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     Adjustments to the Distribution Plan for Phase VI

 

         Letter from the Secretary General to the President of the Security Council

         Letter from the Executive Director of OIP to the Permanent Representative of Iraq

         Table showing new allocations for the phase VI distribution plan

                   


 

12 October 1999

 His Excellency
Mr. Sergey V. Lavrov
President of the Security Council
New York

Dear Mr. President,

In a letter dated 11 June 1999 addressed to the President of the Security Council, I informed the members of the Council that I had approved the distribution plan submitted by the Government of Iraq for the purchase and distribution of humanitarian supplies during the new period specified in paragraph 1 of resolution 1242 (1999) - phase VI - on the understanding that, inter alia, in the event that it was estimated that revenue could be generated at a level that would exceed the target referred to in paragraph 2 of resolution 1242 (1999), in anticipation of the Council's review of this matter pursuant to paragraph 14 of resolution 1242 (1999), I would consult with the Government of Iraq concerning the utilization of the additional revenue and, as necessary, make recommendations to the Council (S/1999/671). Accordingly, on 18 August 1999, the Government of Iraq was invited to submit, taking into account the sectoral priorities set forth by the Security Council in resolution 1153 (1998) and successive resolutions, proposals for the utilization of the additional revenue for my consideration and recommendations thereon to the Council.

Taking into account Security Council resolution 1266 (1999), the Government of Iraq was informed today that I had approved the proposed adjustments submitted for my consideration by the Government of Iraq, transmitted in a letter dated 28 September 1999 from the Permanent Representative of Iraq to the United Nations.

In my latest report to the Security Council (S/1999/896, para. 94), I recalled that the Government of Iraq had already indicated in the distribution plan for phase VI that if oil revenues generated during the phase were likely to exceed the total of the $3.004 billion required for the implementation of the approved distribution plan, the Government intended to enter into additional contracts for oil spare parts and equipment up to the value of $300 million (S/1999/671, annex II, enclosure). The Government has reconfirmed its intention in that regard in its submission of the revised sectoral allocations referred to above.

As stated in my previous reports to the Security Council, as well as in my most recent letter dated 2 July 1999 addressed to the President of the Security Council (S/1999/746 and Add. 1), the oil industry of Iraq continues to be in a lamentable state, the details of which are provided in the aforementioned letter. The group of experts indicated that the amount ($600 million) requested by the Government of Iraq is considered to be commensurate with the production levels achieved and predicted, particularly given the emphasis placed on major projects and investment in safety, control of pollution and environmental damage (S/1999/746, para. 48).

Accordingly, I recommend that the Security Council approve the request to increase by $300 million the allocation for oil spare parts and equipment, bringing the total allocation to $600 million, during the current phase.

Please accept, Mr. President, the assurances of my highest consideration.

Kofi A. Annan


12 October 1999

His Excellency Dr. Saeed Hasan
Permanent Representative of Iraq
   to the United Nations
New York

 

Excellency,

On behalf of the Secretary-General, I have the honour to acknowledge receipt of your letter dated 28 September 1999, concerning the proposed adjustments by the Government of Iraq of phase VI allocations, in light of increased oil revenues during the current phase, for the Secretary-General's consideration and approval.

Further to the letter dated 11 June 1999 from the Secretary-General addressed to the President of the Security Council (S/1999/671) approving the distribution plan for phase VI, and taking into account Security Council resolution 1266 (1999) of 4 October 1999, I have the honour, on behalf of the Secretary-General, to inform the Government of Iraq through you that, having examined the proposed adjustments, the Secretary-General has approved the adjustments with the following understandings.

The adoption of Security Council resolution 1266 (1999) will, for the first time, enable the humanitarian programme pursuant to resolution 986 (1995) to be sufficiently funded for the implementation of the recommendations of the Secretary-General (S/1998/90), as endorsed by the Council in resolution 1153 (1998). The sectoral allocations should be kept under review with due regard to paragraph 2 of resolution 1153 (1998) providing that the food and nutrition and health sectors are allocated funds on a priority basis.

 In particular, given the unsatisfactory nutritional situation prevalent in Iraq and the necessity of providing a full food basket on a monthly basis, and also taking into account the effects of the current drought, it is essential to keep under constant review the funding level of the food sector. While welcoming the Government's proposed modest increase in the target caloric value of the food basket to 2,200 kilocalories per person per day, in view of the additional funds available, the Secretary-General recommends that the caloric value of the food basket should be increased at the minimum to 2,300 kilocalories per person per day country-wide, which was the level approved for the enhanced distribution plan for phase IV (S/1998/446).

The information that the Government of Iraq has contracted all the targeted nutrition supplies in quantities set out in the approved distribution plans for phases IV, Vand VI is welcomed. I would like to recall that, in light of the findings of the recent child and maternal mortality survey (July 1999) - conducted by the United Nations Children's Fund and the Government of Iraq - the Secretary-General had recommended in his report to the Security Council that the Government of Iraq increase the funding for the targeted nutrition programmes so as to expeditiously improve the nutritional status of children (S/1999/896, para. 103). Furthermore, in order to ensure timely and regular distribution of the supplies, the allocation for the targeted nutrition programme should be increased to provide adequate warehousing, trasportation and related infrastructure.

