Thank you Mr. President.
This morning I intend to keep my remarks to a
minimum and simply update you on developments since the letter dated 14
January 2000 from the Secretary-General
addressed to the President of the Council (S/2000/26), submitting,
together with the report of the oil expert, a detailed list of parts and
equipment for the oil industry during
phase VII, and the Secretary-Generals
report (S/2000/22) submitted to the Council on the implementation
of paragraphs 15 to 30 of resolution 1284 (1999) adopted on 17 December
1999. (S/2000/22) on the first
30 days of the implementation of
1284 adopted on 17 December 1999.
The Secretariat is working harder than ever on
a number of fronts to maintain the oil for food programme as it grows in
size and complexity and also to assemble authoritative information to
assist the Security Council and its Committee in addressing the new
provisions contained in resolution 1284 (1999).
Let me express at the outset our sincere
appreciation that the Council endorsed the Secretary-Generals
recommendation that the information and recommendations to be included
in the reports requested in paragraphs 28 and 30 of resolution 1284 and
in paragraph 5 of resolution 1281 (1999) be included in a single report
to be submitted to the Council on 10 March.
Such a single comprehensive report will provide the basis for a
constructive exchange of views on a range of related issues next month.
The letter of the Secretary-General on the oil
sector reflects the outcome of the visit of an independent oil expert
who visited Iraq from 15 to 21 December for the purpose of working with
Ministry of Oil in the preparation of that part of the distribution plan
for phase VII relating to the oil industry.
The conclusions are consistent with earlier
reports. Iraqs oil
industry continues to be in a lamentable state.
We would appeal to all members of the Council to reflect on the
argument that - unless key items of oil industry equipment are made
available and commissioned within a short time, the production of oil is
likely to drop, even under a regime of severe risk management.
This is a very clear warning.
The independent experts contracted by the
United Nations have always noted that their predictions on Iraqs
export capacity depend on the timely arrival of spare parts and
equipment. That isnt
happening to date around $250 million
of oil sector equipment has actually arrived in Iraq while $288 million
worth remains on hold.
Mr President allow me to repeat the
Secretary-Generals recommendation that Iraq be authorized to
purchase an additional $300 million dollars worth of spare parts using
revenue from phase VI. There is
currently sufficient unallocated revenue available from phase VI to
cover this additional amount. On
the information presented this Council over nearly two years there can
be no doubt about the need of Iraqs oil industry for higher levels
So far as oil sales are concerned in the
current phase OIP has received 96 contracts of which 92 have been
approved by the 661 Committee. The
total volume of oil approved is 254.6 million barrels.
To date 88.9 million barrels have been exported for revenue
estimated at $2.14 billion. Based
on current contracts for the sale of oil and prevailing prices we
estimate that revenue in phase VII should be around $6.6 billion.
The volumes of oil approved and exported show a marked reduction when
compared to the same period in phase VI.
At the same point in Phase VI the overseers and the Committee had
approved contracts for the export of 350 million barrels of oil.
Actual exports at that point were also greater at 108 million
However, the price of oil is currently much
higher than through most of phase VI and, despite the drop in volume
revenues in the current phase are significantly higher than in phase VI.
Mr. President the oil market continues
to be volatile and therefore there is no room for complacency in
witnessing the rise in oil prices.
I should like to recall that at the start of the programme three
years ago the price of oil was at $18 per barrel, then dropped to $8 per
barrel and now is around $25 per barrel.
Pursuant to paragraph 30 of resolution 1284,
the Secretary-General established a group of six experts with skills in
different sectors of the oil industry.
The team visited Iraq from January 16 to 31.
Their report will be presented to the Council on 10 March.
Per Cent Account
In paragraph 20 of resolution 1284 (1999) the
Council suspended implementation of paragraph 8 (g) of resolution 986
(1995). This decision left
hanging the issue of what to do with one per cent of Iraqs oil
revenue. You have before you the
proposal of the Secretary-General that this one per cent be added to the
allocation for the humanitarian programme in the south and center of
Iraq the account we usually call the 53% account.
I believe this would be a logical and equitable use of the
additional resources and would ask for your endorsement of the
Secretary-Generals recommendation (S/2000/22, para 22).
We welcomed the Councils requests
contained in paragraphs 21 and 28 of resolution 1284 (1999) to review
both the observation mechanism and the progress of the programme in
meeting the humanitarian requirements of Iraqs people.
On the first point, my Office has already begun an internal
review of the observation work taking into account the dramatic
changes in the programme with the arrival of substantial quantities of
non-food and medicine supplies over the past year.
