Iraq urges UNSC to suspend or reduce Compensation Fund’s payments


Iraq suggested that the issue be discussed either at an international conference bringing together Iraq and the relevant states or on a bilateral basis between Iraq and each of those states.

"Iraq, in putting this matter before the Security Council, appeals to the council to take the necessary steps, to ensure the temporary suspension of the obligation to make payments, or to reduce those payments to an amount that Iraq can bear, and further requests that the matter be discussed either at an international conference bringing together Iraq and the relevant states, or on a bilateral basis between Iraq and each relevant state," Iraqi Prime Minister Nouri Al-Maliki said in a letter to the council president, China.

He explained that the idea of compensation was introduced as a result of the "reckless and unjustified actions of the previous dictatorial regime. The Iraqi people, naturally, have borne the consequences, even though they had no part in those actions. As a result, they have suffered for many years, and continue to suffer, paying dearly with their many hopes and aspirations and with the sustenance and health of their children."

He noted that the Iraqi people, not the regime, "have been victimized by the obligation to pay compensation all these years." The Fund was established in resolution 687 of April 1991 which stated that "Iraq is liable under international law for any direct loss, damage, including environmental damage and the depletion of natural resources, or injury to foreign Governments, national and corporations, as a result of Iraq’s unlawful invasion and occupation of Kuwait." The council has gradually reduced the percentage of the payments from Iraq’s proceeds derived from oil and gas sales from 30 percent to five percent.

Noting that the payments made to the Fund have increased as a result of the increase in the price of oil and in Iraq’s production capacity, Al-Maliki suggested that Iraq and the Fund "should arrive at an understanding on the establishment of a new and just compensation mechanism," recalling that Iraq has already paid a "considerable" amount as compensation for the Kuwait liberation war, totaling USD 22 billion as of the end of April of this year and continues to pay such compensation.

"The time has come for the Governing Council of the Fund to make an objective presentation to the Security Council on the need to temporarily suspend the obligation to make payments (at five percent) in order that a new mechanism for negotiating with the relevant states still owed compensation by the Fund can be established and a settlement reached in the matter, along the lines of the debt reductions granted them in accordance with the principles of the Paris Club," he said.

The continued payment by Iraq, at this critical juncture, of about USD one billion a year to the Fund is a "burden that it cannot bear in view of its numerous basic needs as well as its reconstruction efforts," he argued.

Iraq just last month succeeded to convince the council to put an end to the UN Monitoring, Verification and Inspection Commission (UNSCOM) whose staff has been paid from the Iraqi oil revenues even thought they have not been much active since they withdrew from Iraq in 2003.

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