Preass Release

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      In recent days the United States Government has waged a war of words against the Government of Iraq concerning the implementation of the Oil-for-Food program, following is Iraq’s response to these allegations:

1- For phase VIII of the oil for Food program and the Memorandum of Understanding (MOU), Iraq has so far concluded contracts at a value of $7.1 billion, which represent 90.6% of that phase allocations. Other contracts are in process now for the rest of allocations. Various reasons prevent companies from submitting of the contracts to the Office of Iraq Program (OIP), including price fluctuations, a matter that makes it unprofitable to implement those contracts by them, especially that the contracts do not include (performance bond) which enforces the supplier to implement any signed contract because the 661 Committee has refused to include such a clause, which preserves Iraq's rights.

2- As the MOU implementation goes ahead, there are increasing difficulties obstructing the contracting process within the framework of this program for the following reasons;

a. Many of Iraq's trade partners are increasingly reluctant to take part in the program's contracts due to the complicated mechanism and many delays in approving the contracts. They have also found that they do not receive the values of the contracts only one month or more after the arrival of the goods in Iraq in contravention with the established commercial practices.
b. As regards the contracts of technical equipment infrastructures such as oil- spare parts, generators, medical appliances and school books printing machines, the contracting process takes a long period of time, as from the submission of offers that are usually enclosed in the technical specifications of the appliances which Iraqi side studies, asking sometimes for samples to be tested by specialized centers (such as ECG and X-ray devices), to the offer reference to a particular company. There are also some contracts, such as oil sector rehabilitation, requiring that the contracting company prepare manufacturing designs that take a long period of time before submitting their relevant offers. Meanwhile, the contracting procedures for other humanitarian needs, Such as foodstuffs, are less complicated because their specifications and prices are well known in world market. This might be the reason why the food contracts of phase VIII were submitted at an early stage and at a value exceeding their allocations as confirmed by OIP letter of 16 January 2001 to the President of the Security Council.
c. It is noteworthy that the contracting process of a particular phase does not 'Start immediately after the phase comes into effect, but rather after the approval of the distribution plan which usually takes one month or one month and a half because of the technical and administrative complications surrounding it's approval
d. All Iraqi ministries suffer from the problems of communicating with foreign suppliers (fax, telex and E-mail) as result of the destruction inflicted upon communications system in Iraq during the 1991 aggression and the blocking by the United States of America and Britain of most of communication sector contracts.

3- While the United States of America and Britain, together with OIP, seek to magnify some difficulties; they neglect the real difficulties preventing the MOU from meeting the minimum of the humanitarian and urgent needs of Iraqi people.

The most important difficulties are as follows:

a. Resolution 986, the MOU and the 661 Committee procedures have imposed long and complicated procedures as well as many obstacles in the way of contract implementation. For instance, every contract takes a minimum of 2-6 months as from the date of signing between the Iraqi side and the supplier to the date of opening the letter of credit, especially when the Office of Iraq program requests additional information about a particular contract in such a case, the contract goes back to the same chain: the supplier, the supplier's foreign ministry, the supplier’s mission to the United Nations, OIP, the 661 Committee and the bank holding Iraq's account. In fact, this complicated and time-consuming mechanism is behind the non-implementation of a good number of contracts in the early phases of MOU.
b. The United States of America and Britain are working to put contracts on hold or delay their approval either in the 661 Committee or by influencing the OIP. The number of contracts put on hold by these two countries since the very beginning of the program, is increasingly growing, a fact which demonstrates a pattern of US-British policy aimed at depriving the people of Iraq of the use of their revenues to meet their humanitarian needs. As of 23 January 2001, the number of contracts put on hold, for phases IV- VIII of the MOU, totaled 1598 contracts at a value of $3.15 billion. In addition, there are other contracts delayed by OIP at the pretext that their documents are or there is an ambiguous line in one of a contract's documents The total value of the contracts delayed by the Office of Iraq Program is more than $820 million. It is clear that this large number of the contracts delayed or put on hold, valued at $4 billion, makes the suppliers reluctant to conclude contracts within the framework of this program since there is no guarantee the OIP or the US arid British representatives in the 661 Committee will not block those contracts for political purposes.;

4- The experience has proved, four years after the implementation of the program that the United States of America and Britain are seeking to empty it of any humanitarian content and turn it into the “Oil-for-Compensation and other UN-Expenditure program). The following figures of the MOU expenditures clearly indicate that the funds paid for compensation exceed those spent on humanitarian purposes, and the administrative, operational and other expenditures depleted significant funds, more than $ 1 billion,

· Total revenues of oil exports under the MOU: $37.5 billion.
· Total of the actual expenditures for the following account:
o Compensation account: $11.5 billion.
o 13% account: $4.728 billion.
o 2.2% account: $780.408 million.
o 53% account: $9.30 billion (of the $ 19.3 billion allocated for humanitarian needs)
· Funds for- humanitarian contracts: $11.774 billion, which include:
· Funds committed for approved contracts, the goods of which have not arrived in Iraq yet: $7.248 million.
· Funds available to cover humanitarian contracts $4,400 billion

5- The United States of America conceives that it can hide the sun with a riddle while it is pursuing a policy of genocide against the people of Iraq, it tries to shed crocodile tears for them.

It is sufficient that the world public opinion as a whole is fully aware that all the contracts blocked by the United States of America are humanitarian in nature; Contract no.800792 for serums and vaccines, contract no.601201 for ambulances and contract no.50845 for chloride to purify water are just examples of the humanitarian contracts put on hold by the United States of America and Britain.

The policy of contracts blocking not only deprives Iraq of the goods of the blocked contracts, but of another contract goods which arrived in Iraq but remained idle pending the arrival of the goods of the blocked contracts because the goods of the two contracts constitute one project which can only be implemented when they are all available.