We are presently undertaking the review of the
progress made in meeting the humanitarian needs of the Iraqi people,
which will be an input to the Secretary-Generals report to be
submitted on 10 March. We plan
also to share the results of the review with the Government of Iraq.
We should have no illusions here without the full support
and cooperation of the Government it will not be possible to conduct a
proper review of the humanitarian situation and of the revenues needed
to meet the needs of the people.
Except in a few cases, however, it has not
been possible to engage the Government formally in detailed discussions
regarding the extent of humanitarian needs and to collaborate on
possible measures to address those needs.
permission Mr President, I would
like to go through some of the specific tasks given to the Secretariat
in resolution 1284 and advise on our work to this point.
In paragraph 26, the Secretary-General
was asked to make arrangements for Iraqis to perform the important
religious duty of the Hajj. Over
the past three weeks I have consulted on behalf of the
Secretary-General - with most of
the members of the Security Council individually and with the
Permanent Representative of Iraq to review options for making such
arrangements. While these
consultations are continuing and all parties appear willing to find a
workable solution, there is not yet a basis for agreement on this issue.
In paragraph 24, the Council opened
the possibility for funds to be used for the purchase of locally
produced goods and to meet the local cost for essential civilian needs
including for installation and training services.
My Office is currently engaged in finalizing terms of reference
for the United Nations Office of Project Services to investigate the
possibility of implementing this provision and reporting back to me.
In paragraphs 17 and 25, the Council directed
measures to facilitate and streamline the approval of contracts for
humanitarian supplies. This was in line with recommendations made by the
Secretary-General in his programme review of February 1998 (S/1998/90).
During last month, my Office circulated to the
Committee draft lists of items in the food and education sectors.
We have also circulated guidelines for the operation of this new
procedure. There have already
been some informal exchanges of views with the Committee and we now
await their detailed response. Meanwhile,
we are drawing up lists for the health and education sectors for
Our approach here is obvious the food
and education sectors are the least difficult and we hope that by
reaching agreement with the Committee on these sectors we will establish
sufficient areas of common understanding to work constructively on other
Internally, we have revised some of our
internal procedures and have updated the database to take account of
these new procedures. Once the
Committee agrees to the lists, the Secretariat will be able to implement
these provisions of resolution 1284.
I would underline here that we are not opening
up any loopholes. Applications
will be scrutinized by OIPs Contracts Processing Section and the
joint unit established under resolution 1051 (1996).
Where necessary, OIP will seek further information from the
submitting permanent or observer mission and in cases where doubts
remain, applications will be circulated to the Committee.
On oil spare parts and equipment, paragraph 18
of resolution 1284 proposes a panel of experts to approve contracts in
this sector. This issue was
discussed with the Committee last week and in individual meetings with a
number of delegations. There
appears to be consensus emerging that this group should comprise
technical experts rather than political appointees and that it should
work as an integral part of the Office of the Iraq Programme.
In this context I would remind the Council that it has been
unable to agree on the appointment of additional oil overseers.
From the original four overseers at the outset of this programme
we currently have just one oil overseer who been working alone since
July last year this is an unreasonable situation and I would ask
Council members to renew their efforts on this matter.
Mr President, this is my first time speaking
to the newly constituted Council, which means that five of the
delegations here have not yet heard me voicing our serious concern at
the persistent high level of holds placed on applications for
humanitarian supplies and especially on oil sector equipment.
I do not propose to repeat what I have said each time I have sat
in this chair beyond the following few points:
There continues to be a steady increase in
both the number of applications placed on hold and their value.
In phases IV to VI there are currently 1068 applications on hold
with a total value of $1.596 billion dollars.
This is 23 per cent of the dollar value of all applications
circulated in these three phases.
A small number of high value applications dominate this picture
25 applications on hold, mainly in the electricity sector, account for
over $800 million or half of the total value of holds.
In successive reports and letters, the
Secretary-General has appealed to delegations around this table to
review this situation with a view to lifting holds wherever possible in
order to improve the implementation of this programme.
To date, there has not been a significant response to those
The workload is enormous.
For our part, we are in the process of recruiting
additional customs experts and support staff to cope with the
flood of applications which followed the high revenue achieved in phase
VI. There is currently a backlog
of around 800 humanitarian and oil sector applications my
colleagues and I believe this is unacceptable and are making every
effort to accelerate our processing of these contracts.
that is all I wish to say at this point.
As I noted, the letter and the report before the Council and my
briefing are interim in nature and reflect work that is still in
progress in responding to the requests contained in resolution 1284 as
well as our ongoing work under the provisions of resolution 1281.