Press Centre 2003/11/19: General Information

Termination of the Oil-For-Food-Programme

The United Nations will terminate its administration of the multi-billion dollar Oil-for-Food Programme (OFFP) in Iraq at midnight on the 21st of November.

New York, 19th November 2003 -- Operational responsibility for the seven-year-old programme, including all humanitarian projects funded by oil revenues, assets ranging from schools to power stations and all OFFP contracts with suppliers will be transferred to the Coalition Provisional Authority (CPA).

The balance of unencumbered funds held in the UN Iraq Account will be transferred to the Development Fund for Iraq, which is under the direction of the CPA.

The UN has already transferred $3 billion to the Development Fund from the UN Iraq Account, where some $1.6 billion remains.

A ceremony is to take place Friday in Erbil (northern Iraq), marking the termination of the UN OFFP and its transfer to the CPA.

As stipulated by Security Council resolution 1483 (22nd May 2003), there will be no further role of the UN in operating the humanitarian programmes funded through the OFFP. However, a pipeline of some $8.2 billion in humanitarian supplies and equipment continues to be delivered and the CPA has indicated that it will maintain most of the ongoing projects and operations, eventually turning them over to Iraqi authorities.

At its peak, 893 international staff and 3,600 Iraqis had worked for the Programme: most international staff left Iraq in the wake of the Baghdad bombing on the 19th of August, while national staff continued operations. The CPA has indicated that most of the 2,600 Iraqi staff associated with project implementation in the three northern governorates will be retained.

In financial terms the OFFP was the largest programme the UN has ever administered. Between 1996 and the onset of war in March, the OFFP achieved progressive improvements in health, education and public infrastructure (see below: Achievements of the Oil-For-Food-Programme). Malnutrition rates among children were reduced by 50% in six years and more houses were constructed in 2002 than in 1990.

The OFFP has also been one of the most efficient of UN programmes, operating through nine agencies with a 2.2% overhead.

The UN Security Council established the OFFP in 1995 in response to a humanitarian crisis that followed the comprehensive sanctions imposed on Iraq following its 1990 invasion of Kuwait. Under the programme, 3.4 billion barrels of oil were exported, with 72% of the revenue going toward humanitarian aid. The balance was allocated to Gulf War reparations (25%), UN administrative costs (2.2%) and the weapons inspection programmes (0.8%).

The UN’s Oil-for-Food Programme has benefited tens of millions of Iraqis by using Iraqi oil revenues to purchase and manage some $46 billion worth of humanitarian assistance, supplies and projects. Proceeds from oil exports bought food and medicine; built schools, clinics and housing; maintained and rehabilitated electrical supply and oil infrastructure; improved water treatment and distribution. Virtually all Iraqis received food through its country-wide network; 60% were totally dependent upon food rations. Food imports totalled more than 500,000 tonnes a month, and deliveries have been continuing despite the current conflict and insecurity.

In the northern Iraqi governorates of Erbil, Dahuk and Sulaymaniyah, nine United Nations agencies implemented the OFFP (WHO, FAO, WFP, UNDP, UN-Habitat, UNICEF, UNESCO, UNOPS, ITU).

In the fifteen governorates of southern and central Iraq, the OFFP was managed by the former Government of Iraq with the UN monitoring for effective and equitable distribution. Some 44,000 Iraqi food agents handled food distribution. UN agents also monitored oil shipments at export points and authenticated OFFP supplies at entry points.

An orderly hand-over of Programme assets and operations by the Security Council’s 21st of November deadline was accomplished on time and in the face of chronic insecurity following the 19th of August bombing of UN headquarters in Baghdad that led to the temporary withdrawal of most UN international staff. Still, the UN has sustained essential humanitarian assistance through the dedication of some 4,000 Iraqi national staff.

UN agencies are handing over all documents and dossiers for OFFP-funded projects they managed. They have also completed the renegotiation of contracts with suppliers as stipulated by the Security Council.

After the 21st of November, UN agencies will continue their mandated activities in humanitarian assistance to Iraq with revenues received from donor countries through humanitarian appeals in March and June 2003. Iraqi authorities may request further technical assistance from them.

