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Dear discussion list, The Secretary General's 90-day report on "oil for food" was published on 28 September (the cut-off date for the data is 31 August 2001). These reports are the single most important regular source of information on the situation on Iraq, and contain a wealth of information, including on health and welfare indicators, the situation of holds, political developments, and much else. Below is a discussion, and then a summary and a walk-through of the report. Although the report is mainly concerned with how oil for food could be improved, I think the most important message is that it makes clear that the shortcomings of oil for food are long-standing and indeed to be regarded as a property of the programme itself. As the report puts it: "considerable difficulties are being faced in the effective implementation of the programme within the context of a rigorous sanctions regime imposed by the Security Council" [§104]. What is needed is the lifting of sanctions - not the improvement of oil for food. Bearing this in mind, the report still sheds valuable light on the situation in Iraq. Initially, however, I have a question. The reports states that: "Comprehensive assessment reports on the impact of holds in the various humanitarian sectors, including water and sanitation, electricity, health, education and crucial areas of the transport and food handling sectors have been prepared by the sectoral working groups, in cooperation with government counterparts. The reports have been made available to the Committee and it is hoped that they have facilitated the approval of related contracts." [§28] Does anyone have access to these reports? I would be very grateful to take part of them. Part of the problem with 'oil for food' is of course imperfect implementation: lack of revenue (which again is becoming a problem), corruption, incompetence, and, above all, the fact that the relief effort is run by mutually hostile parties, none of which is accountable to the people they are trying to serve. As the SG puts it: "the effective implementation of the humanitarian programme countrywide continues to face a number of serious difficulties and obstacles to which I have drawn the Council’s attention repeatedly"[§3]. In an ideal world where these were different, the Iraqi people would probably be better off. MAIN PROBLEMS WITH OIL FOR FOOD: These are summarised in §4: * "The programme has suffered because of the cumbersome procedures in the formulation and late submission of the distribution plan". * "slow contracting for essential supplies by both the Government of Iraq and the United Nations agencies and programmes". * "the inordinate delays in the submission of applications for such contracts to the Secretariat on the part of both the suppliers and the agencies and programmes concerned". * "there are considerable delays in the opening of letters of credit for large numbers of already approved applications owing to slow action thereon by the Central Bank of Iraq". * the "unacceptably high level of holds placed on applications by the Committee, with a total value of over $4 billion, [which] continues to affect adversely the efficient implementation of the programme." * "the absence of an agreement on the implementation of a cash component as envisaged in resolution 1284 (1999) continues to hamper severely the implementation of the programme." THE MAIN CRITICISMS OF THE GOVERNMENT OF IRAQ The explicit mentions of GoI failures tend to make up the back-bone of FCO and MOD claims about sanctions, and there are therefore important to be aware of. There is not doubt that there are real failures and problems, although this in no ways alters the fundamental fact that sanctions are the root cause of much hardship. The GoI has * has denied inspectors entry to the country for the control of end-use/user access [§25]; * has refused to grant UN personnel visa, and expelled 5 members of the Office of the Humanitarian Coordinator, accused of "performing of activities that infringe the national security of the Republic of Iraq" [§100]. * fails to provide for vulnerable groups such as female-headed households, or children in difficult circumstances [§83]. Particularly damning is the claim that "the Government of Iraq is indeed in a position to address the nutritional and health concerns of the Iraqi people, particularly the nutritional status of the children." [§105]. This last claim is contradicted by last years WHO/FAO study of the nutrition status and food availability in Iraq, which claimed that this could substantially improve without a revival of the infrastructure (see CASI's February newsletter on www.casi.org.uk for a summary of this report). * IMPORT CONTROLS AND HOLDS At the end of the summary of the report there is a list of applications on hold listed in the report; it is long indeed, and includes computers essential for stock-taking, vaccines for the poultry industry, pesticides, food testing equipment, spare parts for sewage pumps, trucks, and much