7. Retrospect and Prospect

The main aim of this report has been to establish the impact of sanctions on Iraq's economy and in particular on the economic conditions of the civilian population. Most of the discussion thus far has been focused on changes in economic variables, on the responses of the private sector and the state to these changes, and on the livelihoods and living conditions of the people. In this section we shift the focus and draw attention to issues concerning the objectives of the sanctions regime.

The time horizon of the sanctions regime is indefinite, unless specifically terminated by the consent of a majority of the members of the Security Council and of all the permanent members. It therefore offers tremendous leverage to individual permanent members of the Security Council: any one of them can veto a proposal for terminating the sanctions or modifying their terms. Given this extraordinary leverage enjoyed by the permanent members, it is clear that the political and strategic aims of these powers play a crucial role in the continuation of sanctions.⁴¹ Here, we restrict our attention to the formally stated goals and objectives of the United Nations and examine whether, or to what extent, these goals and objectives have been realized.

Finally, in section 7.2, we turn to the most recent modification in the sanctions regime, namely, the food-for-oil agreement between the UN Security Council and the government of Iraq. We argue that while it is does provide welcome relief to ordinary Iraqis, the food-for-oil deal is merely a modified continuation of the sanctions regime. It does not obviate the need for seeking a quick and just solution to the crisis that has blighted the lives of millions in Iraq. The food-for-oil deal does, however, expose some important contradictions in positions taken by the main protagonists.

7.1. Objectives of Sanctions

The United Nations Organization, and its Security Council in particular, can be properly regarded as the body charged with representing the will of the international community in the resolution of the Gulf conflict. Punitive sanctions against Iraq ought to be seen, therefore, within the wider context of actions taken by the international community in the pursuance of its objectives. It is worth recalling at length the words of a former Secretary-General of the United Nations who oversaw many issues arising from the Gulf crisis during his tenure:

"The breadth of actions taken by the United Nations in more than five years of work - from the immediate, intense world-wide diplomatic activity aimed at ensuring universal support for the restoration of Kuwaiti sovereignty, to the ongoing challenge of building long-term peace and stability in the region - have confirmed the extraordinary relevance of the United Nations in addressing the most complex political issues facting the international community...

"A principal concern for the Organization throughout its involvement has been to alleviate the hardships the conflict has visited upon the Iraqi civilian population...

"By the use of sanctions and other enforcement measures, through efforts to institute a programme of disarmament and weapons control, in the provision of humanitarian assistance, and with programmes in areas such as boundary demarcation, compensation for damages caused by the invasion and the promotion and protection of human rights, the United Nations has broken new ground as peacemaker, peace-keeper and peace-builder." (United Nations, 1996, p 3).

These extracts from the former Secretary-General's reflections on United Nations and the Gulf conflict highlight two important aspects of how the organization itself perceived its the role. Firstly, while the restoration of Kuwaiti sovereignty and the cessation of armed conflict were regarded as immediate tasks, the ultimate objective was to build "long-term peace and stability in the region". Secondly, the organization regarded the alleviation of hardships faced by Iraqi civilians as a "principal concern".

It is pertinent to ask how far and to what extent the objective of building long-term regional peace and the concern with the conditions of Iraqi civilians have been reflected in the resolution of the Gulf crisis. In order to address these questions, it is useful to proceed by examining the mechanism adopted by the Security Council in the pursuance of its objectives. The ceasefire resolutions, and particularly resolution 687 is of fundamental importance in this regard. According to Mr. Boutros-Ghali, the former Secretary-General of the UN:

"The primary basis for the wide range of actions that the United Nations has taken to accomplish this goal [that of establishing regional peace], is Security Council resolution 687 (1991), adopted on 3 April 1991, which imposes numerous obligations on Iraq and, in doing so, constitutes one of the most comprehensive sets of decisions ever taken by the Council." (United Nations, 1996, p 4).

Resolution 687 does, indeed, impose a comprehensive set of conditions on the government of Iraq. It also calls for unprecedented coordination between various UN agencies and international organisations -- particularly in the area of weapons control -- for its implementation. Apart from demands for compensation, the acceptance of international boundaries and the repatriation of prisoners, resolution 687 is overwhelmingly concerned with military matters, such as weapons control. Besides its scope and detail, there are three aspects of resolution 687 that deserve mention, especially in the light of the broad objectives mentioned by Mr. Boutros-Ghali.