Achievements of the Oil-For-Food-Programme

• Food: the nutritional value of the monthly food basket distributed countrywide almost doubled between 1996 and 2002, from about 1,200 to about 2,200 kilocalories per person per day.
• Health: between 1997 and 2002, the capacity to undertake major surgeries increased by 40% and laboratory investigations by 25% in the centre and south of Iraq. Communicable diseases, including cholera, malaria, measles, mumps, meningitis and tuberculosis were reduced in the centre/south during this period. As of the 29th of May 2003 there had been no cases of polio in Iraq for more than three years. In the three northern governorates, cholera was eradicated and the incidence of malaria was reduced to the 1991 level. Vaccinations reduced measles morbidity considerably.
• Nutrition: malnutrition rates in 2002 in the centre/south were half those of 1996 among children under the age of five. In the three northern governorates, there was a 56% reduction in chronic malnutrition and a 44% reduction in the incidence of underweight children under five.
• Transportation: before 20 March 2003, private and public road transport was rehabilitated to varying degrees, and safe, reliable inter-city public passenger transportation services were restored.
• Water and sanitation: the deterioration of water facilities was halted. OFFP supplies and equipment improved access to potable water, and helped to reduce the incidence of water-borne illnesses, including diarrhœa.
• Agriculture: agricultural improvements enabled large segments of the population to purchase produce at affordable prices. In the centre/south, poultry and egg production doubled. In the three northern governorates, OFFP supplies contributed to a substantial increase in agricultural production.
• Electricity: access to electricity was extended and supply became more reliable. During the summer of 2002, there were no planned power cuts in the city of Baghdad.
• Telecommunication: improved infrastructure in the centre/south was reflected in the increased number of telephone calls placed successfully.
• Education: the distribution of 1.2 million school desks met 60% of the needs at primary and secondary schools in the centre/south where, in 1996, students had sat on bare floors. In the northern governorates, the Programme helped to increase primary school attendance by 32% between 1996 and 2002 and secondary school attendance by over 74%. Most schools operated in two rather than three shifts, as a result of the greater availability of educational facilities.
• Residential construction: in late 2002, housing construction in the centre/south was expected to reach 14,432,896m², compared with 13,930,490m² in 1990 and 347,892m² in 1996. This includes 19,051 dwelling units constructed between 1996 and early 2003 to house some 114,300 internally displaced and otherwise vulnerable persons. Over the same period, some 685 schools were built or repaired, benefiting 190,000 students, as well as 127 health centres; 99 agricultural and veterinary facilities; 49 civic buildings; 853 kilometres of water systems and 2,800 kilometres of roads and bridges.
• Demining activities: between 1998 and 2002, the UNOPS Mine Action Programme cleared some 76,500 mines from 9,100,000m² of land, of which 3.950,000m² were returned to the local population for productive use. The programme also worked with some 2,000 mine accident and war victims, providing surgery, prosthetics and other rehabilitation services. Tens of thousands of women and children received Mine Risk education. Mined areas yet to be cleared were marked with warning signs.

Duration and Expenditure of the Oil-For-Food-Programme

Duration of Programme: December 1996 to 21st of November 2003.

Total value of oil exports: $65 billion.

Total oil income allocated to OFFP: $46 billion -- balance allocated to Gulf War reparations through a Compensation Fund (25% since December 2000); UN administrative and operational costs (2.2%); weapons inspection programme, UNMOVIC and IAEA (0.8%).

• $38 billion to fifteen governorates in south/central Iraq.
• $8.1 billion to three governorates in northern Iraq.
• Unutilised funds will be transferred to the Iraq Development Fund as required under SCR 1483.

Interest income of $2.7 billion to June 2003, all allocated for the procurement of humanitarian supplies.

Expenditures

• Total value of humanitarian goods delivered (and suppliers paid): $31 billion plus.
• The total value of goods currently in humanitarian pipeline is $8.2 billion. More than 86% of these contracts signed by the previous government have been prioritised in consultations between the UN, Coalition Provisional Authority and Iraqi authorities and about 91% of the prioritised contracts have so far been renegotiated by UN agencies. The money for these contracts remains in the UN/Iraq account to be paid out after the UN has confirmed the supplies were delivered to Iraq.
• $3.6 billion approved for projects to be implemented by UN agencies for approved projects.
• $3 billion transferred from UN/Iraq account to the Development Fund for Iraq. The first $1 billion was transferred on the 28th of May 2003. A second transfer was made at the end of October 2003 and a third on the18th of November.
• Approximately $1.6 billion in uncommitted funds are in UN/Iraq Account.

Please note that total expenditures do not reflect goods in transit or fluctuating currency exchange rates.

Resolution 986 apportioned 2.2% of the oil revenue to cover UN administrative and operational costs of the programme. As of the 11th of June 2003, some $400 million remained in the 2.2% sub-account, of which $106.6 million will be needed during the phasing-out/termination period; $16 million will be kept as contingency, leaving $277.4 million for transfer to the Iraq Development Fund. The transfer has not yet taken place.

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