-for-food programme.

Revenues must be paid into a UN account, and the funds are then used to buy civilian goods under the scrutiny of the UN sanctions committee.

America says Iraq needs to export oil freely to raise desperately needed funds to buy humanitarian supplies.

But Russia and France fear that an early lifting of sanctions would mean control of Iraq's oilfields would effectively pass into the hands of the coalition or an embryonic interim Iraqi administration heavily influenced by Washington.

Maintaining UN controls would ensure a degree of influence in shaping the post-Saddam era for France and Russia, which were among the main beneficiaries of trade with Saddam and seek to defend their commercial interests.


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