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Von Sponeck on Cash Component: UN Agencies Didn't Want to Handle Cash Component Cash (1 May 2000)

Please note the Boston Research Group merged with and became part of the
Iraq Sanctions Project, Center for Economic and Social Rights.

Interview Subject: Hans von Sponeck
Interviewer and Transcriber: The Boston Research Group (BRG)
Venue: The Carr Center for Human Rights, Harvard University
Date: 1 May 2000

BRG: In 1999 both the Humanitarian Panel and the Secretary-General talked
about the imperative for some sort of cash component, particularly, in the
case of the Secretary-General, for "Target Nutrition Programs" in Southern
and Central Iraq. Could you briefly talk about the specific benefits of the
cash component? Perhaps you can use a particular sector as an example.

Please also address the cash component in relation to the Target Nutrition
Program, and answer whether or not you think that the lack of a cash
component is the explanation for why the Secretary-General continues to say
that that the Target Nutrition Programs canít expand and are currently

And then, if you would, please also say a few words about what the long-term
implication is for Central and Southern Iraq without a cash component.

von Sponeck: The cash component concern has been prevalent in all agencies
because it is Humanitarian Program weakness due to the fact that there is no
access to cash in the Center/South. And as a result, the absorbency capacity
of items that come in under the 986 Program is severely restrained. It also
explains the delays in the installation of equipment.

Take water and sanitation for example. A new water purification plant is
brought into the country, but maybe, in order to install this, you need 3%,
4%, letís say 5% of the value of this equipment as cash in order to have the
required labor and the local materials: Perhaps sand, and maybe cement. You
also need to have implements, like shovels. All of that is not obtainable
under the "Oil-for-Food" Program. So it all must wait until the Government
somehow finds or allocates the money. The result is that some of this
equipment waits, and is installed later than it is supposed to be. The
absence of the cash component has a restraining effect, a delaying effect on
the implementation of the "Oil-for-Food" Program.

The issue of the Nutrition Program was the first case (I was involved in
that one) that we used to test out how one could find a formula, acceptable
to everybody, to make cash available to implement this Targeted Nutrition
Program (as it is called). We quickly found out some things that we didn't
expect. First of all, we found out that within this Targeted Nutrition
Program the value of the actual commodities were about $15 million. And the
cash component was roughly $17 million. UNICEF, in charge of the Targeted
Nutrition Program, pointed out to us that they have no capacity to handle
$17 million worth of cash. So we had a problem with the implementing
partner. The assumption at that point was that the Government of Iraq would
go along with a UN agency having access to cash. That was a false
assumption. The Government of Iraq does not want to have any outsider, not
any UN agency or NGO, to be in possession of Iraqi cash. And the Security
Council doesn't want any Iraqi institution to have access to any cash. So
here we have a complete deadlock. On top of it, the Government of Iraq, as
you know, has rejected, in full, Resolution 1284 which provides for this at
long last. How many times did I make a case for a cash component in the
Sanctions Committee? In February of í99 I submitted a program of different
concerns that needed to be considered by the Security Council. A cash
component was very prominently identified. We had no takers and it didn't
make any progress until this Resolution came. And then when we used this
practical example of a Targeted Nutrition Program we discovered: A) The
Government wasnít willing to accept the UN as a custodian of cash; B) The
very agency that had, until then, implemented the target nutrition Program,
wasnít willing to assume responsibility for the management for such a large
amount of cash with the existing human resources that they had.

Nathaniel Hurd
Iraq Sanctions Project (ISP) Associate
Center for Economic and Social Rights (CESR)
162 Montague Street, 2nd Floor
Brooklyn, NY 11201
Tel.: 718-237-9145, x 21
Fax: 718-237-9147
Mobile: 917-407-3389
Personal E-Fax: 707-221-7449

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