FUNDING FOR THE WMD PROGRAMME

33. The UN has sought to restrict Iraq's ability to generate funds for its chemical,

biological and other military programmes. For example, Iraq earns money

legally under the UN Oil For Food Programme (OFF) established by UNSCR

986, whereby the proceeds of oil sold through the UN are used to buy

humanitarian supplies for Iraq. This money remains under UN control and

cannot be used for military procurement. However, the Iraqi regime continues to

generate income outside UN control either in the form of hard currency or barter

goods (which in turn means existing Iraqi funds are freed up to be spent on other

things).

UN Sanctions

UN sanctions on Iraq prohibit all imports to and exports from Iraq. The UN

must clear any goods entering or leaving. The UN also administers the Oil for

Food (OFF) programme. Any imports entering Iraq under the OFF

programme are checked against the Goods Review List for potential military

or weapons of mass destruction utility.

34. These illicit earnings go to the Iraqi regime. They are used for building new

palaces, as well as purchasing luxury goods and other civilian goods outside the

OFF programme. Some of these funds are also used by Saddam Hussein to

maintain his armed forces, and to develop or acquire military equipment,

including for chemical, biological, nuclear and ballistic missile programmes. We

do not know what proportion of these funds is used in this way. But we have seen

no evidence that Iraqi attempts to develop its weapons of mass destruction and

its ballistic missile programme, for example through covert procurement of

equipment from abroad, has been inhibited in any way by lack of funds. The

steady increase over the last three years in the availability of funds will enable

Saddam to progress the programmes faster.

Iraq's illicit earnings

Year

Amount in $billions

1999

0.8 to 1

2000

1.5 to 2

2001

3

2002

3 (estimate)

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