Excerpts from Iraq's 3rd report on the DFI to the Security Council
S/2010/567
Security Council Distr.: General
2 November 2010
Original: English
Note verbale dated 28 October 2010 from the Permanent Mission
of Iraq to the United Nations addressed to the President of the
Security Council
In the period following the submission of the second quarterly report, the
Government of Iraq continued its endeavours to determine the immunities to be
granted to Central Bank of Iraq reserves and Iraqi Government assets, in accordance
with the jurisdiction of the States in which Iraq intends to open accounts. The
Governor of the Central Bank of Iraq held formal consultations with Banque de
France (the central bank of France) on the margins of the annual meetings of the
World Bank Group and International Monetary Fund, which were held in
Washington from 8 to 10 October 2010. However, these endeavours and those that
preceded them did not produce any results that improved on the situation described
in Iraq’s second quarterly report: the proposed immunity offered by the foreign
banks and institutions that were contacted did not match that provided by a Security
Council resolution adopted under Chapter VII of the Charter of the United Nations.
In its second quarterly report, the Government of Iraq stated that, in its third report,
it would determine its position on whether or not the immunities should be
maintained, in the light of contacts with foreign banks and financial institutions and
legal arrangements in regard to the claims inherited by Iraq from the former regime.
Although the Government of Iraq has put in place legal arrangements to address the
aforementioned claims, it has not obtained the necessary guarantees to ensure the
protection of Iraqi assets. It therefore finds itself compelled to request a one-year
extension with respect to the protection afforded to the Development Fund for Iraq.
It looks to the Security Council to consider its request sympathetically, taking due
account of the difficulties with which Iraq has to contend; the fact that, as of the
time of writing, political blocs and entities in Iraq have yet to reach agreement on
the formation of a new Government after the parliamentary elections held on
7 March 2010; bearing in mind the considerable progress made by the Government
of Iraq in resolving sovereign debt and settling commercial claims, claims inherited
from the former regime and contracts outstanding from the Oil-for-Food
Programme; and also bearing in mind the significant steps taken by the Government
to apply the action plan and timeline for transition to successor arrangements, as set
out in the first quarterly report of Iraq.
4. Conclusions
• On the basis of the action plan and timeline that were put forward by the
Government of Iraq in its first quarterly report, significant steps have been
taken with regard to the settlement of sovereign debt, commercial claims and
the claims inherited from the previous regime; contracts outstanding from the
Oil-for-Food Programme; and improved financial and administrative oversight.
• The Government of Iraq wishes to close the Oil-for-Food Programme at the
end of 2010, by paying the amounts due for contracts where receipt is
documented and annulling contracts for which no such documentation is
available, as the Security Council deems appropriate.
• The immunity offered to Iraq by foreign banks and financial institutions does
not match that provided by Security Council resolution 1483 (2003) under
Chapter VII of the Charter of the United Nations.
• Iraq is apprehensive that commercial creditors who were not involved in the
settlement offers put forward since 2004 by the Government of Iraq through
Ernst & Young may seize Iraqi funds and assets abroad once immunity has
been lifted from the Development Fund for Iraq. The Government therefore
considers it important that a future Security Council resolution concerning the
immunity of that Fund should include a paragraph to the effect that Iraq will
not be liable for such claims after June 2011. Such a statement will
considerably facilitate the process of lifting immunity from the Development
Fund for Iraq.
• Immunity for the Development Fund for Iraq should be extended for a further
year, on the basis of the foregoing and of the statement concerning follow-up
to the second quarterly report of the Government of Iraq that was made by the
Committee of Financial Experts at the Security Council meeting of 12 July
2010, and taking into consideration current conditions in Iraq; the fact that
political blocs and entities in Iraq have, as of the time of writing, yet to reach
agreement over the formation of a new Government after the elections that
were held on 7 March 2010, which has, in one way or another, affected the
ability of Government institutions to promptly and comprehensively
implement and meet requirements for the timeline for transition to successor
arrangements for the Development Fund for Iraq and the International
Advisory and Monitoring Board for Iraq.
