21 November 2003

SANCTIONS IMPOSED: In August 1990 the Security Council adopted resolution 661, imposing comprehensive sanctions on Iraq following that country’s short-lived invasion of Kuwait. Throughout 1991, with growing concern over the humanitarian situation in Iraq, the United Nations and others proposed measures to enable Iraq to sell limited quantities of oil to meet its people's needs. The Government of Iraq declined these offers, contained in particular, in resolutions 706 and 712, adopted in August and September 1991.

AGREEMENT ON OIL-FOR-FOOD: An oil-for-food programme began at the end of 1996 after the United Nations and the Government of Iraq agreed on the details of implementing resolution 986 (1995), which permitted Iraq to sell up to two billion dollars worth of oil in a 180-day period. The ceiling on oil sales was eased during 1998 and finally lifted in 1999, enabling the programme to move from a focus on food and medicine to repairing essential infrastructure, including the oil industry.

DIVIDING THE MONEY: With the adoption of Security Council resolution 1330 (2000) on 5 December 2000, around 72 per cent of the oil revenue funds were allocated to the humanitarian programme in Iraq (59 per cent for the centre and south and 13 per cent for the three northern governorates); 25 percent to the Compensation Commission in Geneva; 2.2 per cent for United Nations operational costs; and 0.8 per cent for the UN Monitoring, Verification and Inspection Commission (UNMOVIC) and the International Atomic Energy Agency (IAEA). Previously, 66 per cent had been allocated to the humanitarian programme (53 per cent for the centre and south and 13 per cent for the three northern governorates), with the Compensation Commission receiving 30 per cent of the revenue. Funds from the two humanitarian accounts also financed the purchase of oil industry parts and equipment to sustain this source of revenue. The Government of Iraq was responsible for the purchase and distribution of supplies in the 15 governorates in the centre and south. The United Nations implemented the programme in the three northern governorates of Dahuk, Sulaymaniyah and Erbil on behalf of the Government of Iraq.

THE DISTRIBUTION PLAN: The programme operated against distribution plans prepared at the beginning of each phase by the Government of Iraq and approved by the Secretary-General. Once approved, the distribution plan became the basis for Iraq’s use of revenue raised during that phase. Distribution plans included thousands of pages of detailed annexes and, from phase V onwards, were posted on the OIP Web site. The Web site also included the status of all contracts from phase V onwards.

OIL-FOR-FOOD: Phase I ran from 10 December 1996 to 7 June 1997. The first oil was exported on 15 December 1996 and the first contracts financed from the sale of oil were approved in January 1997. The first shipments of food arrived in Iraq in March 1997 and the first medicines arrived in May 1997. The Security Council continued the programme in 180-day periods called “phases”. The final oil exporting period (phase XIII) authorized by Security Council resolution 1447 (2002), was in effect from 5 December 2002 through 3 June 2003.

FOOD & MEDICINE: Between March 1997 and March 2003, foodstuffs worth some $13 billion and medicines and health supplies worth over $2 billion, have been delivered to Iraq. The programme helped to improve the overall socio-economic condition of the Iraqi people countrywide and prevented the further degradation of public services and infrastructure under sanctions. (Economic sanctions were lifted on 22 May 2003). The nutritional value of the monthly food ration basket distributed countrywide almost doubled between 1996 and 2002, from about 1,200 to 2,200 kilocalories per person per day. Malnutrition rates in 2002 in the centre/south of Iraq were half those of 1996 among children under the age of five and the decline in malnutrition rates was even greater in the three northern governorates.

EXPANSION and the OIL INDUSTRY: In April 1998 the Security Council approved a recommendation from the Secretary-General that the ceiling of $2 billion in oil sales every six months be increased to $5.265 billion. That month, oil industry experts reported on the "lamentable state" of the oil industry and indicated that the oil production level authorized by the Security Council was well beyond Iraq’s capacity at current prices. Resolution 1175 in June 1998 authorized the import of $300 million worth of oil spares and equipment for phase IV. This limit was raised to $600 million per phase from phase VI onwards. A year later, Security Council resolution 1284 (1999) removed the oil export ceiling altogether.

APPROVING CONTRACTS: On 14 May 2002, the Security Council (resolution 1409), introduced the Goods Review List (GRL) and a new set of procedures for the processing and approval of contracts for civilian supplies and equipment. Until that time, most contracts for humanitarian supplies were circulated to the Council's 661 Sanctions Committee for approval. Under the new procedures only contracts containing GRL items were to be sent to the 661 Committee for consideration. 

As of 21 November 2003 when the Oil-for-Food Programme was terminated in keeping with Security Council resolution 1483 (22 May 2003), some $46 billion worth of humanitarian supplies, including about $3.8 billion worth of oil spare parts, had been approved by the 661 Sanctions Committee and the Office of the Iraq Programme. Of this amount, almost $31 billion worth of humanitarian supplies and equipment had been delivered to Iraq, including $1.6 billion worth of oil industry spare parts and equipment. An additional $8.2 billion worth of approved and funded supplies were in the production and delivery pipeline. For more information on the status of funds as of 21 November 2003.

FLUCTUATING OIL PRICES: The capacity of the Oil-for-Food Programme to deliver humanitarian assistance was always dependent on the international oil market. In its first three phases the price of oil was relatively high but the Security Council had placed a ceiling on exports. When the ceiling was raised in mid-1998, the price of oil was already collapsing and it was only from mid-1999 onwards that Iraq was able to take advantage of better prices and raised ceilings to improve its delivery capacity. Oil exports under the programme ended 20 March 2003 with the war, and economic sanctions were lifted on 22 May 2003 (resolution 1483) . For more information on oil exports.