Background and Design
The Oil-for-Food Programme was instituted to relieve the extended suffering of civilians as the result of the comprehensive sanctions on Iraq from the UN, following Iraq's invasion of Kuwait in August 1990.
Security Council Resolution 706 of August 15, 1991 was introduced to allow the sale of Iraqi oil in exchange for food.
Security Council Resolution 712 of September 19, 1991 confirmed that Iraq could sell up to $1.6 billion in oil to fund an Oil-For-Food Programme.
After an initial refusal, Iraq signed a memorandum of understanding (MOU) in May 1996 for arrangements to be taken for the implementation of that resolution.
The Oil-for-Food Programme started in December 1996, and the first shipments of food arrived in March 1997. Sixty percent of Iraq's twenty-six million people were solely dependent on rations from the oil-for-food plan.
The programme used an escrow system. Oil exported from Iraq was paid for by the recipient into an escrow account possessed until 2001 by BNP Paribas bank, rather than to the Iraqi government. The money was then apportioned to pay for war reparations to Kuwait, ongoing coalition and United Nations operations within Iraq. The remainder, the majority of the revenue, was available to the Iraqi government to purchase regulated items.
The Iraqi government was permitted to purchase only items that were not embargoed under the economic sanctions. Certain items, such as raw foodstuffs, were expedited for immediate shipment, but requests for most items, including such simple things as pencils and folic acid, were reviewed in a process that typically took about six months before shipment was authorized. Items deemed to have any potential application in chemical, biological or nuclear weapons systems development were not available to the regime, regardless of stated purpose.
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