[Congressional Record (Bound Edition), Volume 145 (1999), Part 2]
[Senate]
[Pages 1678-1681]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            ENERGY SECURITY

  Mr. MURKOWSKI. Mr. President, first of all, I want to raise with my 
colleagues two issues that revolve around energy security. The first 
issue is the state of the domestic oil industry and the second issue is 
the Oil-for-Food Program for Iraq. I think that this marks the first 
departure from the debate on the impeachment, and I hope the Presiding 
Officer will find it refreshing.
  Last week, the Energy and Natural Resources Committee, which I chair, 
held a hearing to review the state of the domestic petroleum industry, 
and to assess the threat to our economic security from our growing 
dependence on foreign oil. The domestic oil industry in the United 
States is in serious trouble. Companies are laying off workers in 
droves. In my State of Alaska, British Petroleum, just announced the 
layoff of some 600 workers, and another one of our major oil companies 
lost somewhere in the area of just under $800 million in the last 
quarter of 1998.
  Exploration and drilling budgets are way down. Drilling contractors 
have been cut to the bone. Marginal and stripper wells are being shut 
in. These are production capabilities, Mr. President, that, once lost, 
will unlikely be regained. These, to a large degree, represent an 
ongoing operating petroleum reserve--one might conclude a strategic 
petroleum reserve--because while they are small, they are substantial 
in their numbers and contribute to domestic production.
  Now, to quote a recent report by the John S. Herold Company, 1998 was 
a ``catastrophe'' for the U.S. oil industry, ``nothing short of 
murderous for investors'' in that industry. We are seeing mergers and 
consolidations, significant implications for the Nation's energy 
security, and certainly U.S. jobs--30 merged companies alone last year.
  This situation in the oil industry is interesting, as we look at the 
commodities in this country. As the Presiding Officer is well aware, 
the agricultural industry--production, livestock, hogs, beef--the 
farmers can hardly raise them anymore. Many aspects of the agricultural 
industry are under water. This is true of the timber industry. It is 
true of the steel industry. It is true of the mining industry, and 
certainly true of the oil and gas industry.
  So as we reflect on the prosperity of this country, it is interesting 
to note the job losses in the commodities industries of this country--
and one has to wonder when it is going to catch up with itself. Of 
course, we enjoy low gasoline prices when we fill our car or boat, low 
heating oil prices when we warm our home, and low inflation due in 
large measure to low oil prices. Let's recognize where it is.
  But a decimated U.S. oil industry creates a risk to consumers, to the 
economy, to our national energy security. And we only have to look back 
at history. Some say we learn from history, and some say not much. 
Well, we recall the 1973 Arab oil embargo when we were only 36 percent 
dependent on foreign imported oil. That had a devastating impact on 
consumers and the economy. We saw oil shortages, and long lines at the 
gas stations. Many people have forgotten that timeframe--soaring 
prices, double-digit inflation, and an economy put into recession. What 
was the prime rate at that time? Well, the prime rate was 20.5 percent 
in 1980. Inflation was in the area of 11 percent--double-digit.
  If it happened today, we could be hit even harder. And we are getting 
set up for it because we are in worse shape today than we were in 1973. 
Since 1973, our foreign dependence has grown by leaps and bounds. U.S. 
crude oil production dropped by one-third. U.S. oil imports--oil 
imports--soared by two-thirds.
  Today, U.S. foreign oil dependence is 56 percent, compared to 36 
percent back in 1973. Our excessive foreign oil dependence puts our 
national energy security interests at stake and hence our national 
security at stake. We can't forget that the United States went to war 
in 1991 when Iraq invaded Kuwait and threatened the world oil supplies. 
Part of that was our supply.
  In 1995, President Clinton issued a Presidential finding that imports 
of oil threatened our national security, and a short time ago the U.S. 
bombed Iraq because Saddam continues to threaten the stability in the 
Persian Gulf. Well, it is fair to say, Mr. President, if we do nothing, 
what will happen: We know things are going to get worse.
  The Department of Energy projects in the year 2010 U.S. foreign 
dependence will hit about 68 percent. That means we will be depending 
on foreign sources for 68 percent of our oil supply.
  I don't think we should put our trust in foreign oil-producing 
nations that have their interests in mind, not ours. I plan to work 
closely with the small and independent producers to develop a solution 
to this crisis. Already I have cosponsored Senate bill 325, a bill 
introduced by my colleague from Texas, Senator Kay Bailey Hutchison, 
that would amend the Tax Code to add marginal producers. I will work as 
a member of the Finance Committee to consider this and see it is 
adopted.
  I also intend, with Senators from producing States, to consider a 
non-tax means to assist domestic production through regulatory and land 
access issues.
  Second, I want to talk about oil-for-food and our relations with 
Iraq. This deals with our energy security; that is, our U.S. policy 
towards Iraq, specifically, the U.N. Oil-for-Food Program. Six weeks 
have passed since President Clinton ordered America's Armed Forces to 
strike military and security targets in Iraq. What has Saddam's regime 
done since then? They have shot at U.S. fighter planes on almost a 
daily basis. They have challenged Kuwait's right to exist. They have 
demanded compensation for U.N. crimes against Iraq--isn't that ironic. 
They have demanded an end to sanctions and no-fly zones. They have 
reiterated that no weapons inspectors will be allowed to return. That 
is a pretty bold statement.
  Now, what policy initiative has the Clinton administration launched 
to deal with Saddam's defiance? U.S. officials offered to eliminate the 
ceiling on the Oil-for-Food Program, a de facto ending of the sanctions 
on oil exports. My views on the absurdity to this proposal were 
included in a recent Washington Post op-ed, and I ask unanimous consent 
that be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, Jan. 25, 1999]

