Iraq to Defer Kuwait War Reparations for a Year, Says U.N.
Iraq can delay payment of a final $4.6 billion in war reparations for its 1990 invasion of Kuwait because of the difficulties it faces in battling the Islamic State insurgency, the U.N. said Thursday.
After holding a special session in Geneva, the governing body of the U.N. Compensation Commission (UNCC), which is handling the reparations, said "extraordinarily difficult security circumstances" in Iraq had presented "unusual budgetary challenges".
It was the first time Iraq has asked for a postponement in payments -- collected as a levy on oil revenues -- since the scheme was set up in 1991, and Kuwait had agreed to the deferral, the commission said.
The payment, owed to the government of Kuwait on behalf of the Kuwait Petroleum Corporation, relates to oil production and sales losses relating to the damage to oil fields that occurred during the war.
It is the final tranche of $52.4 billion of reparations awarded to 1.5 million successful claimants under the U.N. scheme, and was due to be paid by the end of 2015.
"The decision postpones Iraq's obligation to deposit five percent of oil proceeds and five percent of the value of any non-monetary payments to service providers into the Compensation Fund until January 1, 2016," the UNCC said.
The Iraqi economy has been suffering because of the IS insurgency, with the International Monetary Fund last week predicting a contraction of 0.5 percent this year.
This year's contraction is lower than the 2.7 percent predicted in October, however, with IMF officials attributing the improved outlook to higher oil production.
The U.N. commission had awarded Kuwait Petroleum Corporation a total of $14.7 billion in 2000 for losses during the war, the largest amount granted under the scheme.
Most has been distributed and payments on the final $4.6 million will resume on a quarterly basis in 2016.
"The Governing Council welcomed Iraq's ongoing commitment to paying this outstanding claim in full," the commission added in a statement.
The commission was set up by the U.N. Security Council in 1991, the same year that a US-led coalition drove then Iraqi leader Saddam Hussein's forces out of Kuwait.
The continued existence of the levy on Iraq oil exports has come in for criticism given that Saddam was ousted in 2003 in another U.S.-led invasion.
Source: Agence France Presse
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