The Oil-for-Food Program for Iraq was established by the UN Security Council on April 14, 1995. Some 3.4 million barrels of Iraqi oil, valued at about USD 65 billion, have been exported under the program since December 1996. Of this amount, 72% has been allocated towards humanitarian needs nationwide since December 2000. An additional USD 10 billion worth of supplies are currently in the production and delivery pipeline. The program has some USD 3.2 billion in unencumbered funds and approved contracts worth USD 7.0 billion that are unfunded.
In August 1990, the Security Council adopted resolution 661, imposing comprehensive sanctions on Iraq following that country's invasion of Kuwait. In the immediate aftermath of the Gulf War in 1991, the Secretary-General dispatched an inter-agency mission to assess the humanitarian needs arising in Iraq and Kuwait. The mission visited Iraq from March 10 to 17, 1991, and reported that "the Iraqi people may face a further imminent catastrophe, which could include epidemic and famine, if massive life-supporting needs are not rapidly met". Throughout 1991, with growing concern over humanitarian situation in the country, the United Nations proposed measures to enable Iraq to sell limited quantities of oil to meet its people's need. The Government of Iraq declined these offers, contained in particular, in resolution 706 (1991) and 712 (1991), adopted, respectively, in August and September 1991.
Resolution 986: On 14 April 1995, acting under Chapter VII of the United Nations Charter, the Security Council adopted resolution 986, establishing "Oil-For-Food" Program, providing Iraq with another opportunity to sell oil to finance the purchase of humanitarian goods, and various mandated United Nations activities concerning Iraq. The program, as established by the Security Council, is intended to be a "temporary measure to provide for the humanitarian needs of the Iraqi people, until the fulfillment by Iraq of the relevant Security Council resolutions, including notably resolution 687 (1991) of April 3".
Although established in April 1995, the implementation of the program started only in December 1996, after the signing of the Memorandum of Understanding (MoU) between the United Nations and the Govt. of Iraq on 20th May 1996. The first Iraqi oil under the 'Oil-For-Food Program' was exported in December 1996, and the first shipments of food arrived in March 1997. The program is funded exclusively with proceeds from Iraqi oil exports, authorized by the Security Council. In the initial stages of the program, Iraq was permitted to sell USD 2 billion worth of oil every six months, with two-thirds of that amount to be used to meet Iraq's humanitarian needs. In 1998, the limit on the Iraqi oil exports under the program was raised to USD 5.26 billion every six months again with two-thirds of the oil proceeds earmarked to meet the humanitarian needs of the Iraqi people. In December 1999, the ceiling on Iraqi oil exports under the program was removed by the Security Council.
Currently, 72% of Iraqi oil export proceeds fund the humanitarian program, of which 59% is earmarked for the contracting of the supplies and equipment by the Government of Iraq for the 15 central and southern governorates, and 13% for the three northern governorates, where the United Nations implements the program on behalf of the Government of Iraq. Included in the balance from the total oil revenues are: 25% for the Compensation Fund for war reparation payments; 2.2% for the United Nations administrative and operational costs for the program; 0.8% for the weapons inspection program.
The Office of the Iraq Program is headed by the Executive Director who is responsible for the overall management and coordination of all the United Nations humanitarian activities in Iraq, under resolutions 661(1990) and 986(1995) and the procedures established by the Security Council and its committee. Setup by resolution 661(1990) as well as Memorandum of Understanding between the United Nations and the Government of Iraq (May 1996). The office of the Iraq program administers the program as an operation separate and distinct from all other United Nations activities within the context of the sanctions regime which fall within the purview of UNMOVIC, IAEA, and the United Nations Compensation Commission.
The office of the humanitarian coordinator in Iraq (UNOHCI) is an integral part of the Office of the Iraq Program (OIP). The humanitarian coordinator in Iraq reports directly to the Executive Director of OIP, and is responsible for the management and implementation of the program in the field. There are nine United Nations agencies and organizations involved in the program. They are: FAQ, UNESCO, WHO, ITU, UNICEF, UNDP, WFP, UNOPS, and UN-Habitat.
To date, some USD 26 billion worth of humanitarian supplies and equipment have been delivered to Iraq under the Oil-For-Food Program, including USD 1.6 billion worth of oil industry spare parts and equipment. An additional USD 10.9 billion worth of supplies are currently in the production and delivery pipeline. The latest report of the Secretary-General on the Oil-for-Food Program was issued on 12 November 2002. It focuses on improvement of shortcomings and difficulties in the humanitarian situation in Iraq; a revenue shortfall in the program; and an assessment of the implementation of the new set of procedures for the processing and review of contracts for humanitarian supplies. The new procedures were introduced under Security Council resolution 1409 (2002), based on the Goods Review List (GRL). It is the first such assessment since the adoption of that resolution.