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US seeks sanctions end to free oil exports

United Nations, May 8 (Reuters): The US today sought an early lifting of UN sanctions against Iraq that would free oil exports and suspend some trade restrictions that Washington imposed more than a decade ago.

US secretary of state Colin Powell, after visiting UN secretary-general Kofi Annan, said he expected to produce a Security Council resolution “this week” that would also give the UN a “vital” role in the country’s future.

The draft is expected to be distributed to the 15 UN Security Council members tomorrow, shortly before they start a weekend retreat. Failing that, it would be circulated on Monday, Bush administration officials said.

Powell said he was working with “all our friends” including Germany, France, Russia and China, who had opposed the US-led invasion of Iraq. “Whatever is in the past is in the past. We are not now talking about a matter of war. We are talking about a matter of peace,” he said.

Diplomats said the draft would include an undefined political and economic role for the UN, which was to appoint a special coordinator.

A UN representative named by Annan would have a seat on a board that would oversee revenues from Iraq’s oil industry, the envoys said. US oil executives, the World Bank and the IMF are expected to be on the board. The resolution would phase out the oil-for-food programme but it is uncertain which or how many contracts currently in the pipeline will be honoured, as Russia has insisted.

Without adoption of the resolution no Iraq or US entity in Baghdad has the legal authority to export oil. Washington wants it adopted by June 3, when the oil-for-food programme is up for renewal.

The multi-billion dollar programme was designed to ease the impact of sanctions which were imposed when Saddam Hussein’s troops invaded Kuwait in August 1990. The programme, which now has more than $12 billion, allowed Iraq to sell oil to purchase civilian goods under UN supervision. Oil revenues are deposited into a UN escrow account, which is used to pay suppliers.

But the draft resolution does not call for the return of UN arms inspectors to verify that Iraq no longer has alleged weapons of mass destruction, as specified in UN resolutions and which several council members have demanded.

Close US ally Britain just signed on to the text of the resolution, which had been a subject of dispute between the state department and the defence department, diplomats said.

Separately, US President George W. Bush said in Washington he would suspend a 1990 US law, the Iraq Sanctions Act, because Iraqi leader Saddam Hussein was no longer in power.

The action would lift trade restrictions on US firms, including licensing of industrial and commercial projects or restricting exports of U.S goods, technology and services.

US treasury secretary John Snow said some US sanctions would be lifted immediately, allowing US residents and private groups to send up to $500 per month to any person in Iraq for humanitarian purposes.

Bush, after a session with Spanish Prime Minister Jose Maria Aznar yesterday, said he thought there was a changed atmosphere in the council.

“We believe there is a mood to work together to achieve a resolution that will expedite the reconstruction of Iraq,” he said. But so far Russia and France, while saying they would be flexible, have advocated a final lift of sanctions, rather than a suspension, after the UN inspectors were back on the ground.

To get support, senior US officials are travelling to Moscow and Berlin as well as lobbying Mexico and Pakistan.

A top US envoy, trying to push a reluctant Moscow to agree to Washington’s plan to lift UN sanctions against Iraq, said today both sides recognised they had to resolve their differences for the sake of Iraqis.

Assistant Secretary of State Kim Holmes, came to Russia at short notice ahead of this week's presentation to the U.N. Security Council of a U.S.-drafted resolution to lift decade-old U.N. sanctions and allow Iraqi oil exports to resume.

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