21 November 2003
SANCTIONS IMPOSED: In August 1990 the Security Council
adopted resolution 661, imposing comprehensive sanctions on Iraq
following that country’s short-lived invasion of Kuwait.
Throughout 1991, with growing concern over the humanitarian
situation in Iraq, the United Nations and others proposed measures
to enable Iraq to sell limited quantities of oil to meet its
people's needs. The Government of Iraq declined these offers,
contained in particular, in resolutions 706 and 712, adopted in
August and September 1991.
AGREEMENT ON OIL-FOR-FOOD: An oil-for-food programme began
at the end of 1996 after the United Nations and the Government of
Iraq agreed on the details of implementing resolution 986 (1995),
which permitted Iraq to sell up to two billion dollars worth of oil
in a 180-day period. The ceiling on oil sales was eased during 1998
and finally lifted in 1999, enabling the programme to move from a
focus on food and medicine to repairing essential infrastructure,
including the oil industry.
DIVIDING THE MONEY: With the adoption of Security Council
resolution 1330 (2000) on 5 December 2000, around 72 per cent of the
oil revenue funds were allocated to the humanitarian programme in Iraq (59 per cent
for the centre and south and 13 per cent for the three northern
governorates); 25 percent to the Compensation Commission in Geneva; 2.2 per cent
for United Nations operational costs; and 0.8 per cent for the UN Monitoring, Verification and Inspection Commission
(UNMOVIC) and the International Atomic Energy Agency (IAEA).
Previously, 66 per cent had been allocated to the humanitarian
programme (53 per cent for the centre and south and 13 per cent for
the three northern governorates), with the Compensation Commission
receiving 30 per cent of the revenue. Funds from the two
humanitarian accounts also financed the purchase of oil industry parts and
equipment to sustain this source of revenue. The Government of Iraq
was responsible for the purchase
and distribution of supplies in the 15 governorates in the centre
and south. The United Nations implemented the programme in the three
northern governorates of Dahuk, Sulaymaniyah and Erbil on behalf of
the Government of Iraq.
THE DISTRIBUTION PLAN: The programme operated against
distribution plans prepared at the beginning of each phase by the Government of Iraq and approved
by the Secretary-General. Once approved, the distribution plan
the basis for Iraq’s use of revenue raised during that phase.
Distribution plans included thousands of pages of detailed annexes
and, from phase V onwards, were posted on the OIP Web site. The
Web site also included the status of all contracts from phase V
OIL-FOR-FOOD: Phase I ran from 10 December 1996 to 7 June
1997. The first oil was exported on 15 December 1996 and the first
contracts financed from the sale of oil were approved in January 1997. The
first shipments of food arrived in Iraq in March 1997 and the first
medicines arrived in May 1997. The Security Council continued
the programme in 180-day periods called “phases”. The final
oil exporting period (phase XIII) authorized by Security Council
resolution 1447 (2002), was in effect from 5 December 2002 through 3 June 2003.
FOOD & MEDICINE: Between March 1997 and March 2003, foodstuffs worth
some $13 billion and medicines and health supplies worth
over $2 billion, have been delivered to Iraq. The programme
helped to improve the overall socio-economic condition of the Iraqi
people countrywide and prevented the further degradation of public services and
infrastructure under sanctions. (Economic sanctions were lifted on
22 May 2003). The
nutritional value of the monthly food ration basket distributed countrywide
almost doubled between 1996 and 2002, from about 1,200 to 2,200
kilocalories per person per day. Malnutrition rates in 2002 in the
centre/south of Iraq were half those of 1996 among children under the
age of five and the decline in malnutrition rates was even greater
in the three
EXPANSION and the OIL INDUSTRY: In April 1998 the Security
Council approved a recommendation from the Secretary-General that
the ceiling of $2 billion in oil sales every six months be increased to $5.265
billion. That month, oil industry experts reported on the
"lamentable state" of the oil industry and indicated that
oil production level authorized by the Security Council was well
beyond Iraq’s capacity at current prices. Resolution 1175 in June
1998 authorized the import of $300 million worth of oil spares and
equipment for phase IV. This limit was raised to $600 million per
phase from phase VI onwards. A year later, Security Council resolution 1284
(1999) removed the oil export ceiling altogether.
APPROVING CONTRACTS: On 14 May 2002, the Security Council
(resolution 1409), introduced the Goods Review List (GRL)
and a new set of procedures for the processing and approval of
contracts for civilian supplies and equipment. Until that time, most contracts for humanitarian supplies were circulated to
the Council's 661 Sanctions Committee for approval. Under
the new procedures only contracts containing GRL items were to be
sent to the 661 Committee for consideration.
As of 21 November 2003 when the Oil-for-Food Programme was
terminated in keeping with Security Council resolution 1483 (22 May
2003), some $46 billion
worth of humanitarian supplies, including about $3.8 billion worth of oil
spare parts, had been approved by the 661 Sanctions Committee and
the Office of the Iraq Programme. Of this amount, almost $31
billion worth of humanitarian supplies and equipment had been
delivered to Iraq, including $1.6
billion worth of oil industry spare parts and equipment. An
additional $8.2 billion worth of approved and funded supplies were
in the production and delivery pipeline.
For more information on
the status of funds as of 21 November 2003.
FLUCTUATING OIL PRICES: The capacity of the Oil-for-Food
Programme to deliver humanitarian assistance was
always dependent on the international oil market. In its first
three phases the price of oil was relatively high but the Security Council
had placed a ceiling on exports. When the
ceiling was raised in mid-1998, the price of oil was already collapsing and
it was only from mid-1999 onwards that Iraq was able to take
advantage of better prices and raised ceilings to improve its
delivery capacity. Oil exports under the programme ended 20 March
2003 with the war, and economic sanctions were lifted on 22 May 2003
(resolution 1483) .
For more information on oil exports.