United States President George Bush on Thursday announced the suspension of the 1990 US law imposing sanctions on Iraq, and lifting of some economic sanctions that banned trade with Baghdad or any activity paid by the US government, including reconstruction and restricted export of goods.
"The regime that the sanctions were directed against no longer rules Iraq and no country in good conscience can support using sanctions to hold back the hopes of the Iraqi people," Bush said after meeting Spain's Prime Minister Jose Maria Aznar in Washington.
Washington also decided to allow Iraqi residents in the US to send $500 per month to family and friends in Iraq and allow privately funded humanitarian activities by US-based organisations.
However, restrictions on the export of goods, which are used for national security purposes will remain. The sanctions were first imposed following Iraq's invasion of Kuwait in 1990.
Meanwhile, the United States will present a draft resolution in the United Nations Security Council proposing the lifting of more than decade-old sanctions against Iraq.
The resolution, co-signed by Britain and Spain, is likely to be circulated among the UNSC members this week, US Secretary of State Colin Powell said in New York.
The proposed resolution would be 'forward looking' and would 'not fight the battles of the past' Powell said, indicating that he expected other council members to support it. He met UN Secretary-General Kofi Annan for about an hour on Wednesday evening to discuss the proposal.
The resolution proposes creation of an international advisory board comprising Annan, World Bank, International Monetary Fund and US oil executives to oversee oil exports and to ensure the revenue earned is spent in way that benefits Iraqi people, diplomats and officials said here.
Powell said the US was working to include Germany, France, Russia and China in the new resolution. Diplomats said they were awaiting reactions from Russia and France.
Moscow insists on a council resolution, which calls for UN weapons inspectors to declare Iraq nuclear-weapon-free before sanctions are lifted and Paris too wants the inspectors to finish their job.
The American resolution calls for phasing out of the oil-for-food programme over four months, which France and Russia are in no rush to end. Russia has indicated that it only favours a 'temporary solution' of suspension of the embargos on food and medicine.
It was unclear whether the draft resolution assigns any role to the UN weapons inspectors. Some diplomats said that it would be silent on the issue.
Describing Russia, France, China and Germany -- who had scuttled the American attempt to win explicit UNSC support for the military action against Iraq -- as 'our friends', Powell said, "Whatever is in the past is past. We are not now talking about a matter of war. We are talking about a matter peace."
The American resolution would also call for appointment of a coordinator by the United Nations, but the world body declined to comment on it saying that it would need to see what exactly the person is supposed to do. The US wants the person to work with it and Britain in the field of governance, humanitarian and economic reconstruction.
The US would need nine votes and no veto to get their resolution through the Council.