Iraq Crisis: Annan offers oil-for-food deal worth billions

CARRYING the stick of new warnings from the United States and Britain, and the carrot of an improved oil-for-food deal for Iraq from the United Nations, the UN Secretary-General Kofi Annan arrives in Baghdad today for the talks that will decide whether the US and Britain unleash the fiercest attack on Saddam Hussein since the 1991 Gulf War.

After a meeting last night in Paris with President Jacques Chirac of France, which is opposed to air strikes but resigned if all else fails, Mr Annan will fly on to Iraq, arriving in mid-afternoon. Yesterday, he talked by phone with Tony Blair who again underlined that "the threat of force is real", and that Saddam Hussein must grant unfettered access to the UN weapons inspectors, and do so in writing.

Upon arrival, Mr Annan will confer with two senior aides, already in Baghdad to prepare the visit. Over the weekend he will hold the crucial talks with the Iraqi leadership before returning to Paris.

The parallels with seven years ago, when then Secretary-General Perez de Cuellar travelled to Iraq in a vain 11th-hour effort to persuade Iraq to leave Kuwait, are striking. Indeed, the two men compared notes yesterday but agreed, according to a UN spokesman, that "the times are different".

Then, Mr de Cuellar was given the cold shoulder. This time, however, Mr Annan professes himself "reasonably optimistic" Iraq will comply with the UN, although he cautioned before leaving New York that there was "a great deal of suspicion" between the sides. Even so, he went on, "knowledge and history should help in these discussions ... Iraq has been hit many times and knows what happens when the international community decides to use force". And as President Bill Clinton and Madeleine Albright, the US Secretary of State, repeated yesterday, force it will be, if President Saddam does not comply.

But, unlike in 1991, the signs - albeit faint - of a diplomatic solution are multiplying. The Vice-President of Iraq, Taha Yassin Ramadan, promised that Baghdad would be working "very positively" with the Secretary-General, while the Russians declared the visit was a "great opportunity" to end the crisis. Meanwhile, the UN Security Council is set to adopt a resolution today that would permit Iraq to sell $5.3bn (pounds 3.3bn) worth of oil over the next six months - more than double the permitted ceiling - to buy food and other humanitarian supplies.

The move will not take legal effect until a distribution plan is approved by Mr Annan. But the timing is crucial, designed to show that whatever its quarrels with President Saddam, the UN is fully aware of the sufferings of ordinary Iraqis caused by existing sanctions.

On the ground in Baghdad, there were differing pointers to the outcome of the Annan mission. Twenty-nine UN staff left Iraq for Jordan and more will leave today as a precaution against any air attack. But money changers marked the dinar up by 6 per cent against the US dollar, in the hope that an end to the confrontation is at hand.

t A BOMB in Athens yesterday damaged a General Motors dealership in what police said was a possible protest against the United States military confrontation with Iraq. There was heavy damage to the building but no injuries. - AP, Athens