UNSC CONSULTATIONS ON DEVELOPMENT FUND FOR IRAQ

UNCLAS USUN NEW YORK 000802 SIPDIS E.O. 12958: N/A TAGS: PREL PGOV IZ KU SUBJECT: UNSC CONSULTATIONS ON DEVELOPMENT FUND FOR IRAQ ¶1. (U) Summary: In Security Council consultations on August 27, the UN Controller briefed on the recently released report regarding activities and progress made in strengthening the financial and administrative oversight of the Development Fund for Iraq (DFI). The Controller highlighted the International Advisory and Monitoring Board (IAMB) recommendations to develop a realistic, time-bound action plan to resolve qualifications to DFI audits and the continued need to implement a comprehensive oil measuring system. The Controller and most Council members noted the need for a smooth transfer mechanism from IAMB to Committee of Financial Experts (COFE) control of the DFI at the end of the year, when the mandate expires. End summary. ¶2. (U) On August 24, the Secretary-General issued the first semi-annual report created pursuant to paragraph three of resolution 1859 (2008) regarding the activities and progress made in strengthening financial and administrative oversight of the Development Fund for Iraq (DFI). The report provides a detailed background on the establishment of the DFI, the role of the International Advisory and Monitoring Board (IAMB),and the 2006 creation of the Iraqi Committee of Financial Experts (COFE) which is poised to take over the task of monitoring the DFI upon the expiration of the IAMB mandate. ¶3. (U) In consultations on August 27, Assistant Secretary-General Controller Jun Yamazaki briefed the Council on the DFI. Yamazaki highlighted the need to enhance transparency and accountability of the DFI, underscoring the IAMB recommendations to develop a realistic, time-bound action plan to resolve the qualifications to the DFI audits and the implementation of a comprehensive oil metering system. In the absence of a fully operational oil metering system, it is not possible to reliably determine the volume of all exports of petroleum and petroleum products for which proceeds are to be deposited in the DFI accounts. Yamazaki also noted the IAMB's call to intensify efforts to follow up on frozen Iraqi assets held abroad, including consideration of the need for a separate entity to handle such issues. Yamazaki concluded his remarks by reminding the Council that the IAMB mandate, including the mandate of the DFI, is due to expire at the end of 2009, and that it will be important to ensure that a proper succession mechanism and process be discussed by the Council. ¶4. (U) All fourteen Council members who spoke during consultations, including the U.S., voiced the need for increased transparency and greater internal controls, especially in relation to oil metering. (Note: Only Libya did not speak. End note.) Most Council members noted the need for a smooth transfer mechanism from IAMB to COFE oversight of DFI at the end of the year, when the mandate expires. The Austrian representative alone made brief mention of the related immunities issue, stating they are interested in "the future shape of the DFI, including the immunities issue." The Russian representative proposed that the Council invite the head of COFE to discuss the establishment of a timeframe and plans to increase oil metering, noting that the "Council should meet those who will take over the fund." Controller Yamazaki agreed in his concluding remarks that a Council meeting with COFE representatives "could be useful". RICE