07 April 2010 – Kuwait News Agency
The UN on Tuesday expressed satisfaction that the Iraqi Government is willing to continue to pay five percent of its oil revenues into the Compensation Fund whether under the present mechanism or a successor mechanism to the Development for Iraq (DFI) whose mandate expires in December of this year.
“It is important to ensure that the present mechanism is maintained or an alternative equally effective mechanism is established to ensure the payment into the Compensation Fund. I note that the Government of Iraq acknowledges their obligations towards the Compensation Fund,” the UN Controller Jun Yamazaki told the Security Council in an open meeting.
The DFI, established by the council in 2003, holds the proceeds of oil export sales from Iraq, as well as the transferred balances from the UN Oil-for-Food Programmes. It is being audited by the independent public accountants reporting to the International Advisory and Monitoring Board (AMB) in order to ensure transparency and make sure all proceeds are deposited in the DFI, except five percent which are deposited in the Compensation Fund to compensate the victims of the Iraqi invasion of Kuwait in 1990.
Iraq has recently presented to the council a first quarterly report containing an action plan and timeline for the transition to successor arrangements for the DFI and the IAMB beyond December 2010 that will enable it to meet its obligations towards the payment of the five percent.
Yamazaki told the council that the Iraqi action plan and timeline are “realistic and I am pleased that the Government of Iraq plans to select an independent international auditor to confirm that all proceeds of oil export sales are accounted for.” As the IAMB mandate is bound to expire by next December, the Iraqi Committee of Financial Experts (COFE) will take over under the new arrangements. This committee has finalized an action plan to implement a “fully operational comprehensive oil metering system” to account for the oil sales and the proceeds.
Yamazaki noted that the Iraqi Council of Ministers “will ensure that deadlines for completion of those goals are met” and encouraged the Iraqi government to keep the council informed and included an update in their next quarterly report to the council.
In his first quarterly report on the issue to the council last week, Secretary-General Ban Ki-moon suggested, as an alternative mechanism to ensure the five percent payment, that Iraq include an article in its banking services agreement specifying the percentage that would be taken from the total and deposited into the Compensation Fund.
He also suggested that the council request that a fixed yearly amount is paid by Iraq into the Compensation Fund, “irrespective of the amount of oil proceeds.”
Iraqi Chairman of COFE Abdelbasit Turki Said Al-Bayati told the council in the open meeting that the Ministry of Finance will have “exclusive authority” to receive the proceeds from oil sales and pay the five percent in the Compensation Fund, affirming that his Committee will take over from the IAMB later this year to ensure transparency.
He said the council, given its moral authority, should encourage the parties to examine the situation regarding compensation imposed upon Iraq. “Settling this would not be possible without the support of the international community,” he said.
He added that Iraq is concerned because the immunity of the DFI will end by December 31 of this year, as suggested last week by Secretary-General Ban Ki-moon in his first quarterly report on the issue.
On the USD 129 billion debt Iraq owes to foreign governments, he said, Iraq settled USD 89 billion and is “undertaking efforts” in order to settle the remaining debts, including those pertaining to the Gulf Cooperation Council (GCC) states.
Council President Yukio Takasu of Japan told reporters following the meeting that “there is every expectation that Iraq (after adopting the action plan and timeline for the transition starting 2011) is on the right track.” “Today’s discussions show clearly that there will be a technical examination of the legal issues such as immunities,” he said, adding that putting an end to the DFI or the IAMB will require “some form of action by the council” later this year.