GUIDANCE: OIL-FOR-FOOD (OFF) LETTER

C O N F I D E N T I A L STATE 003574 SIPDIS USUN FOR GERMAIN AND FINERTY E.O. 12958: DECL: 01/13/2020 TAGS: PREL UNSC IZ SUBJECT: GUIDANCE: OIL-FOR-FOOD (OFF) LETTER REF: A. A:08STATE88209 ¶B. B:09STATE127817 Classified By: IO A/S Esther Brimmer. Reason 1.4 (b) and (d). ¶1. (U) This is an action request. ¶2. (C) USUN is instructed to advocate with Council members for the enclosed non-paper (para 3) affirming UN Security Council action to authorize payment of OFF contracts in 90 days unless the Government of Iraq provides relevant documentation that substantiates the contested claims of delivery within the 90 day period, along the lines noted in reftel's A and B. ¶3. (U) Begin Non-paper: --DRAFT LETTER FROM THE PRESIDENT OF THE UNSC TO THE SECRETARY-GENERAL --Dear Mr. Secretary-General, --I have the honour to inform you that your letters dated 11 March 2008 and 25 July 2008 and the accompanying Notes concerning the processing of letters of credit pertaining to the Oil for Food Programme have been brought to the attention of the members of the Security Council. --Security Council members continue to welcome the ongoing work of the United Nations Secretariat to bring a complete and timely conclusion to all outstanding issues related to the Oil for Food Programme, which terminated on 31 December ¶2007. To date, 69 letters of credit with outstanding claims of delivery remain unresolved. --Accordingly, members of the Council decide that the Government of Iraq be given a final period of 90 days from the date of this letter to confirm delivery of the goods associated with the remaining 69 letters of credit with outstanding claims of delivery, and to issue and transmit the necessary confirmations of arrival to the UN Secretariat, in order for payment to be made under the relevant letters of credit. In the event that the necessary confirmations of arrival for the remaining letters of credit are not received by the UN Secretariat within 90 days, and notwithstanding the provisions of relevant Security Council resolutions, Council members request the Secretariat to instruct BNP Paribas to proceed with payment to the suppliers provided that, with the exception of the confirmation of arrival, all other documentation required for payment by the letter of credit has been presented by the suppliers. --For those letters of credit within the last group of 69 letters of credit where the Government of Iraq credibly contests delivery in spite of the documents presented by the beneficiaries, Council members will consider other options pursuant to the definitive closure of the remaining activity of the Programme. --The Council members wish to reiterate that confirmations of arrival under the letter of credit should not be delayed or made contingent upon the resolution of commercial disputes. The Council members recall that such disputes should be handled in accordance with the dispute resolution mechanism provided for in the underlying contract, as stated in paragraph 5 of the accompanying Note to the Secretary-General,s letter dated 11 March 2008. --Regarding letters of credit which were cancelled and where beneficiaries had made claims of delivery prior to their expiry, as identified in paragraph 8 of the accompanying Note to the Secretary-General,s letter dated 7 December 2007, the Council members look forward to the Secretary-General,s keeping the Security Council apprised of the developments in relation to such letters of credit. --Regarding letters of credit with no claims of delivery asserted by the supplier, Council members await the conclusion of the Secretariat,s evaluation whether any or all of these letters of credit can be cancelled, and endorse the recommendation of cancellation. For any letter of credit cancelled, Council members request that the associated funds on deposit with the UN be made available to the Development Fund for Iraq when all outstanding issues are resolved. --Council members reiterate their call upon the Government of Iraq to do its utmost, in liaison with the Secretariat of the United Nations, to expedite the processing of the remaining 69 letters of credit with outstanding claims of delivery. Members of the Council look forward to receiving a further progress report, and request that you provide such a report after the expiration of the 90-day deadline outlined above. --The members of the Security Council also take note of the possibility of transferring over $700 million of unencumbered funds to the Development Fund for Iraq (DFI). While Council members recognise the availability, in principle, of such funds for the transfer to the DFI in accordance with resolution 1483 (2003),members of the Council recommend that all unencumbered funds associated with the Oil for Food Programme remain in the Iraq escrow account until such time as all outstanding issues are resolved. End Non-Paper. CLINTON