                      Our Toothless Policy on Iraq

                        (By Frank H. Murkowski)

       On the eve of Operation Desert Fox, President Clinton 
     announced to the nation that ``we are delivering a powerful 
     message to Saddam.'' That message now appears to be that as 
     long as Saddam Hussein refuses to cooperate with inspections, 
     refuses to comply with U.N. resolutions and refuses to stop 
     illegally smuggling out oil, he will be rewarded by the de 
     facto ending of economic sanctions.
       At least, that was the message sent by the U.S. Ambassador 
     to the United Nations Peter Burleigh on Jan. 14 when he 
     offered a plan to eliminate the ceiling on how much oil Iraq 
     can sell abroad. This proposal was in reaction to a proposal 
     (made by France and supported by Russia and China) to end the 
     Iraq oil embargo.
       Do not be fooled. The distinctions between the U.S. plan 
     and the French plan are meaningless. This is the end of the 
     U.N. sanctions regime. Security Council Resolution 687, 
     passed in 1991 at the end of the Gulf War, requires that 
     international economic sanctions, including an embargo on the 
     sale of oil from Iraq, remain in place until Iraq discloses 
     and destroys its weapons of mass destruction programs and 
     capabilities and undertakes unconditionally never to resume 
     such activities. This, we know, has not happened.
       But the teeth in Resolution 687 have effectively been 
     pulled, one by one, with the introduction and then continued 
     expansion of the so-called oil-for-food exception to the 
     sanctions. Although the humanitarian goals of the oil-for-
     food program are worthy, Saddam Hussein already has subverted 
     the program to his own benefit by using increased oil 
     capacity to smuggle oil for hard cash and by freeing up 
     resources he might have been forced to use for food and 
     medicine for his own people.
       The increase in illegal sales of petroleum products 
     coincided with implementation of the oil-for-food program in 
     1995. Part of this

[[Page 1679]]

