UN Secretary-General Ban Ki-moon revealed in early August several options for resolving the outstanding issues in the closure of the UN's letter of credit (L/C based oil-for-food programme (OFP) for Iraq.

Under the OFP, Iraq was allowed to use monitored oil sales revenues to purchase food, medicines and humanitarian goods at a time when it could not trade normally with the rest of the world due to sanctions imposed on the country during the Saddam era.

Slow progress

The OFP was established by the UN in 1995 under Security Council Resolution 986 and terminated in late 2003 after another resolution lifted sanctions on Iraq.

Ban has become concerned about the slow wind-down of the programme, and in June asked for a working group to look into matters such as how documents were being authenticated and processed.

In its latest report the working group said the processing of payment for 132 L/Cs with a value of US$273 million, remained outstanding under the programme.

Disputed L/Cs

The working group also noted that in several cases, suppliers of goods under the OFP were claiming that they had delivered products and wanted payment under the L/Cs related to these transactions.

The Iraqi government however was requesting that L/Cs related to these transactions should be cancelled.

Options

Options to resolve the outstanding OFP issues include asking the working group to continue to monitor progress and to process the remaining L/Cs or - as per the working group's own recommendations - establish a dispute resolution mechanism to handle outstanding issues.

A third option would be to transfer the OFP funds, as well as the responsibility for administering any remaining activity under the programme, to the Iraqi government. If this were to happen Baghdad would have to report progress on the programme's wind-down to the UN on a quarterly basis.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.