U.N. Secretary-General Ban Ki-moon said in a report released on Monday that he backs the idea of "alternative" solutions to accommodate Iraq's request to reduce its war reparation payments to Kuwait, Reuters reported.
After the 1991 Gulf war, the U.N. Security Council ordered Iraq to compensate countries that suffered as a result of its 1990-1991 occupation of neighboring Kuwait. Baghdad now must set aside 5 percent of its oil revenues for reparations payments, most of which go to Kuwait.
Iraqi Prime Minister Nuri al-Maliki urged the five permanent Security Council members last week to cancel Iraq's obligation to pay war reparations to Kuwait. He also asked Ban to support his request to reduce or even cancel the payments so the money could be used for investments inside Iraq.
In a report to the 15-nation Security Council, Ban mentioned Iraq's bilateral discussions with Kuwait on reparations, including Baghdad's idea of "converting the outstanding payments into investments."
"I strongly encourage Iraq and other stakeholders to actively discuss alternative solutions to the issue of outstanding compensation and debt payments, including through investments, in the mutual interest of Iraq's people and the region as a whole," Ban wrote.
Although he did not explicitly back a reduction in the payments to Kuwait, Ban said any new solution should "help Iraq meet its reconstruction needs and be beneficial to the region as a whole."
Iraq says the reparations are an unfair burden and wants the percentage reduced so it has more money for reconstruction and development projects. It has called for annulling Security Council decisions requiring the reparation payments under Chapter 7 of the U.N. charter.
Kuwait strongly opposes ending Iraq's Chapter 7 status and has so far successfully lobbied the Security Council to support it.
But council diplomats say they may vote to lift the restrictions at the end of this year, which would enable Iraq to renegotiate the amount of reparations it pays to Kuwait.
Iraq has said it still owes $25.5 billion in reparations, $24 billion to Kuwait alone.
Relations between Iraq and Kuwait have become tense recently, with politicians in both countries trading accusations over the reparations.
Ban stopped short of declaring that Iraq no longer posed any threat to international peace and security, which was the official justification for the sanctions imposed on Iraq when the late Saddam Hussein was in power.
But he made clear that Iraq in 2009 is not the same country it was before the U.S.-led invasion in March 2003 that toppled Saddam's government.
"The Security Council should also take into account the efforts and progress made by the government of Iraq since 2003 in creating a stable nation, at peace with itself and its neighbors," Ban said. "It is important to recognize that Iraq of today is very different from Iraq prior to 2003."