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150 day report on Iraq - summary



The Secretary-General's latest report to the Security Council on Iraq was
produced on 19 November, and contains information up to 31 October. It is
at:
http://www.un.org/Depts/oip/reports/S2001_1089.pdf

The report was required 150 days after the renewal of the oil-for-food
programme in Phase X, unlike the usual 180-day procedure. The difference
is due to the failure of the Security Council to come to an agreement on
the future of sanctions in its May to July 2001 discussions, which led to
a prolongation of Phase IX by one month (SCR 1352 of 1 June) and the
subsequent shortening of the reporting period for Phase X (SCR 1360 of 3
July).

There are few general comments within the report. Unlike earlier reports
of the SG, there are no references to the limited goals or temporary
nature of the programme. The SG has repeatedly implied in the past that
many of the shortcomings of the programme are inherent in the nature of
the programme itself.

I will go over the data on human welfare presented in the report first,
followed by the SG's comments on the causes of the humanitarian problems,
and then summarise the problems in the oil-for-food programme that the SG
identifies.

THE HUMANITARIAN SITUATION
The most thorough data is for the three northern UN-administered
governorates, coming from the results of the July 2001 household
nutritional status survey, sampling 2745 under-5s (63). There has been a
major improvement in the wellbeing of children in this region over the
past seven years. Chronic malnutrition (stunting) has fallen from 37.3%
(1994) to 11.4% (2001), severe malnutrition (wasting) from 4.2% to 3.0%,
and being underweight from 25.8% to 10.7%.

I doubt such improvements exist in Central / Southern Iraq. 62 reports on
810,000 malnourished children in Iraq.

The causes of the humanitarian problems in Central / Southern Iraq are
detailed as follows.

Distribution of humanitarian goods within Iraq is not identified as a
problem, pace the regular claims of the UK and US governments:
"Observations indicate that food commodities have been distributed in an
equitable manner throughout the centre and south of the country. The
distribution of food commodities between urban and rural areas has also
been carried out equitably, and commodities have been delivered to the
agents and distributed to the households as scheduled." (37)

Similarly,
"In the health sector, 85 per cent of delivered health supplies and drugs
have been distributed, thereby contributing to greater access of patients
to improved health services, particularly in the areas of chronic and
infectious diseases and heart disorders." (51)

Instead, the health problem is located in Iraq's basic infrastructure:
"despite the availability of drugs against amoebic dysentery, hydatidosis,
toxoplasmosis, typhoid and visceral leishmaniasis, these diseases are not
under control due to the poor state of water, environmental sanitation and
related infrastructures." (51).

See sections 1(c) and (d) below for information on holds for this sector.

The SG highlights the Unicef data that shows that diarrhoea in children
increased from 3.8 episodes per child per year in 1990 to 14.4 in 1999 -
"one of the main causes of the high child mortality rate in Iraq" (61).

On the positive side, the health system seems to be improving. A national
polio immunization programme is underway, and one is planned for measles
(54, 58). In general, "the number of laboratory investigations and
surgical operations had increased since the inception of the programme."
However, "laboratories are not always able to make accurate and timely
diagnoses because of holds on laboratory reagents, erratic arrivals, slow
rate of contracting and inadequate funds for equipment, hampering proper
treatment." (55). There also remain problems in transferring
Iraqi-produced medicines to the 3 Kurdish governorates, although the
actual quantity of medicines received in these governorates has doubled
over the past 6 months (56).

However, the nutrition programme is still faulted. The programme remains
underfunded. In particular, there remains a shortage of high protein
biscuits and an absence of therapeutic milk. The SG notes ominously that
this "could lead to an increase in moderate to severe malnutrition among
the group of beneficiaries covered by the programme" (62). These specific
problems are not wholly the product of the Government of Iraq's
malevolence: the shortage of high protein biscuits is due to "the failure
of suppliers to honour two successive contracts for a total of 6,625 tons
of high-protein biscuits in 2000 and 2001" as well as contracting delays
(62).

GENERAL PROBLEMS WITH OIL FOR FOOD
4 lists the shortcomings in the implementation of the oil-for-food
programme, and much of the report is taken up with the elaboration of
these shortcomings. I've broken this down into five categories - holds,
the cash component, United Nations programme implementation, failings of
the Government of Iraq, and everything else. This is a summary of the
points:

1. HOLDS
The total number of applications placed on hold by the sanctions committee
has risen (albeit marginally) once again, although the total value of
applications on hold has fallen (as shown in Annex 3 of the report). The
increase on the number of holds on oil spare parts has more than made up
for the decreasing number of holds on the import of humanitarian goods.
These are my figures drawn from the last three reports:

14 May 01 -  1701 applications on hold, valued $3.71 bn, of which $442m
for oil spares.
15 Sept 01 -  1531 applications on hold, valued at $4.05 bn, of which
$524m for oil spares.
31 Oct 01 - 1548 applications on hold, valued at $4.03 bn, of which $559m
for oil spares.