Firstly, the only reference contained in resolution 687 to humanitarian considerations is that it allows for the relaxation of the sanctions regime for the import of food and medicines.⁴² This relaxation, however, is conditional "on the policies and practices of the Government of Iraq, including the implementation of all relevant resolutions of the Council...".⁴³ Since these "relevant resolutions" and conditions are largely concerned with weapons control, there appears to be a clear hierarchy in the goals of the Security Council in the favour of military objectives over and above humanitarian concerns. Although, to our knowledge, no specific threat of revoking the relaxation of imports of food and medicines has ever been made since the adoption of resolution 687, it is remarkable that the conditionality exists at all. The declaration that the alleviation of the suffering of Iraqi civilians was a primary concern also rings hollow in the light of admission by Mr. Boutros-Ghali that "..donor response to the five United Nations inter-agency humanitarian appeals issued since January 1992 has [...] fallen well short of the funding goals" (United Nations, 1996, p 113).

The second conspicuous feature of resolution 687 is that it demonstrates that the Security Council failed to make any meaningful distinction between mechanisms designed for the achievement of immediate and urgent objectives (ending Iraq's occupation of Kuwait) and "peace-building" measures such as the demarcation of boundaries and the limitation of Iraq's offensive potential. The regime of comprehensive economic sanctions was imposed under resolution 661 within a few days of Iraq's invasion of Kuwait in August 1990. The objectives of this resolution were, quite justifiably, extremely short-term ones. It was imperative at that time to secure Iraq's rapid withdrawal from Kuwait and the restoration of Kuwait's sovereignty. The aims of the cease-fire conditions as set out in resolution 687, however, are by definition over a longer time horizon. These include among other things the identification and destruction of Iraq's capacity for the production of chemical, biological and nuclear weapons and their delivery systems, as well as the institution of an ongoing programme to monitor possible breaches of weapons control in the future. No time period is specified for the completion of these tasks. The political and military situation, and the demands of regional peace and security were vastly different in April 1991 when resolution 687 was adopted than they had been in August 1990. It is striking, then, that instead of considering any alternative instrument for ensuring Iraq's compliance with the cease-fire conditions, the Security Council simply reiterated the maximalist position of comprehensive sanctions as enunciated in resolution 661. This is so in spite of the fact that the UN did recognize the distinction between its peacemaking, peace-keeping and peace-building tasks.

Thirdly, resolution 687 advances a purely legalistic and military settlement to the Gulf conflict. While there are detailed prescriptions for limiting Iraq's military potential and about its legal obligations under international law in the resolution, neither resolution 687, nor any of the other resolutions or negotiations propose or consider long-term political or diplomatic initiatives for confidence-building and conflict resolution in the region. This is a serious omission because although adherence to its international legal obligations by Iraq, and the limitation of its military potential might be necessary conditions for regional peace and stability, they are not sufficient conditions. Given the importance of Iraq in terms of its population, resources and political history, it is difficult to envisage a long-term settlement in the region that excludes Iraq.

In sum then, resolution 687, which provides the basis for the continuation of the sanctions regime reflects very inadequately the twin objectives of the international community of building long-term peace and alleviating the suffering of Iraqi civilians. Even in its wording, the resolution does not live up to the claim that the suffering of civilians is a primary concern. The failure to make a distinction between the very different contexts of peacemaking and peace-building, or in other words between the imperatives of immediate aims such as the restoration of Kuwait and longer aims such as the monitoring of Iraq's armaments programme, has set the scene for prolonged and continuing economic hardship in Iraq.

It can be argued that the sanctions regime under resolution 687 has been successful in securing Iraq's compliance with her international legal obligations and in the implementation of one of the most comprehensive internationally-monitored disarmament systems in the world. This, indeed, has been the main argument put forward by proponents of the continuation of sanctions. Progressive compliance by Iraq with the demands of resolution 687 is undeniable, though the claim that comprehensive economic sanctions are the only or even the most effective or least costly instrument for ensuring compliance is open to question.

This is particularly the case if we take a longer view of the conditions required for peace-building in the region. Implicit in the prescriptions contained in resolution 687 is the understanding that the main causes of regional instability and aggression were Iraq's disregard for international law and its advantage in military capability over other states. Such an analysis ignores other political factors such as the potency of Arab nationalism and the sense of historical injustice in Iraq, both among the rulers and the people.