S/2010/567
Security Council Distr.: General
2 November 2010
Original: English
Note verbale dated 28 October 2010 from the Permanent Mission
of Iraq to the United Nations addressed to the President of the
Security Council
In the period following the submission of the second quarterly report, the
Government of Iraq continued its endeavours to determine the immunities to be
granted to Central Bank of Iraq reserves and Iraqi Government assets, in accordance
with the jurisdiction of the States in which Iraq intends to open accounts. The
Governor of the Central Bank of Iraq held formal consultations with Banque de
France (the central bank of France) on the margins of the annual meetings of the
World Bank Group and International Monetary Fund, which were held in
Washington from 8 to 10 October 2010. However, these endeavours and those that
preceded them did not produce any results that improved on the situation described
in Iraq’s second quarterly report: the proposed immunity offered by the foreign
banks and institutions that were contacted did not match that provided by a Security
Council resolution adopted under Chapter VII of the Charter of the United Nations.
In its second quarterly report, the Government of Iraq stated that, in its third report,
it would determine its position on whether or not the immunities should be
maintained, in the light of contacts with foreign banks and financial institutions and
legal arrangements in regard to the claims inherited by Iraq from the former regime.
Although the Government of Iraq has put in place legal arrangements to address the
aforementioned claims, it has not obtained the necessary guarantees to ensure the
protection of Iraqi assets. It therefore finds itself compelled to request a one-year
extension with respect to the protection afforded to the Development Fund for Iraq.
It looks to the Security Council to consider its request sympathetically, taking due
account of the difficulties with which Iraq has to contend; the fact that, as of the
time of writing, political blocs and entities in Iraq have yet to reach agreement on
the formation of a new Government after the parliamentary elections held on
7 March 2010; bearing in mind the considerable progress made by the Government
of Iraq in resolving sovereign debt and settling commercial claims, claims inherited
from the former regime and contracts outstanding from the Oil-for-Food
Programme; and also bearing in mind the significant steps taken by the Government
to apply the action plan and timeline for transition to successor arrangements, as set
out in the first quarterly report of Iraq.
4. Conclusions
• On the basis of the action plan and timeline that were put forward by the
Government of Iraq in its first quarterly report, significant steps have been
taken with regard to the settlement of sovereign debt, commercial claims and
the claims inherited from the previous regime; contracts outstanding from the
Oil-for-Food Programme; and improved financial and administrative oversight.
• The Government of Iraq wishes to close the Oil-for-Food Programme at the
end of 2010, by paying the amounts due for contracts where receipt is
documented and annulling contracts for which no such documentation is
available, as the Security Council deems appropriate.
• The immunity offered to Iraq by foreign banks and financial institutions does
not match that provided by Security Council resolution 1483 (2003) under
Chapter VII of the Charter of the United Nations.
• Iraq is apprehensive that commercial creditors who were not involved in the
settlement offers put forward since 2004 by the Government of Iraq through
Ernst & Young may seize Iraqi funds and assets abroad once immunity has
been lifted from the Development Fund for Iraq. The Government therefore
considers it important that a future Security Council resolution concerning the
immunity of that Fund should include a paragraph to the effect that Iraq will
not be liable for such claims after June 2011. Such a statement will
considerably facilitate the process of lifting immunity from the Development
Fund for Iraq.
• Immunity for the Development Fund for Iraq should be extended for a further
year, on the basis of the foregoing and of the statement concerning follow-up
to the second quarterly report of the Government of Iraq that was made by the
Committee of Financial Experts at the Security Council meeting of 12 July
2010, and taking into consideration current conditions in Iraq; the fact that
political blocs and entities in Iraq have, as of the time of writing, yet to reach
agreement over the formation of a new Government after the elections that
were held on 7 March 2010, which has, in one way or another, affected the
ability of Government institutions to promptly and comprehensively
implement and meet requirements for the timeline for transition to successor
arrangements for the Development Fund for Iraq and the International
Advisory and Monitoring Board for Iraq.