Saddam Throws Down the Gauntlet

In Dirty Harry parlance, Saddam Hussein is feeling lucky. Emboldened by the steady collapse of international sanctions against his regime and rising world oil prices, the Iraqi dictator on Thursday restated his refusal to accept new U.N. weapons inspections — and then underlined his newfound confidence overnight by turning off its oil spigot. Iraq pumps some 2.5 billion barrels a day, which supplies 5 percent of the global market (Iraqi oil goes mostly to Europe). Energy Secretary Bill Richardson had moved Thursday to reassure the market by vowing to dip into his country's strategic reserves to make up for any shortfall on the world market created by Iraq's action, and also announced that pro-Western oil producers such as Saudi Arabia had vowed to increase their output to compensate. But the pressure on prices was immediate, with a 30-cent-a-barrel jump in the crude price in the first hours of trading Friday.

Cash on the barrelhead

Iraq's move came in support of a demand that its customers pay a 50-cents-a-barrel surcharge into an account controlled by Baghdad, in direct violation of a sanctions requirement that all purchases of Iraqi oil be paid first into a U.N.-controlled account. And with high world oil prices having helped Iraq accumulate some $11 billion in cash reserves, it's in a position to sustain its oil strike for some time.

Saddam certainly has grounds for confidence. The Gulf War alliance has for the most part collapsed on the issue of sanctions, with the U.S. and Britain isolated in their insistence on maintaining the blockade, while their erstwhile Arab and many of their European allies are already attending trade fairs in Baghdad. Not that these countries are prepared to forgive Iraq its weapons of mass destruction, but they're looking for a new mechanism that guarantees the rapid lifting of sanctions if arms inspections are resumed — as opposed to using sanctions as a weapon to maintain long-term pressure on the regime. Still, Baghdad is playing hardball even with those countries leading efforts at the U.N. to end the sanctions regime — on a visit to Moscow Thursday, Iraq's deputy prime minister Tariq Aziz flatly rejected cooperation with the U.N. arms monitoring group constituted to replace UNSCOM. The issue concerns the certainty of lifting sanctions. Iraq wants a cast-iron guarantee of an end to the embargo in exchange for accepting cursory inspections of which it is forewarned; U.N. inspectors are unlikely to embrace such a limited concept of weapons inspection. The issue will be negotiated with Iraq early next year by U.N. Secretary General Kofi Annan, who has made clear that he plans to find an acceptable formula to restore inspections and end sanctions.

Washington outsiders

The most notable feature of the current round of politicking over sanctions against Iraq is the extent to which it appears to have left Washington on the sidelines. Failure to evolve a viable Iraq policy has left the Clinton administration clinging to a hard line on sanctions that is unsustainable in the long run — and that's left it little alternative but to stand by and watch as the sanctions regime starts to collapse under pressure from the Arab world and Europe. The danger of simply allowing sanctions to drift to a natural death is that it leaves the strategic initiative in Saddam's hands. And as he showed Thursday, he's more than happy to accept the gift.