Oil-for-Food Background Information
Statement by Benon V. Sevan, Executive Director of the Office of the Iraq Programme, prior to his fourth mission to Iraq, 1-17 August 2000
It has been 10 years since the Security Council imposed sanctions on Iraq but only three and a half years since the first oil was shipped out of Iraq under the terms of the oil-for-food programme. Since that first oil shipment, on 10 December 1996, around 1.9 billion barrels have been exported earning just under $29 billion.
Under the terms of relevant Security Council resolutions, some $16 billion of this money is available for the humanitarian programme in the 15 governorates in the centre and south of Iraq with another $4 billion for the three northern governorates. This is by far the largest humanitarian programme ever administered by the United Nations.
For the centre/south of Iraq, the Government of Iraq is responsible for entering into contracts and submitting them to the United Nations for approval by the Security Council’s 661 Committee. As of 30 June, the Office of the Iraq Programme (OIP) had submitted $14 billion worth of humanitarian contracts to the Committee. So far the Committee has approved $11.9 billion and placed a further $1.25 billion on hold.
In the oil sector, OIP has submitted to the Committee, 2,382 contracts worth $1.29 billion. Of these one billion dollars worth have been approved and $282 million have been put on hold by the Committee.
This is a very different picture from the first three six-month phases of the programme, when Iraq was limited to selling $2 billion worth of oil in each phase with most of the humanitarian allocation being spent on food and health supplies. Starting in 1998 the ceiling on oil revenue was lifted and finally removed, enabling Iraq to make large scale purchases in other sectors. Revenue in phase VII which ended in June 2000 was $8.28 billion.
Coping with the rapid growth in the size and complexity of programme has stretched the capacity of the United Nations’ 70 staff in New York and 570 international staff (including agencies and programmes) in Iraq. In resolutions 1284 (1999) and 1203 (2000) the Security Council authorised important procedural improvements designed to streamline the administration of the programme. Some of these have taken effect in the past few weeks.
They include the establishment of lists agreed between the Committee and the OIP for the food, health, education and agriculture sectors whereby contracts for supplies on these lists need not be submitted to the Committee for approval. So far some 558 contracts have been dealt with in this manner with a total volume of just over $1 billion.
In the oil sector, the Committee agreed on a list of parts and equipment which would be approved by a group of experts. OIP established that group which began work in July and is responsible both for contracts related the list and for contracts which would go to the Committee for its consideration. In the few days since the list was approved, the group of experts has approved four contracts with a value of around $800,000.
Inevitably, the rate of approvals has far outstripped the pace of supplies arriving in Iraq - except for food and health where around 75 per cent of supplies approved by the Committee have arrived. For agriculture 44 per cent of approved supplies have arrived, for education arrivals are 25 per cent, for electricity 34 per cent and for water and sanitation 23 per cent. In the oil sector arrivals are around $338 million or 34 per cent of the amount approved.
It adds up to around $8.35 billion arrived in Iraq with another $4.2 billion of supplies and equipment in the “pipeline” for a total of $12.55 billion. Then there is the $1.6 billion the Committee has put on hold, plus more than 200 contracts for which additional information is being sought.
Even with the recent improvements in New York and the new leadership in Iraq and improved observation methods in Iraq, the oil-for-food programme is no substitute for the resumption of normal economic activity in Iraq. However, there is no doubt the situation for many in that country is significantly better than it was when the first oil was exported under the programme at the end of 1996.
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