else. From May to September, "the relative value of applications on hold declined from 17.8 per cent to 16.77 per cent", [§15] but this is both marginal and out of proportion with the needs in Iraq. THE IMPLICATION is that the very nature of the Iraqi government is that it cannot be trusted to deal with many items vital to civilian infrastructure. This is important information, especially when attempting to interpret 'smart sanctions', and particularly in thinking about the viability of proposed import controls to Iraq. Our only guide to understanding the definition of 'dual use' goods must be the empirical record, which now stretches over many years. It is demonstrably incompatible with economic development. This is a very strong argument against 'smart sanctions': the benefit of this new system will in all likelihood be slight in the absence of an entirely new definition. There is also disagreement which items actually belong on the pre-made lists of 'dual use' goods (the "1051-list")[§16]. This is also ominous with a view to the smart sanctions - the process of determining what should enter the country is apparently open to wide interpretation. In addition, even when UNMOVIC has carried out reviews and stated that applications do not contain 1051 goods, the holds have not been released in 78% of cases. [§17] * THE 'CASH COMPONENT' The importance of the cash component has been stressed by the SG for more than two years now, and "[t]he absence of a cash component in the 15 central and southern governorates of Iraq has impeded the efforts of the humanitarian programme at many levels and has prevented the installation and effective utilization of plant machinery, equipment and supplies." [§92]. An example of the problems that arise in its absence is detailed in the report: although most of the spare parts to repair the printing presses for school text books have arrived, the presses are working at a mere 10% of capacity, as the absence of cash means the new materials are not installed [§92]. Another example is that "in the health sector alone, the utilization of power generators, chiller units, haemodialysis machines, electrocardiograph units, endtidal CO2 analysers, anaesthesia machines and intensive care ventilators has been either delayed or not completed because of inadequate cash to install and maintain the equipment." [§93] THE IMPLICATION is that the Iraqi government cannot be trusted with cash. Or, even wider: it cannot be trusted with the administration of the country, including training, installation, transport, maintenance, and much else that is vital for a country's functioning. The result is that in these respects, no-one runs Iraq. COMPLEXITY OF THE OIL FOR FOOD PROGRAMME It is not only in the south there are problems, but "[t]he implementation of the programme in the three northern governorates, which is carried out by the United Nations on behalf of the Government of Iraq, has been facing considerable difficulties", mainly because of the complexity of the operation. [§106] The GoI is too slow at submitting contracts under oil for food, and they arrive erratically. However, this is also a problem in the north of Iraq, run by the UN: "I remain concerned, however, that during the reporting period there has not been much improvement in the rate of submission of applications by United Nations agencies and programmes [in the north of Iraq]" [§2]. This indicates one of the fundamental flaws of oil for food - it is too big to administer efficiently. I think it is safe to assume that the virtually unpaid civil servant cadre in Iraq is inefficient. Running a centrally planned economy in an adequate way is difficult enough in normal circumstances, and has historically been much less efficient than other systems, but it is probably virtually impossible in the circumstances that now prevail in Iraq. * INADEQUATE REVENUE The GoI has used oil as a political weapon in attempting to get its way, and the amount of oil exported has therefore been lower than expected. There has therefore been a "substantial reduction in revenues" available for oil for food. "If all the applications currently being processed are approved and the holds lifted, the ESB (59 per cent) account would be short of funds by over $6 billion". [§5] One result of this is that the distribution plans get distorted. The shortfall of revenues has hit some sectors harder than others (e.g. agriculture, education, electricity, health and water and sanitation). The SG expresses "deep regret" at the failure of the GoI to maintain a proper balance in the division of actually available funds. [§13] It seems to me that this at least partly is a function of the attempt to plan and run Iraq in centrally planned phases. In total, "the value of all goods delivered to Iraq under all phases and sectors has reached a total of $14.84 billion" [§24], which can be compared with the $13.36 billion that have gone into the compensation fund [Annex I, §2c]. In numerical terms, 'oil for food' could just as well be called 'oil for compensation'. * LETTERS OF CREDIT As with slow contracting, this is an important obstacle to goods' arrival in Iraq. Does anyone know why the Central Bank of Iraq fails to do this, now extending to "643 applications worth $968 million" [§19]? COMMERCIAL PROTECTION Oil for food denies "legitimate commercial protection to the Iraqi buyers" [§20]. This means that a lot of faulty goods arrive in Iraq. One effect the last few months has been the rejection of several wheat orders on the basis of their quality, which has resulted in low stocks [§31]. FOOD AND NUTRITION The food basket contains "2,229 kilocalories and 50.34 grams of protein per person per day, which corresponds to 90 per cent and 84 per cent, respectively, of the 2,472 kcal and 60.2 grams of protein per person per day requirements" [§32]. In the south/centre, targeted nutrition is lagging, partly because of the GoI failure to apply for supplies, partly because of non-delivery by suppliers.[§43] It is needed: in the north, the distribution of high-protein biscuits increased children's learning ability in schools in 86% of targeted schools[§46]. WATER AND SANITATION Many Iraqis still don't have access to clean water. Oil for food has not had "a significant impact" on improving sewage, and therefore, "sewage-flooded streets, caused by sewer blockages, have become a common phenomenon in many urban areas throughout the centre and south of Iraq". "The release from hold of contracts for mechanical and electrical equipment for these [sewage] facilities is therefore urgently required." [§47] Power cuts [§48] and holds on testing equipment to enable chlorination[§49] are also obstacles to the provision of clean water. In the north, 90% of the demands for clean water is being fulfilled [§50]. Still, the water in main cities in the north is unfit for human consumption. [§1] * ELECTRICITY "The deficit in electricity generation is severely affecting consumers — there are power cuts of 2 to 4 hours per day in Baghdad City, 12 hours per day in Baghdad governorate and up to 18 hours per day in most of the other 14 governorates in the centre and south". This is similar to the situation a year ago [§57] Drought, holds on equipment, and lack of technical expertise are hinted at as main reasons for this [§58-63] EDUCATION Oil for food has not "stemmed the deterioration in the [education] sector" [§64]. Without a cash component, the textbooks needed cannot be printed [§65]. A major problem in improving schools are "the erratic pattern of arrival of essential inputs, shortages of electricity supply and the receipt of materials of poor quality or incorrect specifications."[§65]. Further education in the sciences are suffering because many items needed for research training and education are on holds, and indeed permanently prohibited as they are on the 1051-list [§67]. TELECOMMUNICATIONS Some essential supplies have been released from holds, "[h]owever, a truly tangible impact in this sector can be expected only after the release from hold of fibre -optic cables and systems and data communication networks, which have been on hold for a long time."[§69] HOUSING "Housing conditions for the majority of the population in Iraq are still poor, characterized by dilapidated structures and overcrowding, and further aggravated by low quality of potable water and inadequate disposal of sewage and garbage." [§71] Poverty is a major problem, as people cannot afford housing materials [§73], and holds "have a serious negative impact on the sector" [§74] LIST OF HOLDS MENTIONED IN THE REPORT: * The port of Umm Qasr needs "dredgers, service boats and tugboats" which are on holds [§34]. * With regards to railways, holds on "signalling and telecommunications equipment" are "a major setback" [§35]. * Trucks to the value of $392m are on hold, also equipment for tyre factories [§36]. * Food testing equipment is disallowed entry, "increasing the risk of distributing contaminated and poor quality food". [§37] * 200 ambulances on hold have been released [§38], though with their radios removed [see last 180-day report, S/2001/505, §67] * Samarra Drug Industries factories are "old and inefficient", but cannot start their production line because of holds [§39]. * Laboratory equipment for hospitals is not allowed entry [§41] * Water-testing equipment is on hold [§49]. * Refusing pesticides entry "resulted recently in a grave outbreak of whitefly, affecting over 10,000 hectares of citrus orchards" [§53]. * Poultry vaccines and much veterinary equipment needed for meat production [§53] * Higher education supplies for the sciences are on holds, and some also on the 1051-list [§67]. * Holds of computers needed for stock-taking affects many sectors of oil for food, having "a serious impact on the effective implementation of the programme" [§82]. -- ----------------------------------------------------------------------- This is a discussion list run by the Campaign Against Sanctions on Iraq For removal from list, email email@example.com CASI's website - www.casi.org.uk - includes an archive of all postings.