Iraq to resume paying war reparations to Kuwait

AFP, Tuesday 26 Apr 2011

Protected fund expires in late June as Iraqi government accounts normalise and UN-mandated payments of oil revenue to Kuwait restart

Iraq has approved opening two bank accounts to manage its revenues after a post-war fund to protect the money from foreign claims closes this summer, a government spokesman said Tuesday.

One of the accounts will hold 95 per cent of Iraq's government income, the vast majority of which comes from oil exports, while the second account, holding five per cent of Iraq's revenues, will deal with war reparations to neighbouring emirate Kuwait.

Saddam's 2 August 1990 assault on Kuwait was rapidly met with a concerted international military response that pushed his forces out of the oil-rich state and eventually ended in his 2003 ouster.

Under UN resolution 1956, Iraq is required to pay five percent of its oil income to Kuwait for reparations stemming from the invasion.

New funds await UN approval. "Iraq will present its proposal to the United Nations Security Council on May 1st for approval," government spokesman Ali al-Dabbagh told AFP. "The plan will take effect July 1st, pending Security Council approval."

He added: "Both accounts will be held by the US Federal Reserve to avoid foreign claims. ... These accounts will hold not only revenues from oil, but also all the money we can retake from the former regime."

The new accounts will replace the Development Fund for Iraq (DFI), which was set up after the 2003 US-led invasion that ousted Saddam Hussein to handle oil and other revenues.

The DFI has been protected against claims by a UN resolution that expires on 30 June.

On 15 December, the UN Security Council ended key international sanctions imposed on Iraq in a major move toward bringing closure on the Saddam era.

Three council resolutions halted punishing international restrictions to prevent weapons of mass destruction proliferation, ended the UN oil-for-food programme for Iraq, and mandated the closure of the DFI.

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