Iraq declared yesterday that it has seized all assets of countries participating in the U.N.-imposed sanctions against it, but the move appeared likely to have only limited impact against foreign governments and companies since oil and other major industries in the country long have been state-owned.
The announcement from Baghdad came as the five permanent members of the U.N. Security Council reportedly reached agreement to expand the sanctions by allowing countries to intercept aircraft bound to or from Iraq or Kuwait. But diplomatic sources said the proposal, expected to be voted on this weekend, does not allow for the use of force against civilian aircraft because that would violate international aviation conventions.
In an effort to further tighten sanctions, diplomats at the United Nations said, the proposed resolution would also allow countries to "arrest" Iraqi ships in their ports if they are believed to be violating the sanctions imposed by the Security Council Aug. 6, four days after Iraq invaded Kuwait.
President Bush warned again yesterday that the United States is prepared to take unspecified "additional steps" if sanctions and the quest for a political resolution to the Persian Gulf conflict do not succeed. A White House spokeswoman said Bush's remarks, at a political fund-raiser in San Francisco, were meant to be a reiteration of what he has said repeatedly -- that Iraqi President Saddam Hussein's invasion and annexation of Kuwait last month "will not stand."
In his speech, which came a day after the Pentagon announced that Iraq had added significantly to its troop strength in Kuwait, Bush said the United States was compelled "by the moral compass that guides our nation" to respond to Saddam's "brutally aggressive act of terrorism against international law and order."
Among other developments yesterday, a U.S.-chartered plane flew 416 women and children, most of them Americans, out of Baghdad. Also, Argentina, in a break with its tradition of neutrality in international disputes, said it will send two warships to the Persian Gulf to help enforce the economic blockade. The move would make Argentina the first Latin American state to join the multinational military deployment there.
U.S. officials said it was not immediately clear how Iraq's seizure of foreign assets, decreed by the ruling Revolution Command Council, headed by Saddam, would affect American interests. State Department spokesman Margaret Tutwiler said, "It is not clear from the Iraqi statement in what form or against whom the action will be taken." A Treasury Department spokesman said no determination of the amount of property involved could be made until claims are filed.
Some Western governments said they saw little to be concerned about.
"The U.K. is in the happy position of being a net debtor to Iraq" and thus not likely to suffer seriously, a spokesman for the Bank of England told Reuter. Asked what he thought the effect would be, Belgian Foreign Minister Mark Eyskens told reporters: "Not much, because there isn't much to seize. Saddam Hussein has come up with much more interesting moves."
The Iraqi decree said, "All money, assets and their revenues, belonging to governments, institutions, companies and banks of countries that have taken arbitrary decisions against Iraq are impounded." It barred Iraqi courts from considering legal challenges against the order, and it back-dated it to the start of the U.N.-imposed embargo.
While the order did not mention Kuwait, there was little doubt that it included that country, which Saddam now considers part of Iraq.
Dozens of major foreign companies, many of them American, have worked in Iraq and Kuwait in recent years, primarily in the oil industry, construction and communications. But Iraq, and to a lesser extent, Kuwait, had nationalized major segments of their economies in the 1970s and outsiders were permitted to hold few assets there.
Spokesmen for Morrison-Knudsen and Bechtel Corp., two of the biggest American engineering and construction firms working in the Persian Gulf area, said their companies had no assets in Iraq.
Iraq's largest industry, the production and transportation of oil, has been entirely state-owned since the former British concession was nationalized in 1972. Foreign oil companies have few assets in Iraq except possibly tools and office furniture owned by drilling and maintenance contractors.
The Bank of England said Iraqi deposits already frozen in British banks totaled nearly $3.2 billion while they owed Iraq more than $1.9 billion they could not pay -- a windfall in Britain's favor. A spokesman said the British government's only physical asset in Iraq was its embassy compound, Reuter reported.
The proposed air embargo is being sought as reports continue to circulate that Libya has been sending air shipments to Iraq. The nature of the cargo is not known, although several weeks ago the Security Council's Sanctions Committee was told that Libya had been transshipping equipment to build bridges for use by tanks.
There also have been intelligence reports that Libyan planes were being used by Western European companies exporting goods to Baghdad.
On Saturday, French President Francois Mitterrand said he had a list of "companies in our country trying to get around the embargo," and he said several countries were helping Iraq evade the embargo, but he did not identify them.
The main focus of the proposed resolution is to have the countries surrounding Iraq -- Iran, Syria, Jordan, Saudi Arabia and Turkey -- prevent aircraft from reaching Iraq unless they are carrying medical supplies or are authorized by the U.N. Sanctions Committee. While no force could be used against planes violating the embargo, a Western diplomat said, tracer bullets could be fired and fighter aircraft could signal by waggling their wings.
If aircraft fail to comply, the diplomat said, the information would be noted and the offending company or country could be singled out for punitive action if such moves are authorized by future U.N. resolutions.
At the United Nations, Soviet Deputy Foreign Minister Vladimir Petrovsky told reporters he was optimistic that sanctions and diplomatic action against Iraq would succeed. "I strongly believe in a step-by-step approach," he said. "Not all options have been used. I also believe Saddam will take into account the attitude of the international community." The Soviet Union is one of the five permanent members of the Security Council, along with the United States, Britain, France and China.
News services reported these additional developments:
Japanese automakers agreed to allow the United States to use three auto transport ships to carry vehicles and other goods to the gulf region.
Jordan's King Hussein, Morocco's King Hassan II and Algerian President Chadli Bendjedid met in Rabat, Morocco, to discuss ways of solving the gulf crisis. Iranian Foreign Minister Ali Akbar Velayati indicated that Tehran would soon open talks with Saudi Arabia for the same purpose.
Vladimir Kryuchkov, chairman of the KGB secret police, told the Associated Press in an interview that the Soviet Union is willing to share intelligence on Iraq with the United States but has not made the offer directly because it has been rebuffed in the past.
The U.S. Defense Department, joining an effort by world relief organizations, has temporarily designated three military cargo planes -- two C-5s and one C-141 -- to supply and transport some of the thousands of foreign refugees from Kuwait and Iraq now in Jordan, the Pentagon said.
Jordanian Finance Minister Basil Jardaneh said his country's economy faces collapse by late November unless it receives substantial financial aid. The embargo against Iraq, a major trading partner, will cost it an estimated $2.1 billion in the first year of the crisis -- half of Jordan's annual gross national product -- and Jordan also will pay about $30 million to aid refugees from Iraq and Kuwait, he said.
Special correspondent Trevor Rowe at the United Nations and staff writers Ann Devroy and Thomas W. Lippman contributed to this article.