     illegally sold oil is moving by truck across the Turkish-
     Iraqi border. A more significant amount is moving by sea 
     through the Persian Gulf. Exports of contraband Iraqi oil 
     through the gulf have jumped some 50-fold in the past two 
     years, to nearly half a billion dollars. Further, Iraq has 
     been steadily increasing illegal exports of oil to Jordan and 
     Turkey.
       Oil is Saddam Hussein's lifeline; it fuels his ability to 
     finance his factories of death and rebuild his weapons of 
     mass destruction. Revenue from oil exports historically has 
     represented nearly all of Iraq's foreign exchange earnings. 
     In the year preceding Operation Desert Storm, Iraq's export 
     earnings totaled $10.4 billion, with 95 percent attributed to 
     petroleum. Iraq's imports during that same year, 1990, 
     totaled only $6.6 billion.
       The United States proposes to lift the ceiling on the only 
     export that matters. In addition, it is prepared to relax the 
     scrutiny applied to contracts for spare parts and other 
     equipment needed to get Iraqi industry working better.
       France, China and Russia, of course, did not support Desert 
     Fox, and have wanted to lift the Iraq embargo for some time. 
     They are willing to put economic gain before international 
     security, because these appeasers of Iraq stand to earn 
     billions in a post-sanctions world. In fact, earlier this 
     month, the U.N. released more than $81 million under the 
     expanded oil-for-food program to enable Iraq to buy 
     electrical generating equipment, nearly all of which ($74.9 
     million) will come from China. Will these new turbines merely 
     guarantee an uninterrupted power supply for Saddam Hussien's 
     poison gas facilities?
       Why is the Clinton administration prepared to take this 
     course? Because our Iraq policy is bankrupt. We have relied 
     on Koki Annan and the Iraq appeasers to sign meaningless 
     deals with Saddam Hussein regarding inspections that were 
     useless from the moment they were signed. When we called back 
     our aircraft at the last moment in October, despite the 
     unanimous support of the Security Council for the attack, our 
     Iraq policy suffered a near-fatal collapse. It finally did 
     collapse when we decided to strike at a time when the 
     president's credibility was at its lowest and the approach of 
     Ramadan guaranteed Saddam Hussien easily could outlast our 
     attack. Indeed the absurdity of our policy is reflected in 
     the fact that in December our bombers targeted an oil 
     refinery in Basra and at the end of the attack we pledged 
     support to rebuild Iraq's oil-export capacity.
       The inept policies that have brought us to this point must 
     be reversed. As a first step, the administration ought to 
     turn back from its path toward lifting, rather than 
     tightening, the sanctions on Saddam Hussein. Second, when the 
     U.N. reconsiders reauthorizing the oil-for-food program in 
     May, the United States should use its veto to end this 
     program, which has allowed Saddam Hussein to rebuild his 
     political and military support.
       We can bring Saddam Hussein to his knees by eliminating his 
     ability to market any of his oil, thereby cutting off his 
     cash flow. Not only should the United States strengthen oil 
     interdiction and inspection operations, the administration 
     should consider adopting a policy similar to the air blockade 
     we enforce in the ``no-fly'' zone. A strictly enforced ``no-
     oil-export'' policy is what is called for.
       Only then will Saddam Hussein realize that cooperation with 
     U.N. inspectors is the only way to rebuild his economy. The 
     policy predicated on so-called humanitarian grounds--oil for 
     food--not only has failed but has ensured the survival of 
     Saddam Hussein.

  Mr. MURKOWSKI. Mr. President, I don't have time to go into that in 
depth, but let me remind my colleagues of a few things. One, the United 
Nations Security Council Resolution 687 passed in 1991 at the end of 
the Persian Gulf War requires that international economic sanctions, 
including an embargo on the sale of oil from Iraq, remain in place 
until Iraq discloses and destroys its weapons of mass destruction 
programs and capabilities and undertakes unconditionally never to 
resume such activities.
  But the teeth in Resolution 687 have effectively been pulled out one-
by-one with the introduction and then continued expansion of the so-
called oil-for-food exception to the sanctions: In 1995, UNSCR 986 
allowed Iraq to sell $2 billion worth of oil every 6 months. Iraq 
produced 1.2 million barrels per day in 1997. In 1997, UNSCR 1153 
doubled the offer to $5.2 billion in oil every 6 months. Iraq is now 
producing 2.5 million barrels of oil. In 1999, United States, France, 
and Saudi Arabia will offer varying plans on removing the limit on how 
much oil Iraq can sell and for what purpose.
  This means that Iraq's oil production of 2.5 million barrels per day 
equals--their production now equals--the prewar production levels in 
the year preceding Desert Storm. Iraq's export earnings total $10.4 
billion, with 95 percent attributed to oil, which is Iraq's only 
significant identifiable cash flow. Iraq's imports that same year were 
only $6.6 billion.
  The President's National Security Advisor, Sandy Berger, takes issue 
with my characterization of the U.S. proposal. In a Washington Post 
editorial, he said that under the Oil-for-Food Program:

       We prevent Saddam from spending his nation's most valuable 
     treasure on what he cares about most--rebuilding his military 
     arsenal--and force him to spend it on what he cares about 
     least--the people of Iraq. From Saddam's point of view, that 
     makes the program part of the sanctions regime.