In this connection, the conclusion of the March 2000 report by the
Security Council's Group of United Nations Oil Experts that "the
lamentable state of the Iraqi Oil Industry has not improved" (p.9) should
perhaps be recalled.
http://www.un.org/Depts/oip/reports/oilexpertsreport.pdf

Two factors should be added in mitigation. The percentage of oil spares on
hold, by value, has remained effectively unchanged (24.44%, cf 24.53% in
September), and so more spares are entering Iraq than before, despite the
actual increase in holds. Secondly, part of the problem is that oil
monitors are mandated to verify the end user and use, and the Iraqi
government has refused to allow an increase in the size of the oil
inspection team (despite UN requests); as a result, holds are imposed when
inspectors' assurances are delayed (31).

Part of the decrease in number of holds is due to the lower number of
items on the new UNMOVIC "dual use" lists (a copy of which can be found
at: http://www.cam.ac.uk/societies/casi/info/un.html#movic).
50 applications that were on hold because they were deemed "dual use" are
no longer so classified, and so were released from holds (22).

Particular sectors in which holds are causing problems include:

(a) Transport: This is particularly important for moving goods from the
port of Umm Qasr, the main entry point for oil-for-food commodities, to
Baghdad. Iraq has attempted to restore the rail network for haulage
purposes. However, the SG writes that: "critical equipment, such as
tamping machines, flush butt-welding machines and bulldozers, remain on
hold" as do "[m]ost of the contracts for signalling and communication",
Therefore, there are "daily closures of portions of the main line for
periods of up to 10 hours" and "serious safety risks in the operation of
freight and passenger trains" (44). As regards trucking, equipment is on
hold for tyre production within Iraq. The SG notes that tyre production
lines in Iraq are working at only 20% of their designed capacity, but
doesn't estimate how much of this shortfall is due to the prevention of
imported machinery (46).

(b) Food distribution around the country is hampered by the lack of
working cold stores and refridgerating trucks. The existing facilities
require spare parts which are on hold; and 12 refridgerating trucks for
use in distributing dairy products are also on hold (47).

(c) Water. The SG notes the continuing existence of holds on
electromechanical equipment for water treatment plants: "it is essential
to ensure that applications submitted in relation to the electricity
sector be approved as expeditiously as possible." (65). Similarly, holds
on spare parts for compact water treatment units, for use in rural areas,
are noted: the release of these contracts, the SG notes, "would definitely
improve the quality and quantity of water available to rural consumers"
(66). Finally, water tankers and spare parts remain on hold: water is
distributed through tanker, except in Baghdad City and the Qadissiya
governorate, and is some regions - due to the insufficient number of
tankers - water is only distributed every ten days (67).

(d) Mechanical and electrical equipment for sewage treatment works remains
on hold. Raw sewage is still being discharged into rivers with no or
minimal treatment (68).

(e) Agriculture is particularly affected by holds (74):
"The consequences of holds are felt across all the agricultural
subsectors and are leading to a decline in overall agricultural
productivity. Despite reporting on 5 September 2001 about a grave whitefly
outbreak affecting over 15,000 hectares of citrus orchards, sprayers and
various pesticides for fruit and vegetable production remain on hold. As a
result, the Government of Iraq has been unable to arrest the development
and spread of the pest. The rapidly spreading outbreak is also affecting
the production of vegetables, mainly cucumbers and tomatoes, decreasing
yields by 30 per cent and forcing prices up.
Without effective control measures, the whitefly outbreak could result in
grave consequences for fruit and vegetable production as well as cause the
spread of viral plant diseases. This could be a setback for the
nutritional objectives of the programme, which promotes local production
of vegetables and fruits as a viable means of supplementing the food
basket with needed minerals and vitamins."

Vaccines for "enterotoxaemia, an endemic disease that causes the sudden
death of mainly sheep and goats" are also on hold. This could lead to an
epidemic, with the incidence of this disease increasing throughout the
country (75).

(f) $700m of electricity generation and rehabilitation equipment remains
on hold, precluding "the adequate and timely maintenance required for the
electricity sector overall" (82). $70m of transmission equipment also
remains on hold, and this is particularly needed in rural areas (83-84).

(g) Higher education: "holds are affecting all fields. In the dental and
medical fields, complete laboratories as well as teaching and clinical
equipment are on hold. Substantial contracts for basic science and
engineering equipment also remain on hold. Consequently, in all
disciplines where practical training is of paramount importance, the
professional competence and expertise of students and staff alike is being
undermined." (95)

(h) Housing: Although there is substantial construction activity currently
underway in Iraq, resulting from the inclusion of the housing sector in
the programme in June 2000, the level of demand outstrips the supply of
local building materials, resulting in large price increases. 41 contracts
for parts and equipment for factories producing cement, bricks, glass,
ceramic etc. are on hold (109), and 37 contracts for construction
equipment likewise (110).

