After the 1991 Gulf War, the UN Security Council determined that Iraq was liable for any economic loss and damage resulting from the invasion of Kuwait. The UN Compensation Commission (UNCC) was set up to oversee compensation claims from foreign companies, governments and individuals. Iraqis are not eligible to apply.

Currently Iraq is paying 5% of its oil revenues in reparations, totalling nearly $2.4bn (as of July 2005) since the fall of Saddam, more than Iraq's annual health & education budgets combined. In all $19.4bn has been paid and $33.1bn remains unpaid.

Jubilee Iraq has demonstrated 3 times at the UNCC in Geneva:

• 15-30 June 2005: A two week Fast for Economic Justice in Iraq organised with Voices in the Wilderness.
• 2 July 2004: Another demonstration.
• 10 March 2004: A demonstration of 60 Iraqis.

Now is a good time to end the 5% payment because:

1. The UNCC has just completed its 14 year process of claims assessment - now the claims are assessed, and there is no longer a totalitarian regime in place which is unwilling to cooperate with the international community, it makes sense to leave the settlement of awards to bilateral agreements, as happens with any other liabilities such as debt.
2. The Iraqi government has explicity requested a change. Deputy Foreign Minister Mohammed Hamud Bidan told Reuters on 28 June 2005, shortly before addressing the UNCC, "We suggest we stop the payments of 5% from oil revenues...it is too much for us. We think it is time now to stop and leave Iraq to negotiate directly with the states concerned."
3. This is a time during which the current elected government, and the permant one we hope will form after the December elections, is in a period of negotiation with Kuwait and other countries on a range of issues, and so it would be appopriate to include the compensation payments within these bilateral negotiations as Bidan requested.
4. It is now clear that the economic recovery expected when 1483 was formulated in May 2003 is not happening because of the intensified conflict, hence the calculations made by the UNSC then that Iraq would be able to afford an ongoing 5% deduction from its budget have been rendered redundant by events. Since the fall of Saddam's regime the reparation payments have totalled nearly $2.4bn, more than Iraq's health spending over that period.
5. Opening up reparation payments for bilateral negotiation, and possible reduction, will give Iraq a sense of hope, a gradual lifting of a burden, at a time when an absense of hope is one of the factors feeding the cycle of violence.
6. The allegations of overstatement of reparations awards by the OIOS report in January and repeated a few weeks ago by the Volker investigation have increased international criticism and Iraqi frustration with the UNCC. As Deputy UN ambassador Fesial al-Istrabadi told the AP on 15 July: "There appear to have been some irregularities that are at the very least gross mismanagement at the level of currency exchange [by the UNCC]" and insisted that Iraq will demand the return of the money if mismanagement and corruption are proven.

Seach Jubilee Iraq for news relating to reparations

Key to categories:

• A: Individuals' who had to depart from Kuwait or Iraq between the date of Iraq's invasion of Kuwait on 2 August 1990 and the date of the cease-fire, 2 March 1991. UNCC breakdown of A claims
• B: Individuals' who suffered serious personal injury or whose spouse, child or parent died. There were 5,734 of these claims. UNCC breakdown of B claims
• C: Individuals' claims for damages up to US$100,000 each including those relating to departure from Kuwait or Iraq; personal injury; mental pain and anguish; loss of personal property; loss of bank accounts, stocks and other securities; loss of income; loss of real property; and individual business losses. UNCC breakdown of C claims
• D: Individuals' claims for damages above US$100,000 each, losses similar to those in category C, with the most frequent being the loss of personal property; the loss of real property; the loss of income and business-related losses.UNCC breakdown of D claims
• E: Corporations and public sector enterprises. Including claims for construction or other contract losses; losses from the non-payment for goods or services; losses relating to the destruction or seizure of business assets; loss of profits; and oil sector losses. UNCC breakdown of E claims
• F: Governments and international organizations for losses incurred in evacuating citizens; providing relief to citizens; damage to diplomatic premises and loss of, and damage to, other government property; and damage to the environment. UNCC breakdown of F claims

The Security Council decided in Resolution 705 (1991) that 30% of Iraq's oil revenue should be paid into a Compensation Fund for this purpose. This was reduced to 25% in Resolution 1330 (2000). After the fall of Saddam and the end of the Oil for Food program a new mechanism was established through Resolution 1483 (2003) requiring Iraq to pay 5% of oil revenue to reparations indefinitely. A new UN Security Council resolution is needed to annul the reparations, until this happens Jubilee Iraq urges claimants to drop their claims or at least place a moritorium on payment..

There are further expenses that are not included within this figure: interest on claims must , in theory, be paid as well once all of the principle amounts have been paid. In addition, Iraq must pay the costs of the UNCC. According to a November 2002 report by the Office of the Iraq Programme, $278m was allocated to pay for the "operating expenditures" of the UNCC, such as lawyers' fees.

There has been international controversy over the payments that the UNCC has determined that Iraq must make, with some alleging that excessive quantities have been awarded (Iraq does not have the right to appeal against awards). For example, in June 2000, the UNCC made the largest award to date, $15.9bn to the Kuwaiti Petroleum Corporation (in category E1). France and Russia, backed by China, Tunisia and Ukraine, refused to ratify this decision. Eventually, a compromise was reached whereby the claim was awarded, while in exchange a reduction of the percentage allocated for compensation, from 30% to 25%, was formalised in Security Council Resolution 1330 of 4 December 2000. The extra revenue generated by the reduction to 25% -- an estimated $275m in phase XII of Oil for Food -- was, according to the Security Council, "to be used for strictly humanitarian projects to address the needs of the most vulnerable groups in Iraq". It is noteworthy that this is an implicit admission that reparations and humanitarian needs compete for scarce resources. This conflict was in fact foreseen already by SCR 687 (April 1991), which stated that the level of payment by Iraq should take "into account the requirements of the people of Iraq, Iraq's payment capacity ... and the needs of the Iraqi economy". Proper application of this principle today would at the very least result in a temporary moratorium of payments while Iraq recovers.

The vast majority of unpaid claims are from governments and corporations. Claims from individuals who were forced to leave Iraq and Kuwait, or who suffered personal injuries, or who suffered the death of a close family member, were given priority by the UNCC, and almost all these claims have now been resolved. As a result, those individuals who have an immediate humanitarian need for financial reparations have already been awarded compensation.

Further reading:

• Michael E. Schneider, "How Fair and Efficient is the UNCC System? A Model to Emulate?", Journal of International Arbitration, 15(1), 1998.
• Alain Gresh, "OIL FOR FOOD: THE TRUE STORY - A debt of dishonour" Le Monde Diplomatique (October 2000)
  
• Thomas R Stauffer, "Critical Review of UNCC Award For Lost Production And Lost Reserves", Middle East Economic Survey, Vol. 44, No. 5 (29 January 2001).
• An extensive bibliography is on the UNCC's own website.