IRAQ - July 2 - UK Drops Attempt To Revamp Sanctions.

The UK abandons its resolution to revamp the UN sanctions regime on Baghdad and agrees instead to the extension of the UN's "oil-for-aid" programme. (This is a defeat for both the UK and US. It comes after Moscow, under pressure from Baghdad, made clear it would veto the UK move. UK Ambassador to the UN Sir Jeremy Greenstock calls Moscow's objections "unjustifiable, negative and national, but they are there". London and Washington, supported by France, sought to facilitate the transfer of humanitarian goods to Iraq while clamping down on Iraq's smuggling, which experts value at $1 bn/year. In response, Baghdad on June 4 halted its legal oil exports. London's move increases the likelihood Baghdad would resume its 2m b/d of oil exports and sparks a sell-off on New York's oil market, cutting 60 cents off August NYMEX oil futures, which at midday fell to a session-low of $25.58/b. The UN Security Council has to decide on the length of the extension before the July 3 midnight deadline. Some Security Council members who want to maintain pressure on Russia to reverse its stance are pushing for a short extension, while Baghdad wants a 6-month rollover. A UN diplomat says: "The resumption of oil exports depends on the length of the extension. If it is six months, I think the Iraqis will resume pumping, at five months, maybe, and a three-month rollover will do nothing".