Oil-for-Food Background Information
REPORT OF THE SECRETARY-GENERAL
PURSUANT TO PARAGRAPH 5 OF RESOLUTION 1360 (2001)
Informal consultations of the Security Council held on Monday, 26 November 2001
Introductory statement by
Benon V. Sevan, Executive Director of the Iraq Programme
I have the honour to introduce the report of the Secretary-General
contained in document S/2001/1089. It
describes the developments in the implementation of the humanitarian programme
since his previous report submitted to the Security Council on 28 September
(S/2001/919), covering the period up to 31 August 2001.
As stated by the Secretary-General, despite its shortcomings, as well as
the complaints and criticisms leveled by various quarters against the programme,
it continues to make a considerable difference in the daily lives of the average
The report of the Secretary-General also draws attention to a number of serious difficulties and obstacles encountered in the effective implementation of the programme. On behalf of all of us who are involved in the implementation of the programme, I should like to assure the members of the Security Council that the programme can deliver more to the benefit of the Iraqi people if all parties concerned take the necessary concerted measures to remove the difficulties faced in the implementation of the programme.
On our part, we definitely can do much more, if we were allowed to do so. We continue to be frustrated, however, because of a number of obstacles faced in fulfilling all the tasks entrusted to us by the Security Council, details of which are provided in the report of the Secretary-General.
As the report provides detailed information on the status of the implementation of the humanitarian programme in Iraq, I shall limit my introductory statement to the serious funding difficulties faced by the programme.
We now estimate that the total revenue for phase X of the programme,
which ends on 30 November, will be approximately $3.644 billion, after the
required deductions pursuant to the relevant resolutions.
It may be recalled that the distribution plan for phase X was budgeted at
$5.5 billion (S/2001/758, annex III).
Hence, there will be a revenue shortfall of $1.856 billion for the
funding of supplies and equipment under phase X.
[Out of the $3.644 billion, $2.987 billion are provided to the ESB (59
per cent) account and $657,800,000 to the ESC (13 per cent) account.
Additional $340 million are made available to the 59 per cent account,
including the 13 per cent share for oil spare parts, reimbursements for bulk
purchase items and interest accrued, bringing the total for the 59 per cent
account to $3.327 billion. ]
shortfall for the 59 per cent account has been further compounded by the
transfer of already approved applications under the 59 per cent account from
previous phases, with a total value of over $1.6 billion, to phase X for funding
purposes. Thus the total revenue
available under the 59 per cent account during phase X is, in fact, $1.727
billion. Additional applications
submitted under phase X with a total value of $614 million have been approved
and funded, leaving only a balance of $1.113 billion still available for funding
new contracts. However, after
deducting $590 million and $260 million, respectively, reserved for oil spare
parts and contracts related to special allocations, the estimated available
unencumbered funds under the 59 per cent account now total $261 million.
At present we already have approved applications with a total value of
$570 million waiting to be funded. Thus
we have a shortfall of $300 million required under the 59 per cent account.
am distributing copies of the revised annex III to the report of the
Secretary-General, providing information as at 23 November, concerning the
status of ESB (59 per cent) account applications for all sectors, along with a
table providing information on the status of ESB (59 per cent) account
applications for phase X.
view of the drastic shortfall in funding the purchase of supplies and equipment
under the 59 per cent account, now more than ever, it is incumbent on the
Government of Iraq to take all measures necessary to expedite action by the
Central Bank of Iraq with regard to the opening of the letters of credit for
approved 583 applications with a total value of $883 million, for which the funds have been blocked in
BNP-Paribas, covering all sectors, including for example, $186 million in the
health sector, $111 million in agriculture sector, $100 million in water and
sanitation sector, $139 million in the education sector.
in a letter addressed today to the Permanent Representative of Iraq I
recommended that in view of the shortfall in funds the Government of Iraq may
wish to review the 722 long standing approved applications with a total value of
$1.209 billion, for which the necessary funds had been blocked for over a year,
but the suppliers concerned had failed to deliver the goods contracted.
The Government may therefore wish to review the performance of the
contractors concerned who have failed to deliver the supplies within the time
frame specified in the contract or a reasonable period thereafter, and cancel
such contracts in order to release the blocked funds for funding other approved
involved include, among others, over $353 million in the food sector, $151
million in the housing sector, $115 million in agriculture sector, $120 million
in electricity sector, $49 million in water and sanitation sector.
I should like to take this opportunity to express, on behalf of all my
colleagues and myself, our sincere thanks to His Excellency Ambassador Ole Peter
Kolby, the Chairman of the Security Council Committee, and members of his
delegation for their support and cooperation.
I should also like to express our sincere thanks to the members of the
Committee as well as to the members of the Security Council for their support
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