6 April 2010
Security Council
SC/9901

Department of Public Information • News and Media Division • New York

Security Council

6293rd Meeting (AM)


Security Council Updated on Action Plan, Timeline for Transition


to Successor Arrangements for Development Fund for Iraq

 


Plans were on track for an Iraqi mechanism to replace the fund that funnels the country’s export revenues towards development needs and international obligations, the United Nations Controller told the Security Council this morning.


“The action plan and timeline as presented by the Government of Iraq is realistic,” Jun Yamazaki said as he introduced the Secretary-General’s progress report (document S/2010/166) on successor arrangements for the Development Fund for Iraq.


“I am particularly pleased that the Government of Iraq plans to select an independent, international auditor to confirm that all proceeds of export sales of petroleum and petroleum products and natural gas from Iraq are accounted for,” he added.


The Council set up the Fund in May 2003, following the United States-led invasion, so that oil, gas and other revenues could be paid into it and disbursed for humanitarian needs and economic reconstruction, replacing the previous “oil-for-food” programme that allowed the sanctions-bound Saddam Hussein Government to use some oil revenues for the monitored purchase of humanitarian supplies.  (See Press Release SC/7765.)


In December of 2009, the Council extended the Fund for one year, along with its auditing body, the International Advisory and Monitoring Board (IAMB), at the request of the Iraqi Government to allow it time to set up a successor mechanism.  The Council called for quarterly reports on the action plan for the transition, with the first report no later than 1 April 2010 (document S/2010/153).


Mr. Yamazaki this morning added that he was also pleased that the Iraqi Government acknowledged its continuing obligations to the Compensation Fund set up by resolution 1483 (2003) to settle claims against the previous regime, and that the Committee of Financial Experts of Iraq had put transactions up on its website and released a plan for an oil-metering system.  He added that only 65 letters of credit, related to Iraqi obligations from the Development Fund, were outstanding as of the time of the report.  There was an option for cancelling the remaining letters of credit.


In regard to obligatory payments to the Compensation Fund ‑‑ mandated to consist of 5 per cent of the Development Fund ‑‑ he said it was critical that those payments were continued in the new mechanism.  He noted that the international privileges and immunities enjoyed by Iraqi funds could not continue under national arrangements, unless otherwise decided by the Security Council.


He encouraged the Government of Iraq to keep the Council informed of its progress as the December deadline neared, stressing that much work remained to be done to fully implement the successor arrangements.


Speaking for the Committee of Financial Experts of Iraq, Abdul Basit Turky Saed said that, under the Iraqi Government’s transparent transition plan, New York bank accounts were being used to deposit all proceeds of oil and gas sales, with the Compensation Fund duly provided for as well.  Iraq’s Ministry of Finance had exclusive authority over those accounts.  His Committee would take over from the IAMB to ensure respect for the rules of procedure adopted by the Iraqi Council of Ministers.


He expressed concern over the end of immunity for Iraq’s overseas funds, given the progress made on debts from the previous regime.  Out of $129 billion in such debts, he said, $89 billion had been settled.


In addition, he said, through bilateral debt restructuring agreements, Iraq would settle more than $51 billion in debt with members of the Paris Club that aids developing countries, and would settle debts in excess of $20.9 billion with 119 commercial creditors.  It had not been able to settle $629 million in debt with other commercial creditors, he added, expressing hope that the international community would assist Iraq authorities with those creditors.


He said the Council should also encourage relevant parties to re-examine the compensation imposed on Iraq as part of the 2004 Paris Club agreement.   Iraq’s infrastructure had been completely destroyed and the Iraqi people had suffered terribly while they were not able to make decisions about their future.  International resolutions should not undermine their ability to do so.


In that context, the support of the international community was vital for settling Iraq’s debt, which was exorbitant, at more than half of its annual budget, he said.  Extending immunity was a way for the Council to solve that problem.  The Iraqi Government had set objectives to evaluate progress in terms of auditing.  In terms of the goal of creating a global system governing crude oil production, distribution and export standards, he said his Committee’s account would monitor all exports.


In regard to the auditing system for the new mechanism, he said a specialized committee had been established and expressed hope that criteria would be adapted to realities on the ground.  His Committee was continuing its efforts and it sought to provide the Council with an update on its progress in a report to be presented by year’s end, in accordance with resolution 1905 (2009).


The meeting started at 10:04 a.m. and ended at 10:32 a.m.


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For information media • not an official record