“The effective implementation of the programme during the past year has continued to face a number of difficulties, foremost, a growing revenue shortfall as a result of substantial reduction in Iraqi oil exports,” said Benon Sevan, Executive Director of the Office of the Iraq Programme. Iraqi oil exports have dropped from an average of over 2 million barrels per day in 2000 to under 1 million barrels per day in recent months. The UN calculates that the reduced exports have caused a $3.2 billion loss of revenue. The situation is further exacerbated by the cumulative revenue shortfall from earlier phases of the programme, which has left over $2.3 billion worth of UN-approved humanitarian contracts without funding. The possible disruption of Iraq’s oil output as a result of political developments is one of the factors causing difficulties, according to the Programme. Others include disagreements over the pricing of Iraqi oil, Baghdad’s occasional unilateral export suspensions, and the practice of “retroactive pricing” which is employed as a means of discouraging illegal kickbacks. Despite these problems, a note to the Security Council reviewing the programme’s past six months of operation shows improvements in some areas thanks to the UN’s relief work, while painting a still-grim humanitarian picture. The incidence of certain communicable diseases, such as cholera, malaria and measles, has declined, but water-borne diseases, including dysentery and typhoid, have shown slight increases. The countrywide shortage of vaccines is “expected to wane,” according to the report, which cautions at the same time that “the erratic supply of vaccines is obviously impacting adversely on children’s health.” Malnutrition is slowly decreasing, but a recent UN Children’s Fund (UNICEF) survey of over half a million Iraqi children found that one in five was malnourished.