On the firing line

Oil-for-food, the humanitarian exception to Iraq's economic embargo, allows Iraq to export oil. Iraq may import goods in return, but all such purchases must be approved by the 661 Committee. It is a delicate job, for which the Committee is constantly exposed to criticism.

On the one hand, purchase requests must be reviewed against perceived attempts by the Iraq government to obtain components for high-tech weaponry. On the other hand, an ancient land's welfare, and that of its 23-million inhabitants, rests on the Committee's shoulders.

Iraq - which in pre-war years imported roughly 2/3 to 3/4 of its food, and which has little advanced industrial base - is desperately dependent upon imports. It is vulnerable to blockade. If an antagonist sought quietly to weaken Iraq, a bit of fiddling on the logistical strings would wreak havoc.

And this charge has, in fact, repeatedly been made: that selected members of the 661 Committee are disrupting the flow of goods into Iraq by withholding contract approval. Further, it's charged that they're doing so for purely political reasons, and that expressed concerns over dual-use goods (civilian / military) are but a pretext.

The culprit in this political maneuvering was understood to be the United States, but since the 661 Committee's operations weren't publicized, no specifics were known. This changed in March 2001.

Uncensored: The 661 Committee contract report

In March 2001, the Secretary General released his quarterly report on Iraq. The report was accompanied by a 4-megabyte spreadsheet containing line-item detail of all 661 Committee contract dispositions dating to early 1997 (when OFF revenue first became available). The UN's Office of the Iraq Programme quickly realized the "error" (UN scuttlebut points to a whistleblower's protest), and the uncensored spreadsheet was replaced with a summary version less than 1% the original size.

Too late, as it turned out. By the time the switch was made, the uncensored version was widely downloaded and copies saved, one of which (downloaded March 14) is available below.

Uploaded are two Microsoft Excel spreadsheets: the censored [BVSChart8March01(Revised).xls] and uncensored [BVSchart.xls] 661 Committee reports.

When interpreting this report, note that non-blank "Hold By" values indicate active holds. The sum of these entries equals total holds noted in Kofi Annan's latest report, $3.3 billion. Unfortunately, the XLS lacks historical information: applications that once were held -- but which were later approved -- appear only as "Approved" in this report. Thus, the number of logistical disruptions are even greater than indicated.

Of $3.33bn in current holds, $3.26bn is tied to U.S.

The uncensored report confirms all speculation:

The U.S. is responsible, solely or with partner, for fully 98% of all contract holds.

The value of all applications considered by the OIP to date is $24.26bn. Of this amount, $3.33bn remains on hold. $3.26bn of this amount can be tied to the U.S. Some figures:

• The U.S. acted alone in holding $2.72bn in contracts
• The U.S. acted jointly with the UK to hold an additional $.54bn
• In contrast, the UK acted alone to hold only an additional $.06bn
• Holds by other countries (China, the Ukraine, and Ireland) are extremely rare, and total only $.005bn.

U.S. holds targeted almost all sectors of the economy

In addition to the quantity of U.S. holds, and its isolation in appplying them, the report also shows that holds were applied indiscriminately across almost all sectors of the Iraq economy. "Food basket" was the only sector left untouched (though even "food handling" equipment was heavily targeted).

The data in the report raise serious questions:

• If the U.S. is applying holds as chartered by the program, then why is it so often acting alone?
• If the U.S. is targeting dual use goods, then why are the holds applied so indiscriminately?

Complimentarity: "For want of a nail, a horseshoe ..."

In practical terms, every single hold's disruptive leverage is magnified due to complimentarity: the functional dependencies among related goods. Complimenetarity recalls the old adage, where "For want of a nail ..." a horseshoe, then horse, then knight, then kingdom were lost.

As OIP Executive Director Benon Sevan told Reuters (Aug 15, 2000), "the nature of the goods (on hold) made them essential to the whole operation. 'You can't distribute supplies if you don't have trucks'". As others have elaborated, you can't use syringes without needles, you can't store medicines without refrigeration, and you can't repair an oil well head or tanker port unless all the machinery is at hand.

Warnings from the Secretary General

The humanitarian impact of contract holds has spurred warnings from the highest levels of the United Nations. A ampling is listed below, beginning with the most recent and running back almost two years.

(8 March 2001: The Executive Director of OIP presents phase IX "90-day" report to the Security Council): "I should like to reiterate the Secretary-General’s grave concern over the unacceptably high level of holds placed on applications, the total value of which had reached $3.333 billion, as at 28 February 2000 (sic - probably should be 2001), involving a total of 1,662 applications."

(4 December 2000: OIP Executive Director, Benon V. Sevan, presents the 180-day report (S/2000/1132) to the Security Council): "In his report before you, the Secretary-General has reiterated his continuing concern about the unacceptably high level of the applications placed on hold."

(3 October 2000: In a letter (S/2000/950) to the President of the Security Council): "... the Secretary-General expresses serious concern on the total value of holds on applications for humanitarian supplies."

(21 September 2000: OIP Executive Director, Benon V. Sevan, presents the 90-day report of the Secretary-General to the Security Council): "... we continue to experience serious delays and the number of holds placed on applications has become unacceptably high."

(1 June 2000: The Secretary-General issues the 180-day report (S/2000/520) on phase VII): Implementation in all sectors of the programme under the ESB (53 per cent) account has been adversely affected by the slow rate of contracting by the Government of Iraq under phase VII, the large number of contracts placed on hold by the Security Council Committee, particularly in food handling, water and sanitation, electricity, transport and telecommunications ..."

(20 April 2000: Benon V. Sevan, at a formal meeting of the 661 Committee on the issue of “holds”): "the effectiveness of the programme has suffered considerably ... because of the very large number of applications on hold.

(1 March 2000): "In line with para. 17 of resolution 1284 (1999), the UN begins implementation of accelerated or "fast track" procedures for the approval by notification of contracts for humanitarian supplies as per lists approved by the 661 Committee.
[Comment: Note the timing. Only now - almost 10-years after sanctions began - are "fast tracks" opened for the most inoffensive of humanitarian supplies.]

(7 February 2000: Briefing by Benon V. Sevan , OIP Executive Director, to the Security Council): "Mr President, this is my first time speaking to the newly constituted Council, which means that five of the delegations here have not yet heard me voicing our serious concern at the persistent high level of holds placed on applications for humanitarian supplies and especially on oil sector equipment."

(14 January 2000: The Secretary-General forwards the report of the oil industry expert on Iraq's oil industry needs ): "... if all holds were released and subsequent shipments speedily processed and delivered, the target of 3.3 to 3.4 million barrels per day is thought to be realistic; a more likely scenario, as estimated by the Ministry of Oil, would be a reduction in production of some 300,000 barrels per day."

(12 November 1999: Benon V. Sevan, OIP Executive Director, presents the Secretary-General's 180 Day report ): "I wish to provide the Council today with the consequences of holds in respect of food production and the electricity sector. ... FAO estimates ... that some of these holds have resulted in significant reductions in the use of land for grain crops and the loss of as much as 20,000 tons of wheat production. FAO also estimates that delays in the arrival of vaccines have resulted in the loss of around seven million kilogrammes of meat."

"In the electricity sector ... Iraq could potentially achieve a 50 per cent increase in electricity supply if these holds were released."

(28 April 1999: The review and assessment report ): "A number of difficulties and bottlenecks were experienced in the first year of the programme with respect to the processing of contracts."

Two years on, this observation appears remarkably prescient.