Campaign Against Sanctions on Iraq
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Guide to Sanctions

[Guide contents & introduction]

3. What is 'oil for food' and isn't it enough?

The 'oil for food' programme, which commenced in December 1996, allows Iraq to export oil and use part of the money raised, which is kept in a UN bank account, to buy basic goods from other countries. Iraq is using its own money to buy these goods: the 'oil for food' programme is not "humanitarian aid" as some US and UK politicians have claimed on occasion. The nature of the programme was established in an agreement between the UN Secretariat and the Government of Iraq from May 1996. This agreement was in turn based upon Security Council Resolution (SCR) 986 of 14 April 1995. The UN initially determined that 53% of the oil revenue would be allocated to the humanitarian programme in the areas under the control of the Iraqi government, 30% would go to pay for compensation claims arising out of the Gulf War, 13% would go to the UN programme in the Kurdish regions of Northern Iraq, and the remainder would be spent on further administrative costs of the UN. The programme is organised in 6 month "phases", with phase XIII beginning on 5 December 2002: every six months the Iraqi government presents a proposal of import contracts to be examined and, if judged adequate, it is approved by the UN Sanctions Committee.

'Oil for food' was never meant to act as a substitute for the independent functioning of the Iraqi economy. Security Council Resolution 986 itself refers to the programme as a "temporary measure". The UN Secretary-General has repeatedly made the same point: for example, in his report of 2 March 2001, he writes that "the programme was never meant to meet all the needs of the Iraqi people and cannot be a substitute for normal economic activity in Iraq." (§154)

The programme has largely prevented the worsening of the humanitarian crisis in Iraq, especially as it has helped to provide for an improved food ration for ordinary Iraqis. The food rations delivered by the Iraqi government under 'oil for food' have reduced malnutrition amongst under-fives in Iraq, but under-nourishment persists due to a wrecked economy. According to a Unicef report from 2002:

"[P]reliminary figures ... show that acute and general malnutrition are now less than half the levels of 1996 ... Despite gains, the present level of child malnutrition remains high compared to 1991 levels, which were already elevated after one year of sanctions. Therefore, more needs to be done by all stakeholders to further reduce malnutrition in Iraq. "

Nevertheless, the programme does not have the capacity to solve the severe humanitarian problems of Iraq. As the Security Council's humanitarian panel reported in March 1999, for Iraq to recover, "the 'oil for food' system alone would not suffice and massive investment would be required in a number of key sectors, including oil, energy, agriculture and sanitation" (§42); furthermore, oil for food "can admittedly only meet but a small fraction of the priority needs of the Iraqi people" (§46).

When Tun Myat, the UN Humanitarian Coordinator in Iraq, returned to New York in October 2000, after six months in Iraq, he emphasised the problem of poverty in a Press Briefing:

"The food distribution system ... now ensures that under the new Distribution Plan over 2,470 kcal of energy of food is being made available to every man, woman and child in the country ... but the fact is, of course, people have become so poor, in some cases, that they can't even afford to eat the food that they've been given free because for many of them, the food ration represents the major part of their income ... they have to sell it in order to buy clothes and shoes or hats or whatever other things that they would require. So the sort of upturn in nutrition that we would all want to be seeing is not happening".

In his June 2000 report, the UN Secretary-General wrote that "clean water and reliable electrical supply are of paramount importance to the welfare of the Iraqi people" (§98). Such basic needs have not been provided by the imports allowed to Iraq under oil for food. In November 2002 the Secretary-General noted that: "Access to potable water is insufficient in both quantity and quality, and in many cases the water and sanitation networks remain in a poor state of repair. On top of this an estimated 500,000 metric tons of solid raw or partially raw sewage is discharged daily into the two rivers, which are the main source of water."

The 'oil for food' procedure has been modified in subsequent Security Council resolutions. In December 1999, Security Council Resolution 1284 endorsed three potential extensions of the programme: the removal of a cap on oil sales permitted by Iraq, the creation of 'green lists' of items which can be imported without individual contract approval of the Sanctions Committee, and the possibility of a 'cash component' to pay for local costs of implementing the programme. After the passing of SCR 1284, 'green lists' were drawn up for sectors such as food, educational supplies, and agricultural and medical materials, but the 'cash component' of 1284 has yet to materialise, even though the UN recognises its crucial importance for reconstructing Iraq's economy and infrastructure, and as a requirement for a sustainable improvement of the humanitarian situation in the country. In the UN Secretary-General's report of 29 November 2000, the statements about the need of a cash component are explicit: "The absence of an appropriate cash component has increasingly hampered the implementation of the programme. A cash component is essential for all sectors of the programme. With the increased funding level and volume of supplies and equipment being delivered to Iraq, the effective implementation cannot be achieved unless there is an early positive resolution to the present impasse" (§133).

In December 2000, Security Council Resolution 1330 reduced to 25% the amount of Iraq's oil revenues to be transferred for compensation claims and increased to 59% the amount to be allocated to the humanitarian programme in the areas under the control of the Iraqi government. Then, in May 2002, Security Council Resolution 1409 allowed all contracts containing neither military goods nor items on a Goods Review List of goods considered to have both civilian and military uses to be processed without the approval of the Sanctions Committee. The measures introduced in this resolution were labelled as 'smart sanctions' by the UK and US.

Benon Sevan, the Executive Director of the UN Office of the Iraq Programme, has repeatedly lamented the "growing tendency to politicize" 'oil for food' and appealed to Security Council members to avoid such tendencies within the relief effort in Iraq, to allow the programme to "maintain its distinct humanitarian identity".

However, in the past year political disagreements between the governments of the US and UK and the government of Iraq have contributed to a growing revenue shortfall in the 'oil for food' programme. In November 2002 the Office of the Iraq Programme reported that there were $3.3 billion of contracts which had been approved, but for which no funds were available.

The report attributed the revenue shortfall to three factors that had caused a reduction in the volume of Iraqi oil exported. First, Iraq's periodic unilateral suspension of its oil exports. Second, concerns by traders over the reliability of uninterrupted Iraqi oil supplies following previous suspensions "and/or possible disruptions as a consequence of current political developments." Third, the absence of an agreement between Iraq and the Sanctions Committee on the way in which the price of Iraqi crude oil is set.

This underfunding of the 'oil for food' programme prompted Benon Sevan to tell the Security Council in September 2002 that:

"Irrespective of improvements in procedures, including those recently adopted by the Council in resolution 1409 (2002), without the necessary funds available in the escrow account it will be impossible to implement the humanitarian programme effectively."