Oil for Food Programme

Office of the Iraq Programme
Oil-for-Food

Oil-for-food - the basic facts

SANCTIONS IMPOSED: In August 1990 the Security Council in resolution 661 (1990) imposed comprehensive sanctions on Iraq and in April 1991 in resolution 687 set out the conditions for lifting the sanctions. Throughout 1991 the United Nations expressed grave concern over the humanitarian situation and proposed various measures which would permit Iraq to sell limited quantities of oil in return for humanitarian supplies notably in Security Council resolutions 706 and 712 in August and September 1991. The Government of Iraq declined to pursue these and subsequent initiatives.

RESOLUTION 986: Concerned about the suffering of the civilian population as a result of the continuing sanctions, the UN Security Council adopted resolution 986 (April 1995) with a revised oil-for-food formula as "a temporary measure to provide for the humanitarian needs of the Iraqi people". Iraq at first refused its terms. In May 1996, after extended negotiations with the UN Secretariat, Iraq signed a Memorandum of Understanding (MOU) setting out detailed arrangements for the implementation of SCR 986. The Government of Iraq is responsible for implementation of the programme in the 15 governorates in the centre and south. On behalf of the Government, the United Nations implements the programme in the three northern governorates of Dahuk, Sulaymaniyah and Erbil.

HOW THE MONEY IS SPENT: Under the terms of SCR 986 the revenues raised in each six month period are divided: 53% for food, medicine and humanitarian supplies in the centre and south, 13% for food, medicine and humanitarian supplies in the three northern governorates, 30% to the UN Compensation Fund, 2.2% for the UN's costs in administering the programme (415 international staff and 1300 local staff in Iraq plus 67 in New York), 0.8% for the adminstrative costs of the UN Special Commission (UNSCOM) and 1% to the Escrow account. For the 53% account, the Government of Iraq enters into contracts with suppliers of its choosing. Those contracts are processed by the Office of the Iraq Programme and submitted to the Security Council’s 661 Committee for approval.

OIL-FOR-FOOD BEGINS: Phase I ran from 10 December 1996 to 7 June 1997. The first oil was exported on 15 December 1996 and the first contracts financed by the sale of oil were approved in January 1997. First shipments of food arrived in March 1997, first medicines arrived in May 1997. The Security Council has continued the programme in 180 day periods. The current oil exporting period is Phase VI authorized by SCR 1242 (1998) and running from 25 May 1999 to 20 November 1999.

IMPROVING EFFICIENCY: October 1997, citing a need to improve the speed of implementation the Secretary-General carried out a comprehensive review of the process of contracting, processing of applications, approvals, procurement and shipping of humanitarian goods. The Office of the Iraq Programme (OIP) was established to consolidate the management of hitherto dispersed activities of the UN under SCR 661 and SCR 986. Benon Sevan (Cyprus) was appointed as Executive Director of the OIP. In September 1998 Hans von Sponeck (Germany) was appointed as humanitarian coordinator in Iraq.

EXPANSION and SPARE PARTS: February 1998,. the Secretary-General proposed that the ceiling of US$2 billion in oil sales every six months be increased to US$ 5.265 billion providing US$3.4 billion for the humanitarian programme. The Security Council in resolution 1153 approved the expansion. Oil industry experts reported in April on the "lamentable state" of the oil industry and indicated the oil production level authorized by the Security Council was well beyond Iraq’s capacity at current prices. Resolution 1175 in June 1998 authorized the import of $300 million worth of oil spares and equipment funded under the humanitarian programme. Resolutions 1210 (1998) and 1242 (1999) each authorised an additional $300 million worth of equipment for the oil sector.

DISTRIBUTION PLAN VI: was approved in June 1999, projecting US$3.004billion in humanitarian purchases from an estimated US$4.2billion revenue from oil sales. $915 million is allocated for food; $207m for food handling equipment, $250m for medical supplies and equipment, $300 million for oil sector equipment, $440m for supporting electricity production and distribution; $274m for agriculture, $280m for repairing water and sanitation systems and $1127 million for education with allocations for settlement rehabilitation ($54m), demining ($9m) and nutrition ($18m) programmes in the northern governorates. The Government also proposed, but the Secretary-General did not endorse, allocations for banking requirements.

FOOD & MEDICINE: Since the first oil sales in December 1996, $6156.8 million has been allocated for the purchase of humanitarian supplies. As at 31 January 1999, some $3.7 billion worth of food and US$690 million worth of medicines and medical supplies have arrived in Iraq. The average daily food ration gradually increased from around 1275 kilocalories in 1996 to around 2000 kilocalories in January 1999. Since early 1999, OIP Executive Director, Benon Sevan, has expressed concern at the slow distribution of medicine, medical supplies and equipment to hospitals and clinics in Iraq and the delays in the purchase of therapeutic milk and high protein biscuits designed to address maternal/infant health problems.

FLUCTUATING OIL PRICES: From early 1998 through to early 1999 oil prices plunged depriving Iraq of the ability to export oil to the limits set by resolutions 1153 and 1042. Despite the recovery in oil prices in mid-1999, Benon Sevan emphasised that there was still a "humanitarian deficit" caused by revenue shortfalls in Phases IV and V of around $3 billion. Revenues for Phase VI appear likely to exceed the ceiling set by resolution 1242 (1999).

ADDITIONAL INFORMATION: For more detailed information, including the full text of the current distribution plan, the Secretary-General's reports; Security Council resolutions and weekly updates on the working of the oil-for-food programme please consult the OIP website at www.un.org/depts/oip.

Produced for media and public information – not an official United Nations Document
For further information please contact John Mills, OIP - NY, 1.212.9631646