Almost the entire spectrum of political opinion in Iraq, and not merely the present regime, is influenced strongly by these ideas. Any political leadership would be required to affirm Iraq's role as a regional power in order to establish its credentials. The issue of long-term peace and stability in the region, therefore, cannot be properly addressed without due recognition of these realities. While the sanctions regime might have been effective in reducing Iraq's military potential and in securing its compliance with international law for the time being, by imposing a heavy cost on Iraqi civilians it adds further fuel to the sense of historical injustice felt by ordinary Iraqis. Given that it is widely perceived inside Iraq as a vengeful measure, the sanctions regime gives rise to further cynicism amongst ordinary Iraqis with international institutions.⁴⁴ While on the one hand the sanctions and other punitive measures against Iraq might enforce an uneasy peace in the medium-term, their long-term effects are likely to be counter-productive and unpredictable.

7.2. "Food-for-Oil" Agreement

The end of 1996 saw the implementation of the "Food-For-Oil" agreement first proposed in August 1991 and finally agreed in May 1996. The deal was reached in May 1996, when a Memorandum of Understanding was agreed between Iraq and the Security Council for the implementation of Security Council resolution 986 of April 1995. The terms of this resolution are valid initially for six months and can be renewed for another six. The agreement can be revoked and does not supersede any previous UN resolution. In fact, it remained in abeyance for over 6 months between May and December 1996 due to the intervention of the Iraqi army in factional fighting in Iraqi Kurdistan.

Background to FFO

It might be recalled that resolution 687, which is the key Security Council document governing the sanctions regime, contained a proviso that empowered the sanctions committee to allow limited and ad hoc exports from Iraq in order to finance the importation of humanitarian supplies. Between April and July 1991 the government of Iraq made several representations to the sanctions committee to exercise this power. This period had also seen several fact-finding missions sent to Iraq by the Secretary-General in order to ascertain humanitarian conditions. The reports of these missions, particularly the inter-agency mission also known as the Aga Khan mission, painted a bleak picture of the conditions inside Iraq.

The response of the Security Council was to adopt resolution 706 which allowed the export of .6 billion worth of Iraqi oil for a period of six months.⁴⁵ Part of the proceeds were earmarked for the compensation fund and to pay for various UN activities in Iraq. The remainder were to be placed in an escrow accounted and to be used for the import of essential supplies approved by the sanctions committee. Resolution 706 proposed strict monitoring of Iraqi finances, imports as well as the distribution of food and other supplies. The Iraqi government rejected these terms as being overly intrusive and as compromising its sovereignty. Although sporadic negotiations continued on the implementation of resolution 706, it was clear in early 1992 that the Iraqi government would not accept its terms.

This diplomatic impasse allowed the Security Council to wash its hands of any responsibility for the condition of the civilian population of Iraq. Accordingly, the government of Iraq, which "by acting in this way [i.e. discontinuing negotiations on FFO], is forgoing the possibility of meeting the essential needs of its civilian population and therefore bears the full responsibility for their humanitarian problems." (Statement by the President of the Security Council, 5 February 1992, in United Nations, 1996, p 391). There were no significant initiatives after that for over 3 years till April 1995 when a new resolution (986) was adopted which formed the basis of the current food-for-oil agreement. There was also no significant attempt by the UN to monitor humanitarian conditions in Iraq in this period.

According to the former Secretary-General, resolution 986 "took into account some of Iraq's concerns over resolutions 706 (1991) and 712 (1991) by reaffirming 'the commitment of all Member States to the sovereignty and territorial integrity of Iraq' and describing the new exercise as 'temporary'". (United Nations, 1996, p 103). This implicit admission that Iraqi objections to those resolutions could be and were accommodated somewhat contradicts the position taken by the Security Council over a period of three years of stalemated negotiations that Iraq bore "full responsibility" for the suffering of its civilian population.

Impact of the agreement

The current food-for-oil agreement allows oil Iraq to export billion worth of oil every six months, excluding that delivered to Jordan for own consumption. The proceeds flow into an escrow account in an international bank chosen by the UN Secretary-General and are used for three purposes in the following proportions:

• 50% for use by the Iraqi governments for the procurement of humanitarian supplies for the whole of Iraq except the three Kurdish governorates outside the Iraqi control;
• 15% for the use by the UN for humanitarian supplies for the three Kurdish governorates of Arbil, Dahouk and Suleimaniyeh;
• 30% for payment into the Kuwait Compensation Fund controlled by the UN;
• 5% for UN administration expenses.

One billion dollars (per six months) at the disposal of the Iraqi government for humanitarian supplies has to be spent as specified in the categorized procurement plan approved by the UN Sanctions Committee.

