Memorandum submitted by Peter Hain, MP,
Minister of State, Foreign and Commonwealth Office
I promised, when I appeard before you on 25
November, to revert to the Committee on two points; the agenda
for the forthcoming G8 Foreign Ministers' meeting on Conflict
Prevention and the way in which financial sanctions against Iraq
are implemented in the UK.
G8 FOREIGN MINISTERS'
When they met in Cologne in June, G8 Foreign
Ministers agreed to dedicate a special meeting to conflict prevention
and conflict resolution. The UK warmly welcomed this: given the
huge human and financial costs of conflict, we want to see the
issue higher up the international agenda.
The meeting will be held in Berlin from 16-17
December 1999. We do not have a formal agenda for the meeting.
But we understand the issues to be discussed are likely to include:
action to combat the proliferation
of small arms;
the problems of children affected
how to tackle war economies (including
the illicit trade in diamonds and other high value commodities
which can fuel conflict);
reducing the role of organised crime
and drug-trafficking in perpetuating conflict;
the risk of conflict arising from
environmental stresses such as water shortages;
supporting the role of the UN and
of regional organisations in conflict prevention.
The UK will be arguing for a comprehensive approach
bringing together political, economic and development policies.
We will call for action now on specific major contributing factors
to conflict, including small arms and the illicit trade which
fuels war economies. We will also stress the need to lay the foundation
for the longer-term work needed to sharpen the tools which the
international community can use to deal with conflict.
Foreign Ministers may, in addition, use this
opportunity to discuss other major foreign policy issues of the
UK OF FINANCIAL
I promised to let you have further information
on the freezing of Iraqi assets in the UK. The total amount of
frozen Iraqi funds held in the UK in June 1999 was $739 million.
This includes both funds held by the Iraqi regime and funds held
by private Iraqi individuals. For legal reasons, we are unable
to disclose information on transactions involving individual client
Her Majesty's Government has no legal powers
to sequestrate frozen accounts to pay for unmet debts, nor to
recoup the £650 million owed to the UK by the Iraqi regime
in export credits. Although frozen funds may be released to meet
debts originating prior to the implementation of sanctions, the
consent of the debtor (in most cases the Iraqi regime) is required.
In 1996, ECGD issued writs on Iraqi debtors in order to keep its
claim on Iraqi debts alive.
On the implementation of financial sanctions
in general, Ms King asked what I saw as the obstacles to financial
sanctions being applied consistently by all Member States. I should
note that, while political will is of course indispensable, the
main difficulty lies in identifying the beneficial ownership of
assets. Secrecy laws and poor financial regulation in certain
jurisdictions allow the ownership of assets to be hidden. Furthermore,
these days funds can be moved rapidly and often untraceably around
the world. Officials have been tackling these issues rigorously
for some time, not least because they have implications for other
Government objectives, such as tackling money laundering, financial
crime and regulatory abuse. The UK is seeking the views of G8
partners on how financial sanctions can be implemented more effectively
on a global scale.
There are a couple of further points on which
I would like to amplify my evidence to the Committee, as follows:
Mr Khabra referred to the recommendation by
the humanitarian panel established by the Security Council that
a standing list of humanitarian items be pre-approved by the Iraq
Sanctions Committee and should be contracted and procured directly
by the Government of Iraq without requirement for approval by
or notification to the Sanctions Committee. The Committee may
wish to be aware that the comprehensive draft resolution now under
discussion in the Security Council incorporates the vast majority
of that panel's recommendations (many of which reflect suggestions
included in a humanitarian paper which the UK submitted to the
panel in March), including the proposal that the Iraq Sanctions
Committee should approve lists of humanitarian items, including
foodstuffs and medicines, on the basis of proposals from the UN
Secretary-General, and that these goods would not require to be
submitted to the Committee for approval, except for items subject
to the provisions of UNSCR 1051.
AGAINST UNITA: DFID
Tony Faint, when he appeared before you on 18
May, informed the Committee that DFID had offered $300,000 to
help fund the work of the Expert Panels. However, the UN then
announced that the work of the Expert Panels could be funded through
internal resources and that no donor contributions were necessary.
Subsequently, the UN Secretariat reassessed
the work plans of the Panels and produced a full budget for their
work. This reinstated the need for donor contributions of $900,000
in addition to the $1,000,000 which could be funded internally.
But by this time DFID's resources had been reassigned to match
other funding priorities, and they only had $200,000 still available
to support the work of the Panels. Officials are now processing
this contribution of $200,000, which should be available for the
use of the Secretariat by the end of next week.
Peter Hain MP
Minister of State, Foreign and Commonwealth Office