PRESS BRIEFING ON ‘OIL-FOR-FOOD’ PROGRAMME

Despite shortcomings, the “oil-for-food” programme, established by the Security Council, had been successful in mitigating the devastating consequences of sanctions for the Iraqi people, the Executive Director of the Office of the Iraq Programme told correspondents this afternoon at a Headquarters press briefing.

Benon V. Sevan said, although there had been criticism from all sides, the programme had, for instance, increased the daily kilocalories of the food basket distributed to the Iraqi people from 1,000 per person to 2,200.  Because of the programme, however, the Iraqi people had become more reliant on the Government;  90 per cent of the population depended on the food basket, and for some 60 per cent the programme was the only source of income.  That was why certain provisions of the programme must continue -- no matter who was in charge -– until the economy in Iraq recovered and people had some employment opportunities.

He stressed that one should have nothing but admiration for the resilience of the Iraqi people.  They had “fantastic expertise” and could run their country, if allowed freedom and control over natural resources.  They had managed their resources even under the most restrictive circumstances, producing 2 million barrels of oil a day most of the time.

Asked how critical resumption of oil exports was in order to avoid a financial crisis for the programme, Mr. Sevan said there were now $10.1 billion worth of reviewed, approved and fully funded contracts.  The programme also had $7.1 billion processed contracts, pending funding, and $7 billion of registered contracts that remain unprocessed due to a shortfall in funding.  If oil exports were resumed today, there were a sufficient number of contracts approved to make oil exports possible for the next 90 days.  The escrow account had unencumbered funds of $3.2 billion.

Council resolution 1472 of 28 March -- article 4 of which had been extended yesterday until 3 June -- authorized the Secretary-General to utilize what was available in the pipeline for goods on a temporary basis to meet emergency needs. With the extension of 21 days under the new resolution, the programme would be able to import into Iraq $600 million to $700 million worth of supplies under approved contracts.

The goods in the pipeline had been approved during peacetime, he said. However, different items were needed for emergency purposes. The Secretary-General had, therefore, authority to order medical supplies under new contracts, if they were not available under approved contracts.  The short period of time available to accomplish all that before 3 June, therefore, meant a race against the clock. After resolution 1472 had been adopted, it had taken the Office 11 days to contact contractors and start renegotiating contracts. Updates would be posted on the Web.

Answering questions about the status of contracts, he said it was essential that the Council address that matter.  Before resolution 1472, the Secretariat was not allowed to contact suppliers.  The only time the programme was aware of a contract was when the permanent mission of a supplier submitted the contract. 

Now, the Office had to deal with a flood of calls from suppliers and permanent representatives to find out about the status of contracts.  It was important, therefore, that the Council take a decision soon to determine the status of the contracts.

Mr. Sevan said he did not accept the idea that, because a contract came from a supplier in a certain country, it was automatically a worthless contract.  The criteria should be that what was contracted for was indeed needed, regardless of the nationality of the contractor.  The nationality of the contractor also did not necessarily reflect the nationality of origin.  Volvo trucks, which were produced in Sweden, for instance, could be bought in Arabian countries.

Concerning the legality of contracts entered into by the Iraqi Government, he said it was up to the Council, based on legal advice, to decide on the validity of those contracts.

As to how long it would take to dismantle the programme if the Council would decide to do so, and how the lifting of sanctions could be reconciled with continuation of the programme, Mr. Sevan said he did not want to speculate beyond 3 June, when resolution 1476 would expire, because he did not want anybody to think the programme would be expanded simply to provide job security.  However, whatever decisions were taken, certain provisions of the programme must be continued in one form or the other, regardless of the authority under which it would operate.

In answer to a question about the United Nations “flash appeal” for

$2.2 billion, he said that appeal was still “flashing” because the goods now available in the oil-for-food “pipeline” were ordered during peacetime and not necessarily needed now, whereas there was now a need for emergency items. Resolution 1472 had certain restrictions and there was also uncertainty about arrival dates of food.  It was, therefore, urgent to acquire additional supplies and items not in the pipeline.  The flash-appeal was a “security blanket”.

Asked if it would be a breach of Council resolutions for Jay Garner, the American administrator of Iraq, to start selling and exporting oil before 3 June, Mr. Sevan said that the Council resolutions stood and he left it to others to conclude whether or not it would be a breach.

Commenting on a question about delinking the sanctions from the oil-for-food programme, he said anything was possible if people worked together creatively. Whatever was done would be done in the best interest of the Iraqi people.

* *** *