The agreement will bring about a substantial reduction in the suffering of the Iraqi population through two channels: first, the appreciation of the Iraqi dinar relative to the US dollar, and, second, increasing the resources for the import of food, medical supplies and inputs for the restoration of infrastructure such as sewage works and water purification plants. The first effect is immediate and, as pointed above, the market price of food and medicines closely track movements in the exchange rate. The second, especially the restoration of infrastructure, will take effect with a lag. As we have noted in section 2 above, the food-for-oil agreement has been a contributory factor in the relative success of the macroeconomic stabilization programme initiated in late 1995 by the Iraqi government.

It must be noted, however, that the substantial positive impact of FFO is actually an indication of the depth of the economic recession in Iraq. The agreement falls well-short of any benchmark of the country’s basic needs. In 1989 Iraq's import bill for food and medicines was .36 billion and the expenditure on preventive water sanitation purification was around 0 million. Assuming 4% inflation, the these two categories of import would cost around .2 billion in 1997 prices. This excludes the repair of facilities and the replacement of medical equipment. Even allowing for cuts in non-essential food and medicines, billion per year fails to cover by a significant margin the bill for essential food and preventive and curative health care.

The amounts stipulated under the FFO also stand in marked contrast to estimates of needs prepared by the various UN agencies. The appears to be based upon the six-monthly limit on oil exports of .6 billion that was first proposed in resolution 706 in August 1991, adjusted for price increases. The origin of the .6 billion itself are somewhat obscure. According to the report of the Aga Khan mission, the last authoritative inter-agency mission, even for a "greatly reduced level of services" Iraq required .8 billion over a one-year period in 1991. The breakdown of this amount was 0 million for water and sanitation, 0 million for health services, million for supplemental feeding, .62 billion for general food. Import requirements of agricultural inputs were estimated at 0 million, and those for the restoration of the oil and the power sectors were respectively put at billion and .2 billion.

The discrepancy between the estimates of the Aga Khan mission and the limit set under resolution 706 was recorded in a report of the Secretary-General in September 1991 which noted that “..the actual sum from the sale of Iraqi petroleum and petroleum products will have to be determined by the Security Council after its consideration of the present report.” This report estimated the six monthly essential requirements at .8 billion (United Nations, 1996, pp 299-300). At current prices, this would be equivalent to over .2 billion, or twice as high as the allowance set by the food-for-oil deal.

The modalities of this agreement, which is, in essence, the only concession by the UN to humanitarian conditions inside Iraq, raise two sets of important (and uncomfortable) questions:

• What is the rationale of restricting oil exports to an amount which falls well short of meeting humanitarian needs?
• What are long-term prospects for the resolution of the sanctions crisis?

The limitation on the export of oil to billion per six months does not lend itself to justification in terms of the misuse of additional revenue. The agreement provides for stringent monitoring by the UN Sanctions Committee of proceeds set aside for humanitarian needs. It is difficult to understand why the monitoring mechanism would not be able to cope with an import bill exceeding $ 1 billion per six months. One possible rationale would seem to be to restrict Iraqi oil sales either to allow other oil exporting countries to export more or to prevent a fall in oil prices, which higher Iraqi oil exports may imply. If true, this would be extremely cynical abuse of Security Council power in the pursuit of goals that had nothing to do with building peace and security.

Another possible explanation is that with greater resources at its disposal Iraq might be able to circumvent import controls more effectively. Arms exporting countries may become lax in their export monitoring and thus allow Iraq to rearm itself. Since all of Iraq’s major suppliers also happen to be permanent members of the Security Council there is more than a hint of irony in this argument. The implication of such as argument would be that the Security Council, finding it impractical or costly to monitor its permanent members’ arms exports, has resorted to a virtual shutdown of the Iraqi economy. The cost of mutual distrust among the permanent members of the Security Council has been borne in tragic proportions by Iraqi civilians.

The history of the negotiations between Iraq and the Security Council since 1991 indicates that the food-for-oil deal cannot be regarded as anything more than a palliative. Just as the impasse over resolution 706 allowed the Security Council to shelve the issue of humanitarian suffering in Iraq for over three years, the present agreement is likely to postpone a long overdue re-appraisal of the sanctions regime for a year, if not longer.

The sanctions may have succeeded in forcing the Iraqi government to submit a substantial proportion of the stock of long-range rockets and nuclear and chemical materials and facilities for their manufacture. The continuation of sanctions may help to unearth and destroy what has until now been concealed; but it would not change the Iraqi leadership or change the character of the regime. It would prolong the suffering of the Iraqi population and contain Iraq through a stranglehold on its economy. These conditions are likely to hinder rather than help the cause of meeting "the ongoing challenge of building long-term peace and stability in the region".