  I ask unanimous consent that editorial in the Washington Post be 
printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                       [From the Washington Post]

                Oil for Food: The Opposite of Sanctions

                         (By Samuel R. Berger)

       The Post's Jan. 17 editorial ``Rewarding Saddam Hussein'' 
     endorsed the administration's policy of containing Iraq and 
     our continued readiness to back that policy with force. 
     Unfortunately, it also misconstrued important elements of our 
     approach to sanctions to Iraq. The confusion was compounded 
     by a Jan. 25 op-ed by Sen. Frank Murkowski (R-Alaska). Both 
     took issue with what the editorial referred to--
     incompletely--as an administration statement offering ``to 
     eliminate the ceiling on how much oil Iraq is permitted to 
     sell.'' The second half of that statement--which the 
     editorial omitted--read: ``to finance the purchase of food 
     and medicine for the Iraqi people.''
       Under the U.S. proposal, Iraq could pump as much oil as is 
     needed to meet humanitarian needs. All the revenue would go 
     directly to a U.N. escrow account, as it does now. From that 
     account, checks could be written--directly to the 
     contractor--to buy food, medicine and other humanitarian 
     supplies, as well as parts for equipment that we know is 
     being used to pump oil for this program. These supplies then 
     would be distributed under U.N. supervision. Saddam would 
     never see a dime.
       The Post and Sen. Murkowski also asserted that our proposal 
     to increase the flow of humanitarian aid to Iraq is no 
     different from proposals to lift sanctions. In fact, it is in 
     direct opposition to them.
       If sanctions were lifted, the international community no 
     longer could determine how Iraq's oil revenues are spent. The 
     oil-for-food program would have to be disbanded, not 
     expanded. Billions of dollars now reserved for the basic 
     needs of the Iraqi people would become available to Saddam to 
     use as he pleased. The amount of food and medicine flowing 
     into Iraq most likely would decline.
       In contrast, under the current program, we prevent Saddam 
     from spending his nation's most valuable treasure on what he 
     cares about most--rebuilding his military arsenal--and force 
     him to spend it on what he cares about least--the people of 
     Iraq. From Saddam's point of view, that makes the program 
     part of the sanctions regime.
       Indeed, Saddam already has rejected our initiative to 
     expand it. He knows that every drop of oil sold to feed the 
     Iraqi people is a drop of oil that will never be sold to feed 
     his war machine. Oil for food means no oil for tanks.
       Saddam's intent is clear: He is cynically trying to exploit 
     the suffering of his people--for which he is responsible--to 
     gain sympathy for his cause and to create a rift in the 
     international coalition arrayed against him. In this way, he 
     hopes to build support for ending sanctions so that he can 
     resume his effort to acquire weapons of mass destruction.
       But he is failing. In recent weeks, opinion has hardened 
     against Saddam in Arab countries. On Sunday, the Arab League 
     called on Iraq to stop provoking its neighbors and to comply 
     with U.N. resolutions. Newspapers in Egypt and Saudi Arabia 
     have called for Saddam's ouster. But there remains strong 
     public sympathy for the Iraqi people.
       The effect of our policy is to make clear that the source 
     of hunger and sickness in Iraq is not sanctions but Saddam. 
     After the Gulf War ended, the United States made certain that 
     food and medicine would never be subject to sanctions. Saddam 
     always has been free to import them. When he refused to do 
     so, the United States took the lead in proposing that Iraq be 
     allowed to sell controlled quantities of its oil in order to 
     purchase humanitarian supplies. Remarkably, until 1996, 
     Saddam refused to do even that.
       Currently, the United Nations allows Iraq to spend up to 
     $5.2 billion in oil revenue every six months for humanitarian 
     purposes. Saddam is so indifferent to the suffering of his 
     people that he still refuses to make full use of this 
     allowance. But the food supply in Iraq has grown, and soon 
     will provide the average Iraqi with about 2,200 calories per 
     day, which is at the top of the United Nations' recommended 
     range.
       To leave no doubt about who is responsible for the 
     suffering of Iraq's people, we are willing to lift the $5.2 
     billion ceiling to allow

[[Page 1680]]

     Iraq--under strict supervision--to use as much oil revenue as 
     is necessary to meet humanitarian needs. In the meantime, we 
     will continue to enforce sanctions against Iraq and remain 
     prepared to take action against any oil facilities being used 
     to circumvent them.
       Critics of this effort imply we should starve Iraq into 
     submission. They forget that starving Iraq is Saddam's 
     strategy. The oil-for-food program helps us to thwart it.
       The program does not reward Saddam; it further restrains 
     him, while relieving the suffering of ordinary Iraqis. It has 
     helped to deepen Saddam's isolation, and it will remain a 
     logical part of our strategy against him and the threat he 
     poses.

