Annex I

            Letter dated 3 January 2002 from the Executive Director of the Iraq
            Programme addressed to the Chargé d'affaires a.i. of the Permanent
            Mission of Iraq to the United Nations

On behalf of the Secretary-General, I have the honour to acknowledge receipt, under cover of your letter dated 23 December 2001 addressed to the Secretary-General, of the distribution plan submitted by your Government for the new period specified in paragraph 1 of Security Council resolution 1382 (2001) of 29 November 2001, together with the annexes to the distribution plan received from the Ministry of Foreign Affairs of the Republic of Iraq, through the Office of the Humanitarian Coordinator in Iraq.  In this respect, I would like to inform you that I have been authorized by the Secretary-General to convey the following.

            In resolutions 986 (1995) of 14 April 1995 and 1382 (2001) of 29 November 2001, the Security Council requires that the Government of Iraq ensures, on the basis of a plan to be submitted to and approved by the Secretary-General, equitable distribution of medicine, health supplies, foodstuffs, and materials and supplies for essential civilian needs (humanitarian supplies) exported to Iraq under the conditions defined by those resolutions. The memorandum of understanding concluded on 20 May 1996 between the United Nations Secretariat and the Government of Iraq (S/1996/356) provides that the Government of Iraq shall prepare a distribution plan describing in detail the procedures to be followed by the competent authorities with a view to ensuring the equitable distribution of humanitarian supplies and submit the plan to the Secretary-General for approval. The memorandum states in this regard that if the Secretary-General is satisfied that the plan adequately ensures equitable distribution of humanitarian supplies to the Iraqi population throughout the country, he will so inform the Government of Iraq.

I have the honour to inform the Government of Iraq, through you, that, having examined the distribution plan, the Secretary-General has come to the conclusion that the plan, if properly implemented, should meet the requirements of equitable distribution of humanitarian goods to the Iraqi population throughout the country. The plan is therefore approved with the following understandings.

           It may be necessary to recall that the responsibility for the sectoral allocations in the distribution plans remains with the Government of Iraq, which is also responsible for the selection of its suppliers and contracting under the ESB (59 per cent) account.  The Secretariat is involved only after the suppliers through their respective permanent and/or observer missions to the United Nations submit applications to the Office of the Iraq Programme.  The financial allocations presented in the distribution plan are regarded by the United Nations as being provisional, as the funding level for the distribution plan for phase XI is based at this time on the estimated revenues to be received from the volume and price of oil exports from Iraq.   Accordingly, the financial allocations presented in the distribution plan are considered by the United Nations as being indicative and for planning purposes only. 

It is noted that the sectoral allocation of the projected funds for the programme in Table-1 of the distribution plan has been further broken down to the sub-sectors where more than one ministry has implementation responsibility in the sector. While this would pose additional burden on the United Nations to monitor funding of contracts signed by various ministries responsible for separate sub-sectors of a sector, we have instituted measures to meet this additional task without any further staffing requirement.

However, providing the sectoral allocations in their monetary value alone has created insurmountable problems in the past in the light of gross disparity between the planning figures and the actual funds made available to the programme. The result has been that the more pro-active ministries would utilize their allocations up to the maximum level of the distribution plan budget, while those sectors for which applications for contracts are usually submitted much later in a phase, suffer severely from under-funding due to the shortfall in the projected funds.

In order to maintain the relative sectoral funding balance established in the distribution plan, the Secretary-General has requested me to translate the monetary allocations in Table-1 of the distribution plan into corresponding percentages, so that these sectoral allocations could be adjusted automatically in accordance with the actual availability of funds, unless the Government decides otherwise and submits its decision to the Secretariat in writing. Of course, funding of applications for food items would be accorded priority up to the level of the full food basket. With such an approach, the need for ad hoc, piecemeal and time-consuming adjustments experienced in the past with regard to relative funding levels for different sectors would also be obviated.

            Furthermore, I should like to reiterate what has been stated by the Secretary-General on several occasions in his reports to the Security Council that, with the improved funding level for the programme, the Government of Iraq is indeed in a position to address the nutritional and health concerns of the Iraqi people, particularly the nutritional status of the children (S/2001/919, para. 105).

            In connection with the above, and taking into account all the concerns expressed, including by the Government of Iraq, regarding the nutritional and health conditions of the Iraqi people, I wish to draw your attention to the fact that the allocation in the distribution plan for phase XI for drugs and medical supplies for distribution in the 15 central and southern governorates does not reflect the scale of resources required and represents a marked reduction from the sum allocated in previous phases - $69 million as compared with $105 million for phase X).  Contrary to repeated concerns expressed by the Government of Iraq regarding shortages in drugs and medical supplies, unless the Government of Iraq considers that supplies already available, or in the pipeline, suffice to meet the requirements of the Iraqi people, the United Nations respectfully requests the Government of Iraq to increase this allocation and ensure that the continuing shortages of drugs and medical supplies in the public health care system be eliminated.

           The approval of the distribution plan does not constitute an endorsement of every specific item or project contained in the plan, as in certain cases it may well be necessary to seek further clarification on the humanitarian relevance of the items contained in the annexes to the plan in order to ensure compliance with the humanitarian objectives and priorities set forth in all relevant Security Council resolutions.

The approval of the distribution plan is subject to the condition that its implementation is governed by the relevant provisions of Security Council resolutions 986 (1995), 1281 (1999), 1284 (1999), 1302 (2000), 1330 (2000), 1360 (2001), 1382 (2001) and the memorandum of understanding (S/1996/356) and that, in case of inconsistency between the particular provisions of the plan, on the one hand, and the resolutions and the memorandum of understanding, on the other, the provisions of the latter documents shall prevail.  Furthermore, the approval of the plan is without prejudice to actions that might be taken by the Security Council Committee established by resolution 661 (1990) regarding applications for export of particular items contained in the list submitted for the Committee’s consideration in accordance with its procedures.

           Finally, the joint unit established by resolution 1051 (1996) will continue to review the categorized list in the light of additional information that may become available for the purposes of identifying items that are covered under the relevant provisions of that resolution, because of their possible dual use for civilian and prohibited purposes under resolution 687 (1991) of 3 April 1991 and other relevant resolutions.


                                                                                                           (Signed) Benon V. Sevan