Oil-for-Food Background Information
UN Security Council Decides on Amendments to Goods Review List (GRL)
Affected Items Range from Trucks to Pesticides
On Monday 30 December, the Security Council approved changes to the list of goods (GRL) subject to review and approval by the 661 Committee under the United Nations oil-for-food programme, as well as new procedures for implementation of the list. The changes, which went into effect under resolution 1454 at 12:01 a.m. today, also require a thorough review of the List and its procedures, both 90 days after the commencement of the current phase of the programme (5 December 2002) and prior to the end of its defined 180-day period (3 June 2003).
The oil-for-food programme was established by the Council under resolution 986 (1995), and allows Iraq to sell oil and use the proceeds to buy medicine, health supplies, foodstuffs and other essentials for civilian use. The Goods Review List itemizes goods that can be imported to Iraq only after obtaining 661 Committee approval, on a case-by-case basis. Changes to the GRL yesterday were passed by a vote of 13 in favour to none against, with the Russian Federation and Syria abstaining.
Of particular importance are:
- changes to the GRL threshold for trucks (raised from a 15 ton payload and 300 HP engine to 20 tons and 370 HP engine) and;
- the introduction of “quantity quotas” for a limited number of items, with the aim of meeting civilian needs while preventing stockpiling. The UN Secretariat has been asked to prepare consumption rates for items ranging from atropine and selected antibiotics to organophosphate pesticides and growth media, within 60 days. These consumption rates will then be used as annual quotas in the processing of applications. Quantities submitted for approval within the quotas will be approved by the Office of the Iraq Programme while quantities exceeding the quotas will be referred to the Council’s 661 Sanctions Committee for approval.
Goods Review Procedures
In accordance with Security Council resolution 1409 (2002), applications submitted under the “oil-for-food” programme are reviewed and evaluated by the Office of the Iraq Programme (OIP), the United Nations Monitoring, Verification and Inspection Commission (UNMOVIC) and the International Atomic Energy Agency (IAEA). UNMOVIC and IAEA review applications for the presence of items contained in the Goods Review List (GRL) (S/2002/515). If an application is found to contain GRL item(s), the items are referred to the Security Council sanctions committee, also known as the 661 Committee, for a decision as to whether or not they may be sold or supplied to Iraq.
Fast track approvals
A total of 198 contracts valued at $327.2 million have been approved by the Office of the Iraq Programme so far under “fast track” procedures since the adoption of a list of pre-approved items in October 2002. Most contracts in this category include food items and medicines. Of the total, 166 contracts valued at $320.2 million, were for the 59 per cent account applied to Iraq’s 15 central and southern governorates.
Iraqi exports under the United Nations oil-for-food programme totaled 14.3 million barrels for the week ending 27 December – an average of about two million barrels per day.
There were 10 loadings for the week (21-27 December) from the authorized terminals: five from the Iraqi port of Mina al-Bakr (8.3 million barrels) and five from the Turkish Mediterranean port of Ceyhan (6.0 million barrels). These are the only outlets for Iraqi oil allowed under the oil-for-food programme.
Total exports for the week (14.3 million barrels) generated estimated revenue of €394 million (euros) or $409 million, at current prices and rates of exchange. The average price of Iraqi crude for the reporting period was approximately €26.10 or $26.90 per barrel.
Ten new contracts were approved by the oil overseers for the week (21-27 December), bringing the current total to 74, covering 200.6 million barrels of oil. Estimated revenue generated from the beginning of phase Xlll (5 December – 3 June 2003) at the current rate of exchange, stands at $910 million.
Of a total 4,563 contracts for humanitarian supplies worth about $8.5 billion processed by the United Nations Secretariat under the Goods Review List (GRL) and new procedures under Security Council resolution 1409 (2002), the Office of the Iraq Programme has approved 3,124 contracts worth about $4.4 billion (51.7 per cent in terms of value) after assessment by the United Nations Monitoring, Verification and Inspection Commission (UNMOVIC) and the International Atomic Energy Agency (IAEA) that they do not contain items on the Goods Review List.
Approvals include 969 contracts worth more than $1.6 billion that had previously been on hold by the 661 Sanctions Committee. These have now been reviewed by UNMOVIC/IAEA under para 18 of the procedures of resolution 1409 (2002).
Of the total contracts, 1,149 worth about $3.6 billion (42.1 per cent in terms of value) are on GRL Non Compliant status. UNMOVIC and IAEA will require additional technical information from suppliers to enable final assessments.
So far, 193 contracts worth $598.7 million have been found by UNMOVIC/IAEA to contain one or more GRL items. Of these, 84 contracts worth $112.2 million have been reviewed by the 661 Sanctions Committee, of which, 20 contracts worth $7.9 million have been approved. Ten have lapsed because the suppliers have not submitted a petition within 30 working days of the denial. Eight of the 84 contracts, worth $20.6 million, have been rejected because of a “high risk of diversion to military use.” An additional 45 contracts worth $58.9 million have been denied approval by the 661 Committee, pending appeal.
Humanitarian revenue shortfall
Due to a cumulative oil revenue shortfall dating from phase VIII (9 June - 5 December 2000) through phase Xll of the programme, 2,260 UN-approved humanitarian supply contracts worth some $4.4 billion, currently lack funds. The sectors affected by the revenue shortfall are: agriculture ($768 million); food handling ($625 million); food ($457 million); electricity ($479 million); health ($501 million); water and sanitation ($445 million); housing ($419 million); education ($324 million); telecommunications and transportation ($344 million).
The oil-for-food programme was established by the Security Council on 14 April 1995. Some 3.28 billion barrels of Iraqi oil valued at about $60.8 billion have been exported under the programme since December 1996. Of this amount, 72 per cent of the total has been allocated towards humanitarian needs nationwide. The balance goes to: Gulf War reparations through a Compensation Fund (25 per cent); UN administrative and operational costs for the programme (2.2 per cent) and costs for the weapons inspection programme (0.8 per cent).
Since December 1996 about $40.8 billion worth of humanitarian supplies, including $3.6 billion worth of oil spare parts, have been approved by the 661 Sanctions Committee and the Office of the Iraq Programme. Of this amount, some $25.9 billion worth of humanitarian supplies and equipment have been delivered to Iraq under the oil-for-food programme, including $1.6 billion worth of oil industry spare parts and equipment. An additional $10.4 billion worth of supplies are currently in the production and delivery pipeline.
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information – not an official United Nations Document