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UN Secretary-General's report on Oil-for-food Programme 18 May 2001 S/2001/505 A pdf version of the full report can be downloaded from http://www.un.org/Depts/oip/reports.html Comments by Milan Rai, voices uk CONTENTS 1) Headlines 2) Points of Interest ****************** 1) Headlines Key news Electricity shortfall in south-central Iraq this summer could be nearly twice (183 per cent) that of last summer. [para 90] Last summer, because of the strain on the system, a fire at a power station was nearly catastrophic for the entire network. Iraq is a particularly electricity-dependent society. Good news 1) Stocks of chronic drugs for chronic illnesses now 'adequate' [para. 64] 2) No foot and mouth in Iraq, despite spread in neighbouring countries  3) The rate of mine clearance in the north doubled this phase  4) Some holds released on important goods (I'm struggling here) Bad news 1) No orders by the Iraqi government for health, education, water and sanitation, oil spare parts and equipment in this phase (ie in the period 6 December 2000 to 14 May 2001)  No reason given. Total value of orders received during this phase $1.8bn, including $1.2bn for food basket.  2) Lower oil revenue because of Iraqi government decision to reduce pumping (cut $2.6bn from revenue) and lower oil prices (cut $1.4bn of revenues).  3) Holds increased from $3.1bn to $3.7bn as at 14 May, then 17.8 per cent of all applications circulated to Sanctions Committee  4) Lots more bad news Interesting 1) Big emphasis on the impact of lack of cash component on Oil For Food (see point L below) 2) No information on child malnutrition rates in south-central Iraq, but data on child malnutrition rates in the north!  3) During phase IX, 2499 metric tons of chlorine arrived in Iraq. Some release of holds on protective masks, forklifts, computers for handling and record-keeping of chlorine  4) 56 per cent increase in number of disagreements on whether items are on the 1051 list!  One hold in eight is being imposed because the US disagrees with the UN's experts as to whether a particular good is on a list of dual-use goods compiled by these same UN experts! (See point i below) 5) Government of Iraq food stocks and OFF foodstuffs 'generally of the same quality and come from parallel procurement of commodities' - contrary to suggestions that Baghdad is systematically ripping off OFF by substituting its inferior foodstuffs for OFF food rations  ****************** 2) Points of Interest a> Reduced Revenue b> Dual-Use Recommendations c> Malnutrition Rates Among Children d> Expert Assessments of programme e> Electricity Alert f> Water/Sanitation g> Telecommunication h> Education i> 1051 List Disagreements j> Green Lists k> Holds l> Cash Component m> Slow Ordering n> Slow Arrival o> Changing the Distribution Plan Process a> Reduced Revenue Total revenue forecast is $5.7bn (before pipeline fee and compensation diversion). $4bn less than previous phase. Iraqi government decision to reduce pumping cut $2.6bn from revenue and lower oil prices cut $1.4bn of revenues.  Total for humanitarian supplies $3.5bn for the six months.  b> Dual-Use Recommendations The 1051 list is being revised, to report end May?  'Even for "dual-use" items of items on the resolution 1051 (1996) list, I should like to appeal to the Security Council [Sanctions] Committee to have confidence in the United Nations observation mechanism and to approve and/or release applications on hold, if necessary on the condition of "end-use" observations and reports thereon to the Committee.'  c> Malnutrition Rates Among Children North: Comparing November 1997 with November 2000, chronic malnutrition declined from 30.3 to 16.2 per cent of children under five. Underweight figure down from 15.9 to 9.7. Acute malnutrition for some reason stable at 3.1 per cent.  d> Expert Assessments of programme And of impact of holds - carried out by different bodies within UN system and circulated to UNSC but not publicised.  Can anyone get some of these? e> Electricity Alert Current deficit in south/central of over 50 per cent will continue. Peak demand in summer could see deficit of 3,294 megawatts, compared to last summer's 1,800 MW estimated deficit. 296 MW have been added to capacity, but offset by stations removed from service for servicing, and deterioration. Drought not helping.  Situation in north also 'critical'.  To illustrate slow lead times of contract-order-deliver-install for electricity sector, some electrical supplies worth $440,000 arrived this phase (IX) which was contracted under phase I. Four years later.  f> Water/Sanitation In south/central Iraq, access to drinking water increased in rural areas from 41 per cent (1997) to 46 per cent (1999/2000), but decreased in urban areas from 94 per cent to 92.4 per cent (same period).  In the north (and presumably in south/central, though this is not said) 'bacterial contamination remains a concern as a result of network corrosion, occasional failure to carry out chlorination (predominantly in semi-urban areas and villages) and illegal connections (particularly in cities and collective towns.'  Improvements in water quality in south-central reported - reduction in rates of failed water samples of 52 per cent (bacteriological) - 46 per cent (chlorine tests) - but these have been tests at pumping stations in the past, not at the end-user.  Because of bad pipes and powercuts, the water quality at the tap may not have improved significantly. g> Telecommunication No spares for maintenance, 'situation is deteriorating at a fast rate'. Affects 'communications related to programme activities, particularly in the health, transport and food handling and oil sectors'.  'Efforts to address these problems through the programme have unfortunately not yielded any result, owing to holds placed on applications.'  By value, of $321.8m worth of applications for contracts, only $91.5m worth have been approved, $17.8m have arrived, and $8.6m distributed.  h> Education 'throughout the educational system, shortages of educational materials and equipment, sub-standard institutional resources and pronounced disincentives to the academic cadres continue to inflict greater structural damage than the programme can address'.  Value of applications on hold in this sector 'almost doubled' from $78m to 154m during last six months.  Survey of 1,208 schools found 79 per cent of schools 'sub- standard or critical condition'.  