  Mr. MURKOWSKI. In conclusion, I don't care much about Saddam's point 
of view, but from the point of view of this Senator from Alaska, what 
this program does is allow Saddam to use his increased oil capacity to 
smuggle oil for hard cash and free up resources he can use to finance 
his weapons of mass destruction. Saddam's cash flow is oil. The 
smuggling is documented. The displacement issue is harder to track, but 
Saddam's war machine is still working and his troops are still fit.
  Let me take issue with the definition of ``humanitarian supplies.'' 
The most recent U.N.-approved plan would allow Saddam to spend this 
oil-for-food money, and I think it is interesting to reflect where is 
he spending his money. Let's look at it, because I think it counters 
Sandy Berger's remarks that this is going for ``humanitarian'' 
purposes: $300 million for petroleum equipment; $409 million for 
electricity networks; $126 million for telecommunication systems; $120 
million to buy trucks, repair the railway system, and build food 
warehouses; $180 million for agriculture equipment, including 
pesticides.
  What is the humanitarian goal in guaranteeing an uninterrupted power 
supply for Saddam's poison gas facilities? What is the humanitarian 
goal in making sure his elite guards can communicate with each other?
  And finally, with a new emphasis on building an effective Iraq 
opposition, I wonder how an opposition can take root when Saddam is 
able, through the Oil-for-Food Program, to take care of his citizens' 
basic needs?
  The chairman of the Foreign Relations Committee, Senator Helms, and I 
will be holding a joint hearing of the Foreign Relations Committee and 
the Energy Committee next week to ask the administration these 
questions. I have asked Sandy Berger to come up and defend his 
arguments, along with Secretary Richardson and Under Secretary 
Pickering.
  I ask unanimous consent to have printed in the Record an excellent 
analysis of the various proposals for changing the sanctions by Patrick 
Clawson from the Washington Institute.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

              [The Washington Institute, January 19, 1999]

       Assessing Proposals for Changing U.N. Restrictions on Iraq

                 (By Patrick Clawson, with Nawaf Obaid)

