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Iraq assets on the line

June 12, 2008|Ned Parker | Times Staff Writer

BAGHDAD — One of the most troublesome issues in the negotiations between the United States and Iraq is what will happen to Iraq's assets when the country regains full sovereignty.

It is subject to the United Nations' Chapter 7 status, a legal designation that has stripped the nation of its full rights since its 1990 invasion of Kuwait.

Iraq wants the U.N. Security Council to remove it from Chapter 7 in December. Baghdad is negotiating a controversial bilateral security arrangement with Washington to replace the U.N. mandate for U.S. forces in Iraq, which falls within the Chapter 7 apparatus.

Whether or not Iraq continues to host U.S. forces, it will face difficulties in protecting its financial assets once it regains its full privileges as a nation. In particular, the country risks being subjected to lawsuits and claims from around the world dating to the Kuwait invasion. The combination of Iraq's Chapter 7 status and opposition from President Bush has warded off the suits so far.

Iraqi Foreign Minister Hoshyar Zebari said Iraq could lose more than $50 billion if its revenues and properties are no longer protected. One solution would be releasing Iraq from Chapter 7 status in all matters except financial assets.

"We are in a dilemma. Here we are contemplating if we can go back to the Security Council, have another resolution to protect our financial assets under Chapter 7 again -- to come out from the door and then to reenter the chapter through the window," Zebari said.

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ned.parker@latimes.com

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