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*From*: "Colin Rowat" <colinrowat@DELETETHISyahoo.com>*Subject*: RE: UN Compensation Fund*Date*: Tue, 31 Jul 2001 21:36:48 -0400

This is a brief follow up to the second part of my Friday posting. In it, I noted that there was an error with the data on the UN Compensation Commission's website (http://www.unog.ch/uncc/status.htm). That has now been corrected, and a 26 July version is available. Based on this, I can recalculate my two estimates of the likely compensation fees that Iraq may still be assessed: (i) the "unconditional" total is still $71 billion; but now (ii) the "conditional" total is only $70 billion. I was told, after my earlier posting, that my attempt to explain how I calculated these figures, and what the difference was, was completely confusing. I apologise for that, and will now take the risk of trying again. I'll use a simple example. Suppose that there were two claim categories, category A and category B. Suppose further that they generate the following table: A B | category 100 50 | compensation sought by unresolved claims 10 20 | compensation sought by resolved claims 3 12 | compensation awarded to resolved claims Thus, of the resolved claims (10 + 20 = 30), 50% (3 + 12 = 15) have been settled in favour of the claimants. If the unresolved claims (100 + 50) are satisfied at this rate of 50%, then we estimate that an additional 75 in awards will be granted. We can also perform the calculation another way, by category. Now we note that 30% (3 / 10) of the category A claims have been awarded, while 60% (12 / 20) of the category B claims have been. If each category's claims continue to be awarded at this rate then there will be an additional 60 in awards: 30 (30% × 100) from category A and 40 from category B (60% × 50). I called the first approach the "unconditional" approach, and the second approach the "conditional" approach, because the second conditions on (uses) the category information. In both cases, these calculations are best when the cases to be resolved are picked at random from the unresolved cases. To see why, imagine that the Commission actually picked the strongest ones first. In this case, assuming that the same percentage that was awarded in the past will continue to be awarded is going to overstate the remaining awards: e.g. if only 50% of the strongest claims were awarded, we would expect less than 50% of the remaining, weaker, claims to be awarded. Best, Colin Rowat work | 269 Mercer Street, Room 710 | Department of Economics | New York University | New York, NY 10003, USA | (212) 998 8939 | http://homepages.nyu.edu/~cir2 | cir2@nyu.edu home | 116 W. 226 St. | Bronx NY 10463, USA | colinrowat@yahoo.com tel/fax | (917) 517 5840 (mobile) | (707) 221 3672 (fax) | 9175175840@voicestream.net (SMS) autumn | Department of Economics | The University of Birmingham | Birmingham, B15 2TT, UK > (i) The unconditional approach uses one ratio, that of the total > compensation awarded to date relative to that sought in the > claims processed to date. Applying this to the compensation > sought by unprocessed claims yields $71 billion. > > (ii) The conditional approach calculates ratios for each category > of claim. It then applies each ratio to that category's > outstanding claims. The figures for each category are then > summed for a total of $75 billion. > > In my view, the conditional approach is a better one as it uses > information contained in the categories about the extent to which > settled claims differ from future claims. To explain, the data > table shows that category A, B and C claims are completely > resolved; further, in all three cases, the award ratios are > higher than those in the categories with claims outstanding. > Therefore, a technique that applies estimates future claims by > treating all of the past equally, may be misleading. In any > case, the two techniques yield similar results. > > I have made one inference about the data available on http://www.unog.ch/uncc/status.htm. The table presented there contained a 0 in the cell corresponding to compensation sought by F4 claims resolved. This is clearly incorrect: 105 F4 claims for $0 each would not have been submitted. I replaced this value with $700 million by assuming that the total value of F4 claims had not changed since 29 May 2001 (google.com's cached version of the UNCC page has this version). This inference leaves open one small question: four claims seem to have disappeared between May and June. I've notified the UNCC's webmaster about the error and will provide an update on these calculations when it is fixed if there is a significant difference. Finally, the above allows an estimate of outstanding payments. Iraq certainly owes $23 billion (the difference between that awarded to date, and that paid) and, according to the estimate above, will owe another $75 billion. These sum to $98 billion. To this must be added the foreign debt acquired by Iraq prior to 1990, estimated to now be worth about $120 billion (see http://www.cam.ac.uk/societies/casi/info/alnasrawi.html). In sum, these amount to about $218 billion, or about $9,000 per Iraqi. Best, Colin Rowat work | 269 Mercer Street, Room 710 | Department of Economics | New York University | New York, NY 10003, USA | (212) 998 8939 | http://homepages.nyu.edu/~cir2 | cir2@nyu.edu home | 116 W. 226 St. | Bronx NY 10463, USA | colinrowat@yahoo.com tel/fax | (917) 517 5840 (mobile) | (707) 221 3672 (fax) | 9175175840@voicestream.net (SMS) autumn | Department of Economics | The University of Birmingham | Birmingham, B15 2TT, UK _________________________________________________________ Do You Yahoo!? Get your free @yahoo.com address at http://mail.yahoo.com -- ----------------------------------------------------------------------- This is a discussion list run by the Campaign Against Sanctions on Iraq For removal from list, email soc-casi-discuss-request@lists.cam.ac.uk Full details of CASI's various lists can be found on the CASI website: http://www.casi.org.uk

**References**:**(1) European Parliament & Iraq; (2) UN Compensation Fund***From:*Colin Rowat

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