Re: New S-G report

[Per Klevnäs <per.klevnas@DELETETHIScasi.org.uk>]

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].

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