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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). 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