With regard to the health sector, at this stage of the programme when sufficient funding is available, it is essential to ensure that all measures are taken to procure and distribute all essential pharmaceuticals in a timely manner.

The ratio established between drugs and medical equipment set out in the approved distribution plan for phaseVI (S/1999/671) should be fully implemented.

In order to address the health and nutritional requirements of the population, the allocation for water and sanitation should be sufficiently funded. The Ministry of Health has repeatedly stated that the provision of clean drinking water to the population is critical in reducing levels of malnutrition. Although the increased allocation to the water and sanitation sector is welcome, the sector has been relatively under-funded in comparison with other sectors in previous phases. Specific consideration should be given to the provision of operational/maintenance supplies in order to enhance the implementation capacity of water authorities.

With respect to the Government of Iraq's request for the introduction of a new sector, namely housing construction supplies, I wish to inform you that, without prejudice to the merit of the proposal made by the Government, the Secretary-General is not in a position at this stage to endorse the proposed allocation in the distribution plan for phase VI. The proposal will be given further consideration and will require a review to, inter alia, clarify objectives, identify beneficiaries and determine appropriate observation resources and procedures.

With regard to the proposed allocation of $10 million for banking requirements, I should like to reiterate what was stated at the time of the approval of the distribution plan for phase VI (S/1999/671, annex I), that the Secretary-General's acceptance of the revised sectoral allocations does not constitute an endorsement of either the budgetary allocation of equipment and supplies in support of the banking requirements, referred in paragraph 67 of the plan, or the specific items listed in annex IX to the plan.

It may be recalled that in approving the distribution plan for phase VI, the Secretary-General took note of the proposal in paragraph 12 of the distribution plan, including the indication given by the Government of Iraq that if oil revenues generated during phase VI were likely to exceed the total of the $3.004 billion required for the implementation of the approved distribution plan, the Government intended to enter into additional contracts for spare parts and equipment up to the value of $300 million (S/1999/671, annex II, enclosure). The Secretary-General supports the proposal of the Government of Iraq for an additional $300 million allocation for the purchase of oil spare parts and equipment, and is therefore recommending to the Security Council that it approve the request, bringing the total allocation to $600 million, during the current phase.

I should also like to recall that due to revenue shortfalls during phase IV, it was necessary to transfer approved applications with a value of approximately $510 million for funding under phase V. These transfers, coupled with the value of additional phase V applications yet to be submitted and the ultimate status of phase V applications currently on hold, may result in subsequent transfers of phase V applications to phase VI. The availability of phase VI revenues to fund the full extent of new contracts arising from the Government of Iraq's plan for the use of the revenue increases, as authorized by resolution 1266 (1999), will therefore need to be considered vis--vis the yet to be determined transfers from phase V.

In light of the above and bearing in mind the volatility of oil prices, the revenue received from oil exports should be kept under constant review in order to make the necessary adjustments for funding approved applications, bearing in mind the priorities set forth by the relevant Security Council resolutions.

Please accept, Excellency, the assurances of my highest consideration.

Benon Sevan
      Executive Director
Office of the Iraq Programme


Table showing adjusted allocations for
Distribution Plan VI following adoption of resolution 1266 (1999)

  

 

Sector

13 per cent

53 per cent

66 per cent

Allocated

Additional

Total

Allocated

Additional

Total

Allocated

Additional

Total

Food

138

15.5

153.5

777

87.5

864.5

915

103

1 018

Food-related supplies

0

0

0

207

72

279

207

72

279

Housing construction supplies

0

0

0

0

112.1

112.1

0

112.1

112.1

Health

44

7

51

206

33

239

250

40

290

Electricity

140

81.4

221.4

300

225

525

440

306.4

746.4

Agriculture

52

30.2

82.2

99

88.8

187.8

274

 

229

 

503

Irrigation

123

110

233

Education

28

16.3

44.3

57

58

115

127

112.3

239.3

Higher education

42

38

80

Interior

30

17.5

47.5

160

75

235

280

151.5

431.5

Municipality of Baghdad

90

59

149

Transport and communications

19.6

11.4

31

100.4

12.2

112.6

120

23.6

143.6

Central Bank

0

0

0

10

0

10

10

0

10

Resettlement

54

31.4

85.4

0

0

0

54

31.4

85.4

Nutrition

18

10.5

28.5

0

0

0

18

10.5

28.5

Mine clearance

9

5.2

14.2

0

0

0

9

5.2

14.2

Total

532.6

226.4

759

2 171.4

970.6

3 124

2 704

1 197

3 901

Oil

0

0

0

300

300

600

300

300

600

 

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