       In the last two weeks, France, the United States, and Saudi 
     Arabia have all proposed changes in UN restrictions on Iraq. 
     While all would have the effect of cutting Saddam some slack, 
     intriguingly, the Saudi plan is about as good as the 
     American.
       The French Proposal. The French proposal is soft both on 
     inspections and on sanctions. In the words of Foreign 
     Minister Hubert Vedrine, the French proposal aims at 
     ``preventing any new [emphasis added] development of weapons 
     of mass destruction [WMD].'' Vedrine proposes no action be 
     taken about what he describes as ``remaining [WMD] stocks 
     that may have escaped control or destruction''--stocks that 
     include some long-range missiles and biological weapons 
     materials. The French-proposed inspection system would be 
     built on the model of the International Atomic Energy Agency 
     (IAEA), rather than UNSCOM. Since the Gulf War, the IAEA has 
     continued its practice of looking primarily at fissile 
     material rather than at the full scope of activities needed 
     to make a nuclear weapon. Intelligence reports suggest Iraq 
     has produced weapon components from which functioning nuclear 
     weapons could be assembled soon after Iraq acquired fissile 
     material. The French proposal may be the most intrusive 
     regime that Saddam would accept. Yet, France is asking the 
     wrong question; the issue is not what Saddam will accept, but 
     what will accomplish the goal of eliminating the threat of 
     Iraqi WMD. From this perspective, France's plan comes up 
     short.
       France has also proposed that Saddam be permitted to use 
     oil export receipts as he wishes, subject only to the 
     restriction that he not import arms or dual-use technologies. 
     The practical effect of this proposal would be to allow 
     Saddam to reduce food and medicine imports to fund his 
     priorities. The French proposal would also eliminate the 
     current system under which all earnings from approved Iraqi 
     oil exports go into an escrow account abroad, and each 
     payment out of the account requires documentation showing for 
     what the funds are being used. The French would instead trust 
     Iraq to keep honest accounts and report accurately to the UN, 
     without diverting any money into clandestine accounts.
       The U.S. Proposal. The U.S. government's January 14 
     proposal to the Security Council focuses not on the 
     inspection system but instead on what can be done to 
     alleviate humanitarian suffering while sustaining sanctions. 
     The first element in the U.S. proposal would be to allow 
     Saddam to export as much oil as he wants. Such a step may be 
     a good way to win a propaganda victory without having any 
     practical effect, because the UN-imposed limit is so far 
     above what Iraq can produce. In the six months to November 
     1998, Iraq exported $3.04 billion through the oil-for-food 
     program, or less than 60 percent of the UN limit of $5.26 
     billion. The practical constraint was not the UN limit, but 
     Iraq's production capacity.
       The only way Iraq can produce more is if it can import 
     equipment needed to repair and modernize its oil industry. In 
     1998, the UN approved imports of $134 million worth of oil-
     field equipment. A team from the Dutch firm Saybolt, hired by 
     the UN, visited Iraq in December 1998 to identify what more 
     is needed. The issue is whether to expedite approval of the 
     $300 million program that team recommended. A sticking point 
     has been Iraqi oil exports outside the oil-for-food program, 
     namely, shipments to Jordan (80,000 barrels a day of crude 
     and 16,000 barrels a day of oil products) and the smuggling 
     of oil products to Turkey and via Iranian waters (the amounts 
     vary from month to month, with the total averaging perhaps 
     50,000 barrels a day). The United States could adopt a tough 
     approach--for instance, insisting that Iraq not be allowed to 
     import oil equipment while illegal exports continue--but that 
     would run counter to the U.S. desire to expand Iraqi 
     humanitarian imports.
       The second element in the U.S. proposal is to expedite 
     humanitarian deliveries and, for this purpose, allow Iraq to 
     borrow in order to import more. Yet, the basic problem with 
     the oil-for-food program is neither a lack of money nor an 
     excess of red tape; instead, the problem is that Saddam does 
     not care about the welfare of Iraqis. To generate more 
     pressure to end the sanctions. Saddam continues to hinder 
     international relief. For instance, the plan Iraq submitted 
     to the UN for the latest six-month relief program would have 
     provided insufficient protein; this caused the UN to delay 
     its approval for two weeks (from November 29 until December 
     11) until Iraq agreed to an extra $150 million for food. 
     Clear proof that Saddam, not UN restrictions, is responsible 
     for Iraqi suffering can be found in the detailed UN reports 
     about the improving living conditions in the Kurdish areas 
     outside Saddam's control, where the UN administers the oil-
     for-food program directly rather than through the Iraqi 
     government.
       The fact is that Iraq has ample funds for food and 
     medicine. Under current procedures, Iraq will have the 
     resources to import at least $1.8 billion over the next six 
     months, even if prices for its oil stay at $9 per barrel and 
     even after the deductions for the Compensation Fund and UN 
     expenses. But even after the UN modification, Iraq's plan 
     calls for only $1.6 billion for humanitarian goods: $1.446 
     billion for food, medicine, and water and sanitation 
     equipment, and $165 million for nutrition programs, education 
     needs and, in the Kurdish north, demining and resettling 
     refugees. Any extra money will go for activities that not all 
     would call humanitarian. The UN-approved plan authorizes 
     $1.135 billion for other purposes; $300 million for petroleum 
     equipment; $409 million for the electricity network; $126 
     million for the telecommunications system; $120 million to 
     buy trucks, repair the railway system, and build food 
     warehouses; and $180 million for agricultural equipment, 
     including pesticides. The telecommunications system repairs 
     are presented as a way to coordinate food and medicine 
     deliveries, but they also allow Saddam to stay in touch with 
     his secret police and military commanders. To date, the 
     United States has used its veto in the Sanctions Committee to 
     block shipments of such dual-use items, even though such 
     items are authorized by the plan approved by the Secretary 
     General. Yet, as the January 14 U.S. proposal focuses on how 
     to increase imports, the United States may consider allowing 
     more questionable items.
       The U.S. proposal also suggests letting Iraq raise money by 
     borrowing from the fund to compensate those whose property 
     was destroyed when Iraq occupied Kuwait. Eight years after 
     these people suffered a loss, none has received more than 
     $10,000. The Compensation Commission has approved two

[[Page 1681]]

     more rounds of payments, mostly to recipients who will get 
     only $2,500 per claim, as soon as it has the funds available.
       The Saudi Proposal. Saudi Arabia's Crown Prince Abdullah 
     has presented a plan that overlaps the U.S. strategy in key 
     areas, calling for retaining sanctions but abolishing the 
     limit on how much oil Iraq can sell and making other changes 
     to speed humanitarian deliveries. It is also said to call for 
     revamping UNSCOM, with few details on what that means 
     (evidently not much change is proposed). Saudi Arabia has 
     lobbied for the plan vigorously at three meetings of the Gulf 
     Cooperation Council and two other inter-Arab sessions. It is 
     unusual for Saudi Arabia to be so bold at asserting 
     leadership in the region, and even more unusual for Saudi 
     Arabia to pursue the plan so tenaciously in the face of 
     opposition from those in the region who want to distance 
     themselves from the U.S.--British air strikes. Under the 
     direction of the foreign minister, Prince Saud al-Faysal, the 
     Saudis have successfully brought on board Egypt, which was 
     initially skeptical.
       The Saudi initiative underscores the convergence of U.S. 
     and Saudi interests on Iraq. Although Riyadh was widely 
     criticized in the United States for its reluctance to 
     participate in the December air campaign. Saudi policy is in 
     fact closely aligned with Washington's. For instance, the 
     political commentator of the official Saudi news agency 
     wrote, ``The Iraqi people deserve and need a revolution'' 
     against ``the tyrant of Baghdad,'' whereas in Egypt, another 
     Arab country whose ruler Saddam attacked, the government 
     confined itself to saying ``the Iraqi leadership is primarily 
     responsible for the Iraqi people's hardships.'' The 
     reassertion of leadership in the region by Saudi Arabia, if 
     sustained, would on many issues correspond well with U.S. 
     interests.
       Although it is unlikely that the Saudis will be able to 
     convince enough Arab states to support their plan for the 
     January 24 meeting of Arab League foreign ministers to 
     endorse it openly, the United States should lend weight to 
     the Saudi diplomatic effort. The Saudi effort focuses Arab 
     attention on the issue most important for U.S. interests--how 
     to relieve the suffering of the Iraqi people--rather than on 
     the question raised by the French proposal, namely, how to 
     water down inspections so as to win Saddam's assent.

  Mr. MURKOWSKI. I will ask the administration to take a different tact 
to tighten, rather than loosen, the Oil-for-Food Program, to veto U.N. 
plans that allow Saddam to use this money to finance nonhumanitarian 
purchases, and to strengthen oil interdiction and inspection 
operations, including adopting something like the ``no-fly'' zone with 
a ``no-oil'' vessel zone. Only by taking these measures can the U.N. 
finally cripple Saddam's regime and increase energy security for all 
Americas.
  If we cut off Saddam's oil supply, we will bring him to his knees. 
That is the only way it will happen.
  Mr. President, I would like to take a moment to comment on the 
Department of the Interior's Mineral Management Service proposed oil 
valuation rule.
  Earlier this week, speaking with regard to the Administration's FY 
2000 budget, Secretary Babbitt said, ``We have met, and talked, and 
talked, and talked,'' about the proposed rule. But I submit that the 
only talking done by MMS has been at industry and at Congress, not with 
them. Mr. President, the proposed rule by MMS was unfair last year and 
it remains unfair.
  Babbitt has declared that talks are ``over'' and that MMS is 
determined to issue its rule in June, when the Congressional moratorium 
expires.
  This is simply unconscionable. The domestic oil industry is on its 
knees right now. But, again, this action by Interior is symptomatic of 
Administration attacks on the domestic energy industry.
  The Federal Government should work to save marginal producers, not 
put them out of business. Yet that is just what Interior is doing by 
issuing an unfair royalty rule at a time when producers can least 
afford it.
  I would ask Secretary Babbitt the following question: How many 
royalties can a bankrupt industry pay? I would also ask him if this 
rule is truly about raising revenue, or is it another Administration 
scheme to drive petroleum producers out of business. After all, 100 
percent of zero is zero.
  For the record, Mr. President, I will be speaking to MMS and looking 
into this flawed royalty rule.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Washington is recognized for 
5 minutes.
  Mrs. MURRAY. Mr. President, thank you.

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