Agricultural colleges have student to tractor ratio of 200 to 1, none of supplementary accessories such as different ploughs provided, only got 30 per cent of needed microscopes (114 have been distributed).  i.> 1051 List Disagreements 218 applications on 14 May where 'at least one member of the [Sanctions] Committee disagreed with the detemination of Secretariat experts that they had not identified in those applications any item included in the "1051-list".' A 56 per cent increase in the last six months (but only 3 per cent increase by value).  The OIP 19-25 May 2001 update says that 33.4 per cent of the $3.67bn worth of applications on hold contain "1051 list" items. <http://www.un.org/Depts/oip/latest/wu30May01.html> That is $1.225bn worth of goods. The total value of disagreed 1051- related applications is $462m.  The disagreed 1051 applications account for over a third of the supposedly 1051 holds (37 per cent), and one eighth (12.5 per cent) of all holds. One hold in eight is being imposed because the US disagrees with the UN's experts as to whether a particular good is on a list of dual-use goods compiled by these same UN experts. j> Green Lists S-G still calling for everything to be on the green list except 1051 list.  The difference between this and the UK draft resolution is that the UK resolution annex proposes an enormous additional 'red list' of stuff to be stopped. This Feb, green lists approved for agriculture, education, food and food-handling, health, housing and water/sanitation. At time of writing his report, electricity green list was still on hold  but was subsequently approved [OIP update 19-25 May 2001] k> Holds Too much to say on this. Separate email sometime. Please note that hold are not responsible for the humanitarian crisis. Even if they were all lifted, there would still be a humanitarian crisis caused by the flattened economy, family poverty, unreconstructed public health infrastructure, poor health conditions, etc. Holds highlights: radios had to be removed from ambulances as a condition of them being approved for import  autoclaves for hospitals on hold  value of holds in agricultre sector increase 129 per cent this six months  veterinary vaccines on hold  education holds almost doubled $78m to $158m  In the north, two contracts worth $273,495 on hold.  In south/central, 1,699 applications worth $3.71bn on hold at 14 May 2001.  (Declined slightly since.) l> Cash Component 'a number of major difficulties continue to be encountered in the effective implementation of the programme, due to the absence of a viable arrangement for local procurement of goods and services and the provision of a cash component... [eg] a situation where locally produced agricultural items cannot be purchased under the programme for inclusion in the food basket... the importation of food items has become a disincentive to local agricultural production. I very much regret that there has beenno progress on the arrangements for local procurement and cahs component foressen in paragraph 24 of resolution 1284 (1999).'  Calls on Baghdad to work with UN developing arrangements. 'In all 15 governorates in the centre/south, transportation of nutrition supplies [for special high-protein biscuit programme for malnourished children and pregnant/lactating mothers] is effected in vehicles hired by the volunteers, 97 per cent of whom are yet to be reimbursed owing to lack of local cash to support the programme. The problem could be reduced if an application for 189 trucks, submitted under the distribution plan for phase VII [ie a year ago] could be released from hold.'  If there were a cash component and a local purchase scheme, coupons could be distributed with food ration to enable sections of population to purchase tomato paste, chicken, meat, and eggs 'from among available farm products marketed through mobile government stores'. To create 'qualitative enhancement' of food basket.  'The inability of the school authorities, in the absence of a viable cash component for the sector to fund the cost of the installation/rehabilitation of materials contributes to the paucity of such materials procured.' Goods bought and delivered under OFF still not installed because schools can't fund installation - '27 per cent of programme rehabilitation materials still had not been installed two years after their distribution.'  m> Slow Ordering No orders by the Iraqi government for health, education, water and sanitation, oil spare parts and equipment in this phase (ie in the period 6 December 2000 to 14 May 2001)  No reason given. Total value of orders received during this phase $1.8bn, including $1.2bn for food basket.  Baghdad says 'in many cases contracts have been signed but suppliers have yet to submit them.' In other words, in some cases, the slow ordering is the fault of the companies who are supposed to be supplying these goods - they are the ones who have to apply to the UN for permission/notification. S-G asks again for Baghdad to forward details of contracts to OIP as soon as they are signed, even before applications are formally made by companies, to speed things up.  There are also $1.151 bn worth of letters of credit for 717 applications which have been approved by the Sanctions Committee which the Central Bank of Iraq has failed to process so that the supplier can be paid.  n> Slow Arrival Repeat from above: To illustrate slow lead times of contract-order- deliver-install for electricity sector, some electrical supplies worth $440,000 arrived this phase (IX) which was contracted under phase I. Four years later.  o> Changing the Distribution Plan Process S-G wants to move away from six-monthly One Big Plan distribution plan system to something more 'flexible'. Current system 'tedious and time-consuming process' and unable to keep up with 'growing magnitude and scope' of programme. Thousands of amendments are made in the course of a phase and thereafter.  Milan Rai Joint Coordinator, Voices in the Wilderness UK email@example.com 29 Gensing Road, St Leonards on Sea UK TN38 0HE Voices website http://www.viwuk.freeserve.co.uk -- ----------------------------------------------------------------------- This is a discussion list run by the Campaign Against Sanctions on Iraq For removal from list, email firstname.lastname@example.org Full details of CASI's various lists can be found on the CASI website: http://www.casi.org.uk