Adjustments to the Distribution Plan for Phase VI
12 October 1999
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
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
His Excellency Dr. Saeed Hasan
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
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
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
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
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-à-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.
showing adjusted allocations for
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