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UN Office for the Coordination of Humanitarian Affairs |
IRAQ: Focus on Oil-for-Food handover
BAGHDAD, 20 November 2003 (IRIN) - After months of negotiations, the World Food Programme (WFP) is set to hand over nearly 900 United Nations Oil-For-Food contracts covering food, transport and handling equipment to the US-led Coalition Provisional Authority (CPA) running Iraq, and the Iraqi trade ministry.
According to plans laid down by recent UN Security Council resolution 1483, no new Oil-for-Food contracts will be signed with effect from 21 November.
The need to renegotiate the contracts came with the 'buyer' disappearing together with the government of Saddam Hussein. "There was no longer a government in place to implement and receive the contracts. If no one had taken the contracts up again, they would have been null and void," Mia Turner, a WFP spokeswoman in the Jordanian capital, Amman, told IRIN.
Moreover, the logistics had changed. Previously, arrangements had been made on where the goods would be delivered, but after the war the terms of the contract had to fit the new conditions. For example, in some cases routing had to be changed because of security conditions.
"Since WFP was in charge of the food and transport sectors under the Oil-for-Food programme, it was natural that it was given the food, food-handling and transport equipment contracts to renegotiate," she explained.
IRAQIS TO RESUME DISTRIBUTION
Now Iraqi workers are looking forward to resuming their jobs of distributing food rations across the country. The Oil-For-Food programme started in December 1996 to ensure that the Iraqi people had enough to eat under international sanctions. UN figures for the programme show that it handled more than US $65 billion over six years. The oil-sale money was put in escrow accounts designed to keep it secure from access by former President Saddam Hussein.
A team of WFP workers has been checking all contracts against the value of the goods being imported, Turner said. The United Nations Development Programme, the Office of the United Nations High Commissioner for Refugees and the United Nations Children’s Fund also handled smaller components of the massive humanitarian programme.
"These were companies that were chosen by the former Iraqi government," Turner said. "They made sure that the contracts were based on the real value of the goods. If the companies didn’t want to take on the real value, they wouldn’t get the business," she explained.
About $10 billion was spent last year on food and humanitarian aid for the country’s estimated 27 million people. Some 500,000 mt of food was bought and shipped to Iraq every month under the programme. Some revenues were also used to pay compensation to Kuwaiti war victims, for a UN weapons inspection programme, and to administer the programme.
PROGRAMME TO CONTINUE FOR SOME MONTHS
There will be enough food to continue the Oil-For-Food programme for several months - a main benefit of the negotiations, Torben Due, WFP’s country representative for Iraq, said in a press release. An estimated $8.2 billion worth of goods is still in the pipeline as the CPA takes over, according to information from the UN. Some $2.1 billion is being held in an escrow account, which is expected to be administered by the CPA.
"The number of contracts already amended ensures that Iraq will have enough humanitarian food available until June 2004," Due said.
Iraqi trade ministry workers welcomed the chance to help run the programme, Fakhr al-Din Rashan, the deputy trade minister, told IRIN in the capital, Baghdad. They had run the programme from 1996 until April 2003, when US-led troops came into Iraq, so they knew what to do, he said.
"We appreciate all they have done, but let us be frank, before the World Food Programme, the Ministry of Trade did all of the distribution and supply of food in Iraq," Rashan said. "We have all of the warehouses, the staff, the transportation, so handing over will be easy," he added.
The food under the programme was distributed under the Public Distribution System (PDS). The US and the CPA indicated at the Madrid donor conference in October that the PDS would continue in its current form until at least mid-2004.
SADDAM TOOK KICKBACKS
In another twist to the story, when Coalition forces entered Iraq, trade ministry officials and others drew attention to documents showing that Saddam Hussein took kickbacks of at least 10 percent from all Oil-For-Food vendors, which was another reason for the need to renegotiate the contracts, according to Rashan and others. However, the UN has said it was not aware of the kickbacks, according to Ian Steele, a spokesman in New York for the Iraq programme.
"We were not in a position to know about arrangements that might have been made bilaterally between the former government and its suppliers outside of the UN contract review process," Steele said.
US-led administrators had been going through all existing contracts to get the 10 percent fee taken off vendors’ bills, Rashan said. Others say UN inspectors would not have known about the kickback fee, because it was tagged on after the original contracts had been signed.
The 10 percent fee collected may also add up to billions. For example, health-ministry-related contracts totalled $879 million last year, so 10 percent would be $88 million, according to Scott Svabek, an American administrator working in the ministry.
Today, shops in the Iraqi capital and around the country are filled with fresh food and vegetables and imported products, but people on the street complain they cannot afford the food. The unemployment rate is currently at least 60 percent, according to unofficial estimates.
Budgets prepared by the trade ministry and CPA officials for 2004 call for $1.2 billion for food, as Iraq works out how to transition to a free market economy. In the future, for example, people who needed it might receive money to buy the food they need instead of the actual items, Rashan said. "It is very complicated," he noted. "We don’t want to create another problem in this context."
IRAQIS TRAINED
Meanwhile, the WFP has trained Iraqis to handle the cross-border transportation, warehouse and databank management, monitoring and the negotiation of contracts, according to a press release about the handover. A planned new "operations centre" will help officials in Baghdad communicate with border-control posts around Iraq, not an easy task in view of the bombing which knocked out much of the country’s telecommunications network.
Virtually all of Iraq’s 27 million people get rice, flour, sugar, chickpeas, tea, milk and other basic food items after showing a ration card and paying about 20 cents under the Oil-For-Food programme. The food actually costs about $15. About 60 percent of the population depends entirely on the programme for basic food necessities, according to CPA estimates in May. Another 30 percent has food ration cards, but also has other means of income, according to the CPA.
In northern Iraq, WFP was always responsible for implementing the Oil-For-Food programme, and most of the projects there will be terminated on 21 November. Those that are not terminated will be passed on to the CPA as per Security Council Resolution 1483. The food agency has managed to deliver more than 2 million mt of food to Iraq since its emergency operation started on 1 April in its biggest emergency operation ever.
Themes: (IRIN) Conflict, (IRIN) Food Security, (IRIN) Governance, (IRIN) Human Rights
[ENDS]
This material comes to you via IRIN, a UN humanitarian information unit, but may not necessarily reflect the views of the United Nations or its agencies. If you re-print, copy, archive or re-post this item, please retain this credit and disclaimer. Quotations or extracts should include attribution to the original sources. All materials copyright © UN Office for the Coordination of Humanitarian Affairs 2003
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