Global Policy Forum

Iraq Oil-for-Food Deal Debated

December 5, 2000

The Security Council met on Monday to discuss proposals to streamline the UN's ballooning Iraq oil-for-food programme and to use some of its oil revenues for new purposes. Diplomats said they doubted that members of the council would agree on all the proposals before midnight on Tuesday (0500 GMT Wednesday), when the current 180-day phase of the programme expires.

Contentious points in a 21-point draft resolution included: making some of Iraq's oil revenue available in cash to buy locally produced food and to pay workers in the dilapidated oil industry; using the revenue to pay the arrears on Iraq's UN dues, currently just over $11 million; expanding the categories of items for automatic approval in line with the sanctions committee's "fast-track" procedures.

The director of the programme, Benon Sevan, told the council that Iraq's oil revenues had increased four and a half times over four years, from $2.15 billion in the first phase to $10.3 billion in the current phase. Fifty-three percent of that is available for imports to the central and southern regions of Iraq, which are under government control, and another 13 percent to the three Kurdish provinces in the north, where UN agencies implement the programme. Most of the remaining 34 percent goes to a compensation fund for victims of Iraq's invasion of Kuwait, and a small amount to cover the running costs of the programme.

Sevan noted that Iraq was now allowed to import a broad range of items in diverse sectors. "We cannot go on applying the same procedures that were valid when it was just food and medicine," he told reporters after briefing the council.

It was time for the committee to review its procedures "to ensure that the applications are approved more expeditiously so that supplies can arrive in Iraq on a timely basis," he said. He added: "It took God seven days to create the world. I don't want to have to wait two months to review the procedures of the committee."

The draft resolution would add electrical goods and housing supplies to the committee's fast-track categories, which already include food, medical, educational, agricultural, basic water and sanitation supplies. Diplomats said France wanted the procedures to include transport and telecommunications items too, but the United States disagreed, arguing that such items might have a military potential and must therefore be vetted.

France also proposed that some of the revenues go towards paying off Iraq's contributions to the UN. The French ambassador to the UN, Jean-David Levitte, pointed out that "the only foreign currency freely available to Iraq today comes from smuggling". It would be "somewhat paradoxical and even embarrassing for the United Nations" to accept that money as payment for Iraq's dues, he said.

But diplomats said Britain and the United States would let Iraq's oil money be used only once it had implemented all council resolutions. They said that London and Washington were not unhappy to see Iraq deprived of its right to vote in the UN General Assembly, the penalty for any country that falls more than two years behind on its dues.

Sevan told the council that unless some revenues were available as a "cash component" to buy local produce, "we will soon face serious difficulties". Iraq's allies on the council argued in favour of a cash component for training and paying maintenance workers in the oil industry, which the UN says is in danger of collapse. The draft resolution would make 600 million euros available for the oil industry, but only as part of a general cash component for all sectors.

Iraq has in the past refused to allow its oil revenues to be handled by UN relief agencies or non-governmental agencies.

More Information on the Oil-for-Food Program
More Information on Sanctions Against Iraq


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