Troubles Involved with Giving Aid
Intro
Giving aid could be problematic. Especially, when the management who receive it is dishonest and uses it in other ways other than the initial purpose. It is hard to monitor how well aid is being use by recipient countries. Usually the United Nation Security Council is in charge of monitoring all the awarded contracts. In many cases the Security Council does not efficiently do their job of overseeing an Aid Program and corruption can easily take place.
Oil-for-Food Programme
The Oil-for-Food Programme was establish by the United Nations in 1995. The purpose of this programme was to allow Iraq to sell oil on the world market in exchange for food, medicine, and other humaritarian needs for ordinary Iraqi citizens without allowing Iraq to rebuild its military.
This programme was introduced by the US Clinton Administration in 1995, 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 sactions were discontinued in 2003 after the United States invasion of Iraq, and the humanitarian functions turned over to the Coalition Provisional Authority.
As the program ended, there were revelations of corruption involving the funds. Facts today show just how corrupt the UN and Saddam were, while money was suppose to be going to the Iraqi people the money was going to Saddam.
As you can see from the timeline below (see Oil-for-Food Timeline), the Programme started in October 1997, and the first shipments of food arrived in March 1998. The programme used an escrow system. Meaning that the oil exported form Iraq was paid for by the recipient into an escrow account possessed until 2001 by the BNP Paribas bank (Banque Nationale de Paris-Pribas), which is located in New York., rather than directly to the Iraqi government. The money was then apportioned to pay for war reparations to Kuwait and ongoing coalition and United Nations operations within Iraq, with the remainder given to the Iraqi government to purchase regulated items.
Over US$65 billion worth of Iraqi oil were sold on the world market. About US$46 billion of these funds were intended to provide for the humanitarian needs of Iraqi people such as food and medicine in the context of international economic sanctions. About US$18 billion was spent for Gulf War reparations. An estimate of 2.2 percent was used to cover UN administrative and operational costs for the program and 0.8% for the costs for the weapons inspection programme.
Chart A: Planned Distribution of Oil Proceeds
Soure: Independent Inquiry Committee
It was decided that Iraq, and not the United Nations, would choose whom they would sell oil to. This decision empowered Iraq with economic and political leverage to advance its broader interest in overturning the sanctions regime. What Iraq did, is that they gave contract preferences to companies from countries such as Russia, France, and China, because they were sympathetic to Iraq’s wish for an end to sanctions.
In the year 2000, Iraq started to require its oil customers to make side payments to Iraq’s accounts outside of the United Nations escrow account. These customers would have to pay a surcharge of ten cents per barrel, in addition to their separated payments to the escrow account. Many oil buyers refused to pay the requested ten-cent surcharge. Therefore Iraq decided to make mandatory the buyers’ payment of surcharge and also to raise the surcharge to fifty cents per barrel. This action was made without notice to or approval of the United Nations.
Iraq continued to collect the secret surcharges from its oil sales until September 2002. Most of these payments were made to Iraqi-controlled accounts at banks in Jordan and Lebanon. Then this money was transported into Iraq and given to Iraqi government.
Chart B: Oil Surcharges - Flow of Funds
Soure: Independent Inquiry Committee
Timeline
Oil-for-Food Timeline
| 1990 | 2 Aug | Iraq invades Kuwait |
| 6 Aug | UN Security Council Resolution UNSCR 661 passed, creates the "661 Committee" to oversee sanctions imposed on Iraq | |
| 1991 | 3 Aug | UNSCR 687 sets terms for disarmament and Iraq’s capacity to develop weapons of mass destruction |
| 15 Aug | UNSCR 706 authorizing Iraqi to sell oil for humanitarian goods not accepted by the Government of Iraq | |
| 1995 | 14 Apr | UNSCR 986 adopted that creates Oil-for-Food (OFF) program, allowing Iraq to export $2 billion in oil/quarter; Iraq refuses its terms |
| 1996 | 20 May | Iraq and UN Secretariat signed Memorandum of Understanding, implementing UNSCR 986 |
| 10 Dec | First oil pumped in Iraq, proceeds deposited in UN escrow account at Banque Nationale de Paris (BNP) in New York January 15, 1997 | |
| 1997 | 20 Mar | First shipment of supplies is cleared for import into Iraq. Wheat flour distribution began in April |
| 13 Oct | Office of the Iraq Program established, Benon V. Sevan (Cyprus) is appointed Executive Director | |
| 1998 | 20 Feb | UNSCR 1153 adopted, increased Iraqi export ceiling to $5.2 billion/quarter (creating approx. $3.4 billion for humanitarian goods) |
| 19 Jun | UNSCR 1175 adopted, authorized Iraq to import $300 million worth oil industry equipment | |
| 1999 | 17 Dec | UNSCR 1284 passed, establishes United Nations Monitoring, Verification and Inspection Commission (UNMOVIC); lifts all export limits on Iraqi oil |
| 2000 | 1 Mar | Implementation of "fast track" procedures (from UNSCR 1284) for approval of contracts for humanitarian supplies |
| 2002 | 14 May | UNSCR 1409 adopted, extended it another 180 days, introduced the Goods Review List, the biggest change since UNSCR 1284 |
| 28 Oct | 6,000 items approved to be "fast-tracked" | |
| 1 Nov | Inspection team arrives at Ar’ar border with Saudi Arabia crossing, to become operational Nov. 8 | |
| 2003 | 17 Mar | UN Secretary-General withdrew all remaining humanitarian personnel from Iraq due to safety and security concerns |
| 19 Mar | War in Iraq began with bombing of Baghdad | |
| 22 May | UNSCR 1483 adopted; lifts civilian sanctions and provided for termination of Oil-for Food Program within six months | |
| 21 Nov | Oil-for-Food Program handed over to the Coalition Provisional Authority |
Source: oilforfoodfacts.org
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