One other problem previously identified (for example, in 39 of the last
SG report, on 28 September) is holds on materials to the medicine
production industry. This problem seems now to have been partially
resolved: the SG notes that Samarra Drug Industries have received
materials, and production capacity is set to increase. Some "complementary
items" remain on hold, though (52-53).

The SG refers in general to the "unacceptably high level of holds" at 6
of the report.

2. THE CASH COMPONENT
"[T]he 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." (4)

The cash absence is also perhaps a significant factor in the Iraqi
population's low purchasing power, resulting in a continuing humanitarian
problem. For example:
"The prevailing socio-economic conditions do not allow a large portion of
the Iraqi population to adequately complement the food basket" (38).

The absence of a cash component, though unmentioned in the rest of the
report, may lurk behind many of the administrative problems that are
detailed within the Government of Iraq bureaucracy (section 4 below). It
also seems marked in the description of the school system in Iraq:
"An assessment of primary schools shows that 40 per cent of them run on a
double-shift system to ensure greater access. Despite this, overcrowding
of classrooms persists because of growth in the student population and the
slow pace of rehabilitation, leading to a reduction in the quality of
education" (92).

3. UNITED NATIONS PROGRAMME IMPLEMENTATION
Contracting: "slow contracting for essential supplies by .. United Nations
agencies and programmes", and delays and irregularities in the submission
of applications (4)

4. GOVERNMENT OF IRAQ (GoI)
Although the SG does not draw attention to the fact, almost all the
criticisms of GoI in the report arise out of the administrative problems
caused by the sanctions regime. It would thus have made as much logical
sense to criticise the need for a centralised distribution plan, for
example, as it would be to criticise the Iraqi bureaucracy for its
difficulties in grappling with that plan.

(a) The Distribution Plan: "the cumbersome procedures involved in
formulating the distribution plan and the late submission of the plan
which has been subjected to thousands of amendments, starting soon after
its approval and continuing throughout a given phase and beyond" (4)

(b) Contracting: "slow contracting for essential supplies by .. the
Government of Iraq", and delays and irregularities in the submission of
applications (4).

(c) Funding allocations. "the Government of Iraq did not make proper and
timely adjustments in sectoral funding allocations" entailing that there
have been "considerable delays in the issuance of approval letters for
approved applications". 210 applications, worth $465m, are held up for
lack of this reason, and are in the agriculture, education, electricity,
health and water / sanitation sectors. The SG acknowledges this problem
arises because of the shortfall of revenue (see below, section 5a), which
is largely out of the GoI's hands. However, the GoI has failed to revise
the Distribution Plan accordingly, which could have mitigated its effects
in part, despite the recommendations of the UN Office of the Iraq
Programme (and now also the SG: 125). As a result, approval letters will
now been issued by the OIP on the basis of the percentage of funds
allocated to various sectors in the distribution plan budget (19). It's
unclear to me if this will not just introduce a new set of inflexibilities
and thus administrative delays into the process.

(d) "delays in the opening of letters of credit for a large number of
approved applications owing to slow action by the Central Bank of Iraq"
(4). 583 applications, worth $883m, are held up due to the lack of
letters of credit. The average delay is 111 days (6; also 25).

(e) Visas. "inordinate delays and/or refusal to grant the required visas
and delays in the clearance of imports of essential supplies and
equipment, particularly those required for programme implementation in the
three northern governorates" (4; also 120-123). Iraq also refused entry
to independent auditors (17); and electricity generation in the North is
also hindered by the refusal to grant visas to international experts to
maintain the diesel generators (87-88). 41 mine removal personnel to
work in the North are also awaiting visas (119).

5. OTHERS
(a) The Secretary-General notes the problems associated with the fall in
oil revenues, resulting "mainly" (8) from lower prices but also from the
Iraqi government's reduction and short earlier suspension of exports. If
all the applications were processed immediately and holds lifted, Iraq
will have overspent by $6 billion (5). The revenue is substantially less
than anticipated: Phase X's Distribution plan was devised on the
expectation that there would be $5.5 bn for the humanitarian programme;
actual revenue minus the Security Council-imposed deductions will be more
of the order of $3.7 bn, of which 1.6 bn goes to pay off the shortfall
from the earlier period (Phase IX). It seems to expenditure will have to
be cut quite considerably for future plans.

(b) "delays in the delivery of goods to Iraq by the suppliers long after
letters of credit have been issued" (4). The SG remarks on this in
particular with regard to food imports, attributing the delays to the
particular difficulties arising from the sanctions situation: "the absence
of performance bonds in the contracts does not encourage suppliers to
honour their contractual obligations." (36).



Glen Rangwala

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