THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME

Oil-for-Food: Focus on relief aid

A sampling of the life-saving work done by UN agencies in Iraq

The United Nations is extremely concerned about the serious allegations of corruption surrounding the Oil-for-Food programme.

KEY ISSUES:
Programme origins
Humanitarian relief operation
UN weapons inspections
Financing
Smuggling occurred independent of Oil-for-Food
Iraqi Government sovereignty
UN's latest efforts to improve management and accountability
Early action against signs of corruption
Common myths
The UN fights terrorism

Responding to these allegations, the Secretary-General on 21 April 2004 named Paul A. Volcker, former Chairman of the Board of Governors of the United States Federal Reserve System, to head an Independent Investigation Committee independent inquiry committee (IIC).

That same day, the Security Council adopted a unanimous resolution calling on the Coalition Provisional Authority, Iraq and all other Member States , including their national regulatory authorities, to cooperate fully with the probe.

The Secretary-General also issued written instructions to all UN staff to do the same, and publicly declared that those who fail to cooperate will face dismissal.

The UN has handed over all relevant documentation to the IIC.

On the question of outside requests for information, the UN has urged contractors working for the Oil-for-Food programme to cooperate with subpoenas from other investigations and they are in fact doing so.

In addition, Mr. Volcker has stated on a number of occasions that he is committed to cooperating with other ongoing investigations.

PROGRAMME ORIGINS

Right after Iraq invaded Kuwait in 1990, the United Nations Security Council put in place a comprehensive set of sanctions to isolate the regime in Baghdad .

Unfortunately, those measures also had unintended negative consequences on the civilian population. In an effort to mitigate the damage, the Security Council adopted resolution 986 (1995) setting up the Oil-for-Food Programme , which allowed Iraq to sell its oil and use the major portion of the revenues to purchase food and other humanitarian relief supplies. The remainder of the earnings was allocated to war reparations to those who suffered damages as a result of Iraq 's invasion and subsequent occupation of Kuwait , the UN weapons inspection programme, administrative costs and other expenses. At no time did Saddam Hussein have access to or authority over any of the funds in the UN-managed escrow accounts.

The Security Council Iraq sanctions committee, known as the “661 Committee” for the resolution that established it, had full responsibility for monitoring implementation of the Programme. The Committee, which had the same membership as the Security Council itself, also approved contracts and dealt with any irregularities in their implementation.

Operations began in December, 1996, and the first relief goods under the Programme arrived in 1997.

HUMANITARIAN RELIEF OPERATION

The Oil-for-Food programme achieved its core mission of providing humanitarian relief to 27 million Iraqis. Caloric intake rose by 83 percent, while malnutrition rates in much of the country were cut by half, and some 76,500 mines were cleared. On the health front, enough medicines and vaccines were imported to eradicate polio and drastically reduce other often deadly communicable diseases, including cholera, malaria, measles, mumps, meningitis and tuberculosis. The capacity to undertake major surgeries increased by 40 per cent in the centre and south of Iraq .

UN WEAPONS INSPECTIONS

The UN weapons inspection programme - funded initially through voluntary contributions from UN Member States and frozen Iraqi assets - supervised the destruction of Iraq 's WMD arsenal. Since the inception of the Oil-for-Food programme, the effort - begun by the UN Special Commission ( UNSCOM ) and continued by the UN Monitoring, Verification and Inspection Commission ( UNMOVIC ), working with the International Atomic Energy Agency ( IAEA ) - has been funded through oil revenues.

UNSCOM destroyed missiles, mobile launchers, fixed launch sites, chemical munitions, a chemical weapons complex and a germ warfare complex as well as tons of missile fuel, chemical warfare agents, precursor chemicals and bacteria growth media. The effort was interrupted in late 1998.

UNMOVIC inspectors only returned to Iraq in November, 2003, when they destroyed dozens of Iraqi Al Samoud 2 missiles and warheads, as well as launchers, shells filled with chemical weapons precursors and other arms. That activity was funded entirely through a small portion of Iraq 's oil revenues.

FINANCING

Press reports on Oil-for-Food vary widely in their account of the financial picture, some describing it as a $100 billion effort and others saying that only $15 billion was spent on relief aid. Neither figure is in any way correct.

Income from the sale of oil totaled $64.2 billion. Funds were allocated according to a formula determined by the Security Council as follows:

With $2.9 billion earned in interest and a $2.3 billion gain on currency exchange, the total available for humanitarian activities amounted to $47.9 billion. Of that figure, $39.7 billion was spent. $8.1 billion was transferred to the Development Fund for Iraq (DFI). Once the UN has completed an assessment of the liabilities left against the account, the remaining balance will be transferred to the DFI.

SMUGGLING OCCURRED INDEPENDENT OF OIL-FOR-FOOD

Press accounts are also citing the figure of $21.3 billion in describing how much money Saddam Hussein obtained illegally. However Saddam Hussein was receiving revenue from oil sales and other sources before the Oil-for-Food Programme even existed, and therefore a substantial amount of the new estimate of $21.3 billion had no link to the UN programme at all.

As far back as 1991, the Security Council mandated a Multinational Interception Force (not administered by the UN) to prevent illegal smuggling.

The UN Oil-for-Food staff were never given the authority by the Security Council to prevent smuggling. As the GAO noted, "Under Security Council resolutions, all member states were responsible for enforcing the sanctions and the United Nations depended on states bordering Iraq to deter smuggling."

The report of the United States Central Intelligence Agency (CIA) Iraq Survey Group (ISG) estimated the Iraqi Government's total "illicit revenue" from Aug 1990 to March 1993 at $10.9 billion, of which $8 billion came from exports under trade protocols which were known – and in some cases condoned – by the Security Council. Smuggling was estimated to account for $1.2 billion. The amount related to the Oil-for-Food programme was $1.74 billion, or 16 per cent of the illicit revenue - far less than the proportion estimated by the US Government Accountability Office (GAO).

The GAO, using a different methodology, has estimated that "from 1997- 2002, the former Iraqi regime acquired $10.1 billion in illegal revenues, including $5.7 billion in oil smuggled out of Iraq and $4.4 billion through surcharges on oil sales and illicit commissions from suppliers exporting goods to Iraq through the Oil-for-Food programme."

IRAQI GOVERNMENT SOVEREIGNTY

As is well known, after the first Gulf War ended in 1991, Saddam Hussein remained in power. Although constrained by international sanctions, he nevertheless was still the leader of a recognized, sovereign State. Conscious of this fact, when the Security Council, by unanimous decision, set up the Oil-for-Food programme, it agreed to allow the Iraqi Government to choose who could buy Iraqi oil, and from whom Iraq would import humanitarian supplies. Without this agreement, Iraq would not have allowed humanitarian goods to enter Iraq at a rate high enough to make a difference to the daily lives of the Iraqi people.

As the GAO put it, "the Security Council allowed the Iraq government, as a sovereign entity, to negotiate contracts directly with purchasers of Iraqi oil and suppliers of commodities. This structure was an important factor in allowing Iraq to levy illegal surcharges and commissions."

In his testimony before a hearing of the US House of Representatives National Security, Emerging Threats and International Relations Subcommittee, Patrick Kennedy, U.S. Representative to the UN, said:

In retrospect, had the program been constructed differently, perhaps by eliminating Iraqi contracting authority and the resulting large degree of autonomy afforded to Saddam to pick suppliers and buyers, then the allegations currently facing the program might not exist.

One can postulate the elimination of this authority and the establishment of another entity to enter into co