SPECIAL FEATURE: OIL-FOR-FOOD DEAL: ITS IMPLICATIONS ON IRAQI'S FOOD SUPPLY POSITION

FAO has closely monitored the food supply situation in Iraq since August 1990. Field monitoring activities were strengthened and a series of on-the-spot assessments on the food and nutrition situation in the country were carried out. FAO also participated in the various United Nations Inter-Agency Missions fielded to Iraq over the past five years. Through its Special Alerts and Reports FAO/GIEWS has continuously drawn attention of the international community to the deteriorating food supply situation and the devastating consequences of the grave food shortages afflicting the vast majority of the Iraqi population.

Concerned by the serious nutritional and health situation of the Iraqi population and by the risk of a further deterioration in this situation, the UN Security Council adopted Resolution No. 986 (1995) on 14 April 1995. This Resolution provided the basis for a fresh dialogue between the Government of Iraq and the United Nations for the resumption of limited sales of oil for the importation of food, health supplies, medicines and other basic necessities. A Memorandum of Understanding on the implementation of the above-mentioned Resolution was signed by Iraq and the UN on 20 May 1996.

The "oil-for-food" deal, which is subject to renewal, permits the sale, under certain conditions, of U.S.$ 2 billion worth of oil over a six months' period to raise money for purchasing food, medicines and other humanitarian needs. The oil sale and distribution of humanitarian supplies will be conducted under strict UN supervision which includes the monitoring of all aspects of the deal and special provision for food distribution in the three northern Governorates of Arbil, Dihouk and Suleimaniyeh. It is estimated that Iraq will be allowed to sell 750 000 to 800 000 barrels of oil per day. However, this amount will fluctuate according to international oil prices. Before the Gulf War Iraq used to pump more than 3 million barrels per day.

The UN Security Council Resolution No. 986 imposes substantial deductions from the revenue of the oil sale of U.S.$ 2 billion for war reparations, humanitarian programmes in the three northern Governorates and other UN costs, including those for the maintenance of the special commission for the elimination of weapons of mass destruction.

The implementation of the agreement will undoubtedly alleviate the present serious food shortages and ameliorate somewhat the nutritional and health situation of the affected population. It will also regenerate some economic activity and should result in a decrease in the current exorbitant food prices and an appreciation of the Iraqi Dinar against hard currencies. Assuming a renewal of the agreement on the same conditions for an additional six months, the balance of funds available for one year import needs of all humanitarian supplies (food, medicine, other basic necessities, etc.) after the above-mentioned deductions, will be about U.S.$ 2 billion, against the estimated requirements of over U.S.$ 3 billion for food imports alone (see table below).

IRAQ - ESTIMATED COST OF FOOD IMPORTS FOR ONE YEAR