DATE=12/03/00

TYPE=CORRESPONDENT REPORT

TITLE=IRAQ / OIL (L)

NUMBER=2-269971

BYLINE=SCOTT BOBB

DATELINE=CAIRO

CONTENT=

VOICED AT:

INTRO: A senior Iraqi official says Iraq will stop oil exports if it does not obtain a new price arrangement from the United Nations. Correspondent Scott Bobb reports from our Middle East Bureau in Cairo that the remarks come two days before the expiration of the current phase of the U-N supervised oil-for-food program for Iraq.

TEXT: Iraqi Deputy Prime Minister Tariq Aziz told reporters the oil belongs to Iraq and it has the right to choose a suitable price for its exports.

/// AZIZ ACT IN ARABIC ///

The Iraqi official said if Iraq's price is refused, there will be no new contracts and Iraq will halt oil exports to its customers. It was the first official Iraqi reaction since the United Nations refused to authorize a new price and payment arrangement for Iraq last Friday.

Iraq told the United Nations it wants to reduce prices on its oil exports by 50-cents a barrel, or about two-percent. U-N officials refused when they learned Iraq wanted its customers to deposit the difference in a bank account controlled by the Iraqi government.

Under agreements negotiated four-years ago, Iraq is allowed to export oil in exchange for food, medicine, and other non-military supplies. A U-N committee oversees the receipts and places one-third of them in a special account to compensate victims of the Gulf War.

Iraq produces two-point-four-million barrels of oil per day, or about five-percent of world production. The threat to cut off Iraqi oil comes at a time of high demand and tight supply on the world market.

Iraqi oil exports were severely restricted

following the Gulf War. The oil-for-food program was established later amid criticism that international sanctions were hurting the Iraqi people, while strengthening the Iraqi regime.

/// REST OPT ///

The Iraqi government has been waging a diplomatic and public relations campaign against sanctions. Iraqi oil exports outside the oil-for-food program have increased in recent years.

And in the past three months, dozens of international flights have challenged the ban on commercial air travel to Iraq, landing in Baghdad with foreign humanitarian workers, government officials, and some businessmen.

Two permanent members of the U-N Security Council - the United States and Britain - maintain the sanctions must be strictly enforced until Iraq agrees to cooperate with U-N weapons inspections.

Three other permanent members - Russia, China and France - say the sanctions should eased as part of resumed weapons monitoring. (SIGNED)

NEB/SB/ALW/RAE