U.S. Department of State on Iraqi Underspending

Regime fails to spend on behalf of Iraqi people

Following is the text of the Department of State Fact Sheet (billion
equals 1,000 million):

(begin fact sheet)

SADDAM HUSSEIN WASTES IRAQI RESOURCES AND FUNDS
January 26, 2001

United Nations letter shows extent of Iraqi mismanagement and waste in
acquiring humanitarian supplies.

Ten years after Operation Desert Storm and the liberation of Kuwait by
an international coalition of forces, Iraq remains under the rule of
Saddam Hussein and his regime.

In recent weeks, Tariq Aziz has asserted that Kuwait "got what it
deserved" when Iraq invaded in 1990. Saddam's son Uday, a member of
Iraq's Parliament, called for a new parliamentary emblem showing
Kuwait as part of Iraq. As Iraq has stepped up its threatening
rhetoric, a January 17, 2001 letter to Iraq illustrated in stark
detail the extent of Saddam Hussein's neglect of the welfare of his
own people. The facts and figures from the United Nations deserve
close attention, as they provide definitive proof that UN economic
sanctions and international diplomatic isolation are not the causes of
the plight of the Iraqi people. Against the unequivocal facts
explained by the UN, Saddam Hussein and his regime stand exposed as
the true authors of Iraq's misery.

In a stinging letter issued recently, the United Nations has pointed
out the extent of Saddam Hussein's callous disregard for the welfare
of his own people.
Baghdad has inexplicably delayed ordering sufficient supplies for
health, education, water, sanitation and the oil sector under the
UN-administered Oil-for-Food program. This program allows Iraq to sell
oil in order to purchase supplies for the Iraqi people, to rebuild
critical infrastructure and to ensure the continued production of oil.
Using the considerable funds in this program, Iraq orders supplies
every six months, and submits these orders to the UN for approval.

In the most recently completed six-month phase of the program (June to
December, 2000), Saddam Hussein's dereliction in providing for the
Iraqi people and the nation's economy is laid bare.

During this period, US$7.8 billion were available to Iraq for
purchases during this period, yet Iraq submitted purchase applications
worth only US$4.26 billion - barely 54 percent of the amount available
for purchases to help the humanitarian needs of the Iraqi people.

In key sectors of the Iraqi economy, Saddam's regime's disregard for
the welfare of the Iraqi people is made plain:

-- Despite the international concern for the health and nutritional
needs of the Iraqi people, the total value of applications received in
the health sector was only US$83.6 million. US$624.7 million are
allocated by the UN for the Iraqi health sector, meaning that Saddam
Hussein spent only 13 percent of funds available for health supplies
it could have purchased

-- Iraq submitted only US$21.5 million in applications for educational
supplies, barely six percent of the US$351.5 allocated for this
purpose.

-- Iraq submitted only US$184.7 million in water and sanitation
applications, out of US$551.1 million available.

-- Iraq requested only US$22.7 million in applications for spare parts
and equipment for the oil sector, just three percent of the US$600
million allotted.

More than US$4 billion sit in a United Nations escrow account,
available to the Iraqi government for the purchase of the humanitarian
supplies the Iraqi people so desperately need, and which the Iraqi
regime claims it cannot obtain due to economic sanctions.

Yet the list goes on of Saddam's maneuvers that continue to mire the
Iraqi people in misery.

In December 2000, Iraq shut off and then slowed down its oil exports
in an attempt to extort control of oil revenues. According to the
United Nations, as of January 10, 2001, Iraq's reduced exports had
already amounted to lost revenue totaling US$1.4 billion dollars.

Baghdad's recent insistence on selling its oil in Euros rather than US
dollars, which is the worldwide industry standard, will likely result
in Iraq losing US$250 to US$300 million yearly in conversion fees and
lost interest.

Many countries in the world have made concessions and gestures aimed
at reducing Iraq's international isolation. Saddam Hussein's inaction
in the past six months shows that he cares little for these gestures,
and cares even less for the Iraqi people. As long as Saddam Hussein
blocks United Nations efforts to provide needed assistance to the
Iraqi people and economy, he shows that his regime will continue to
pose a threat to the region and remains the primary cause of suffering
in Iraq.