State Department Noon Briefing

DEPARTMENT OF STATE
DAILY PRESS BRIEFING

FRIDAY, DECEMBER 1, 2000, 1:00 P.M.
(ON THE RECORD UNLESS OTHERWISE NOTED)

Q: Okay. Good. Saddam Hussein has said he will not be selling his oil
through the Oil for Food Program. Do we have any comment on this?

MR. REEKER: I think my colleagues at the White House also mentioned
that. The United States is working with the International Energy
Agency members and other major oil producers on an oil response,
which, if needed, would more than compensate for any oil volumes which
Iraq is threatening to withdraw from the market. Their discussion of
suspending oil exports is certainly an attempt to coerce the
international community, and they certainly shouldn't believe that a
cessation of oil exports will gain them any leverage at the United
Nations.

We call on Iraq to work with the United Nations, to quickly reach an
agreement on the oil pricing issue, which is the basis of all this.
Iraq had submitted proposed prices - oil prices - to the United
Nations for December - this is done on a monthly basis - that are
significantly lower than world market prices, and the UN panel of oil,
the overseers who recommend to the UN Sanctions Committee the level,
the price level at which the Iraqi oil should be placed, recommended
against approving these prices. And the Sanctions Committee
unanimously agreed with that recommendation and we very much support
that judgment.

The proposed pricing that Iraq submitted may not be adequate to meet
the humanitarian needs of the Iraqi people under the Oil for Food
Program and it would have created an opportunity for unauthorized
payments outside the Oil for Food payment to the Saddam regime. So we
believe that the issue should be resolved consistent with the intent
of the UN resolutions, obviously, which are designed to help the Oil
for Food program meet the humanitarian needs of the Iraqi people.

Q: Can I follow up?

MR. REEKER: Yes.

Q: Do you think that Saddam Hussein may be motivated in some way by
the new Syrian pipeline that I guess is operating outside of the
jurisdiction of the Oil for Food Program?

MR. REEKER: Well, I think we talked about the Syrian pipeline earlier
in this week, perhaps last week. We were discussing with the Syrians
the need to have that mode of oil transfer come under the UN
jurisdiction, to be approved by the Sanctions Committee. I don't see
how there would be a connection between this.

This all has to do with Saddam Hussein and his regime trying to
undercut the Oil for Food Program by getting a price for oil that
would be below the appropriate price and would create an opportunity
for some sort of unauthorized payment or rebate that they could then
get cash outside of the Oil for Food program. And the efforts to
coerce the UN program that way, obviously, should not be something
that Iraq thinks they can do. They should work with the UN on
establishing the pricing mechanism as we always have and the Sanctions
Committee is still working on establishing that pricing guideline.

Q: Can you think of any steps that the US might recommend at the UN or
elsewhere if Iraq does overstep the UN somehow?

MR. REEKER: I guess I'm not quite sure what the premise of your --

Q: In other words, if they go ahead with this, if they do cut off some
of their exports, would they be violating any rules at the UN that
they would be punished for?

MR. REEKER: Iraq makes the decision itself to export its oil. And it
is the funds from the export of that oil that go to the Oil for Food
Program to provide the humanitarian supplies, food and medicine and
other supplies, for the Iraqi people. It's the largest humanitarian
program that the United Nations has ever undertaken and certainly
provides more than adequate amounts to help the Iraqi people.

By trying to go around that, they are simply, once again, playing
games with the UN system. There are UN Security Council resolutions in
place that everybody is aware of - certainly the Iraqis. They need to
comply with those resolutions.

We, as I said, have been working with the International Energy Agency
members and major oil producers so that any oil supply response, if
necessary, would more than compensate for volumes which Iraq is
threatening to withdraw. So once again, it is time for Iraq to get
with the program, work with the UN Security Council, with the Iraq
Sanctions Committee to establish the price and continue with the Oil
For Food Program. And, obviously, as we have said so many times, to
comply fully with the UN Security Council resolutions because that,
after all, is their way out of the sanctions program.

(The briefing was concluded at 2:15 p.m.)