Plans Afoot to Tap Future Iraq Oil Profit For War Reparations

Iraq's future oil revenues are already spoken for. Claimants include victims of Iraq's recklessly launched Scud attacks, businesses with interests in Kuwait and Iraq, expatriate workers whose livelihoods were casualties of upheaval, government ministries - even fishermen of the Persian Gulf waters, now dense with Iraq's deliberate oil spills.

The competing international claims for war reparations may override Baghdad's wish to pour expected export earnings into its own postwar reconstruction. Iraq's military and civilian infrastructure is badly damaged. Basic sanitation is hazardous; transportation is almost nonexistent.

Now United States officials and members of Congress are carefully reviewing the sweeping economic and trade embargo on Iraq. They are exploring ways to exploit Iraq's oil wealth while allowing the country's government sufficient capital to rebuild.

Sen. Alfonse D'Amato (R) of New York returned from Kuwait on Monday, one of many US political leaders to survey the wreckage. He will present the White House with a plan designed to put a meter on Iraq's oil production until a substantial portion of the cost of Saddam Hussein's aggression has been recovered.

Senator D'Amato wants Iraq to relinquish 50 percent of its oil revenues for an undetermined period until injured parties - including individuals, corporations, and countries - are reasonably compensated for their losses.

``We'd like to see all the injured parties receive a certain percentage of what they're justly due,'' says a D'Amato spokesman, ``including Kuwaitis, Israelis, and members of the allied coalition who engaged in military operations - those who shed blood. Frankly, the Kuwaiti's $10 million mansion that's been ransacked doesn't elicit as much sympathy as the Israeli pensioner whose house was leveled.''

THE spokesman hastens to add that an award limit, per claim, is necessary. Kuwait's damage coupled with coalition defense costs easily spiral above $100 billion, he says, ``not even including the destruction of civil targets in Israel and in Saudi Arabia.''

Tapping Iraq's oil production may be the only way to assess the country for damages. If current prices hold steady, Iraq should make an annual $15 billion when at full capacity.

Attorney Jeffrey Jannuzzo, who practiced law in the Middle East and specializes in international claims, says: ``Setting a limit on claims will protect the Iraqis from excessive over-compensation and take them out of what would otherwise be an adversarial process.'' Mr. Jannuzzo says the United Nations could seize payments from half of Iraq's oil sales for up to seven years. This could be accomplished by a UN decree ordering the purchaser of Iraqi oil to make half the payment for each shipment directly into a UN account, by bank transfer.

Jannuzzo says monitoring tankers and pipeline traffic as well as banking transactions is feasible. He envisions a claims settlement bureau, in each principal nation concerned, which receives a percentage of a UN fund of assets garnished from Iraq's oil sales. Each injured country would address claims settlements of the injured - ranging from looted businesses to loss of life. Country-managed reparations are preferable, he says, because government officials, rather than UN officials, are in the best position to recognize their nationals' valid claims and make sound and speedy decisions.

Proponents of garnishment say that exacting reparations from Iraq's future economy need not paralyze its development, especially if Iraq abandons its penchant for military spending.

Bankers' estimates put Iraq's debt as high as $100 billion, including some $50 billion owed to Arab creditors and the rest to governments, export credit agencies and private trading firms.

Jannuzzo assumes that the international community will prevent Iraq from retooling its war machine and that Iraq will eagerly pump oil at capacity.