Iraq's Upstream Investment Hopes Rise Amid Diplomatic Momentum

Strategic Insights -

Iraq's upstream investment prospects are gaining momentum as the United Nations Security Council's permanent members (P5) close in on a deal to lift sanctions. Following a senior diplomat meeting in London, hopes are rising that a breakthrough will be achieved this week in New York, where a second round of talks is scheduled to be held. The principle of lifting sanctions is widely accepted, but disagreements remain on the scope, triggers, and regulation of imports.

Key Takeaways:

  • The five permanent members (P5) of the UN Security Council have made significant progress in resolving their differences on lifting sanctions, with a deal potentially being reached by the end of the month.
  • The principle of lifting sanctions is unanimously accepted, but disagreements persist over the scope, triggers, and regulation of imports.
  • Russia and China advocate for a full and immediate lifting of sanctions, while the United States seeks to link it to Iraq's disarmament and possible imports of dual-use equipment.
  • France and the United Kingdom occupy the middle ground, with Paris calling for humanitarian oil investments to be allowed immediately and London suggesting a 60-day probation period.
  • A key point of agreement is the formation of a new commission of arms inspectors, with the criteria and modus operandi yet to be determined.
  • Sanctions would be lifted on all exports and civilian imports, except for goods that can be used for military purposes.
  • The trigger point for the lifting of sanctions remains a crucial question, with the United Kingdom insisting on Iraq's completion of "key remaining [disarmament] tasks."
  • A tentative consensus has been reached on the idea that compliance with disarmament requirements can be verified objectively.

Statistics:

  • The chances of a deal being reached this week are reportedly around 50-50 (according to the United Kingdom).
  • A full and immediate lifting of sanctions is being advocated by Russia and China on one hand, and rejected by the United States due to concerns over Iraqi imports of dual-use equipment.
  • The new commission of arms inspectors is expected to have a new composition and modus operandi, with specific criteria yet to be determined.
  • Sanctions would be lifted on all civilian imports, except for goods that can be used for military purposes.
  • A 60-day probation period is being suggested by the United Kingdom for foreign investments in the oil sector.

Sources:

  • Todays Oil Daily, dated September 8, 1999