Oil-for-Food Programme
The Oil-for-Food Programme (OIP) was established by the United Nations in 1995 (under UN Security Council Resolution 986)[1] to allow Iraq to sell oil on the world market in exchange for food, medicine, and other humanitarian needs for ordinary Iraqi citizens without allowing Iraq to boost its military capabilities.
Abbreviation
The programme was introduced by United States President Bill Clinton's administration in 1995,[2] as a response to arguments that ordinary Iraqi citizens were inordinately affected by the international economic sanctions aimed at the demilitarisation of Saddam Hussein's Iraq, imposed in the wake of the first Gulf War. The sanctions were discontinued on 21 November 2003 after the U.S. invasion of Iraq, and the humanitarian functions turned over to the Coalition Provisional Authority.[3]
The programme was de facto terminated in 2003 and de jure terminated in 2010. Although the sanctions were effective, there were revelations of widespread corruption in the programme and abuse of its funds.
Background and design[edit]
The Oil-for-Food Programme was instituted to relieve the extended suffering of civilians as the result of the United Nations' imposition of comprehensive sanctions on Iraq following Iraq's invasion of Kuwait in August 1990. Security Council Resolution 706 of 15 August 1991 was introduced to allow the sale of Iraqi oil in exchange for food.[4]
Security Council Resolution 712 of 19 September 1991 confirmed that Iraq could sell up to US$1.6 billion in oil to fund an Oil-For-Food Programme.[5] After an initial refusal, Iraq signed a memorandum of understanding (MOU) in May 1996 for arrangements to be taken to implement that resolution.
The Oil-for-Food Programme started in December 1996, and the first shipments of food arrived in March 1997. Sixty percent of Iraq's twenty-six million people were solely dependent on rations from the oil-for-food plan.
The programme used an escrow system. Oil exported from Iraq was paid for by the recipient into an escrow account possessed until 2001 by BNP Paribas bank, rather than to the Iraqi government. The money was then apportioned to pay for war reparations to Kuwait, ongoing coalition and United Nations operations within Iraq. The remainder, the majority of the revenue, was available to the Iraqi government to purchase regulated items.
The Iraqi government was permitted to purchase only items that were not embargoed under the economic sanctions. Certain items, such as raw foodstuffs, were expedited for immediate shipment, but requests for most items, including simple things such as pencils and folic acid, were reviewed in a process that typically took six months before shipment was authorized. Items deemed to have any potential application in chemical, biological or nuclear weapons systems development were not available to the regime, regardless of stated purpose.
Financial statistics[edit]
Over US$53 billion worth of Iraqi oil was sold on the world market. About US$46 billion of this was intended to provide for the humanitarian needs of the Iraqi people such as food and medicine, given the context of international economic sanctions. A considerable portion was spent on Gulf War reparations paid through a compensation fund (25% starting December 2000). UN administrative and operational costs for the programme was US$1.2 billion; the cost of the weapons inspection programme was also paid from these funds. Internal audits have not been made public.[6]
Investigations[edit]
GAO investigation[edit]
After the 2003 invasion of Iraq and subsequent Coalition victory over the Iraqi Army, the US Government Accountability Office (GAO) was given the task of finalizing all Oil-for-Food-related supply contracts made with the now-defunct regime and of tracking down the personal fortunes of former regime members.[42] During the execution of this task, the GAO found weaknesses in the programme that allowed kickbacks and other sources of wealth for Saddam Hussein. The GAO estimates that the Saddam Hussein regime generated $10.1 billion in illegal revenues. This figure includes $5.7 billion from oil smuggling and $4.4 billion in illicit surcharges on oil sales and after-sales charges on suppliers. The scale of the fraud was far more extensive than the GAO had previously estimated. A U.S. Department of Defense study, cited by the GAO, evaluated 759 contracts administered through the Oil-for-Food Programme and found that nearly half had been overpriced, by an average of 21 percent.[43] Unlike the 661 committee, members of the Security Council had the authority to launch investigations into contracts and to stop any contract they did not like. The British and the Americans had turned down hundreds of Oil-for-Food contract requests, but these were blocked primarily on the grounds that the items being imported were dual-use technologies.
To quote the GAO report, in its summary: