S-G Report 18 May 2001

[Milan Rai <milanrai@DELETETHISbtinternet.com>]

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 [83]
3) The rate of mine clearance in the north doubled this phase [115]
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) [15] No reason given. 
Total value of orders received during this phase $1.8bn, including 
$1.2bn for food basket. [133]
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). [4]
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 [29]
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! [75]
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 [78]
4) 56 per cent increase in number of disagreements on whether 
items are on the 1051 list! [32] 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 [53]

******************

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. [4] Total for 
humanitarian supplies $3.5bn for the six months. [124]

b> Dual-Use Recommendations
The 1051 list is being revised, to report end May? [33] '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.' [131]

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. [75]

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. [50] 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. [90] 
Situation in north also 'critical'. [93]
        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. [89]

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). [76]
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.' [79]
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. [76] 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'. [104] 
'Efforts to address these problems through the programme have 
unfortunately not yielded any result, owing to holds placed on 
applications.' [105] 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. [103]

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'. [97]
        Value of applications on hold in this sector 'almost doubled' 
from $78m to 154m during last six months. [97]
        Survey of 1,208 schools found 79 per cent of schools 'sub-
standard or critical condition'. [98]
        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). [100]

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). [32] 
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. [32] 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. 
[21] 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 [35] 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 [67] autoclaves for 
hospitals on hold [64] value of holds in agricultre sector increase 129 
per cent this six months [80] veterinary vaccines on hold [80] 
education holds almost doubled $78m to $158m [97]
        In the north, two contracts worth $273,495 on hold. [23] In 
south/central, 1,699 applications worth $3.71bn on hold at 14 May 
2001. [18] (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).' [127] 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.' [71]
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. [56]
        '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.' [98]

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) [15] No reason given. 
Total value of orders received during this phase $1.8bn, including 
$1.2bn for food basket. [133]
        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. 
[133]
        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. [133]

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. [89]

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. [129]

Milan Rai
Joint Coordinator, Voices in the Wilderness UK
milanrai@btinternet.com 29 Gensing Road, St Leonards on Sea UK 
TN38 0HE
Voices website http://www.viwuk.freeserve.co.uk



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