The United Nations Compensation Commission last fall reported that Iraq owed Kuwait $15.9 billion for lost oil sales and for reserves of oil and gas which were burned off.

The report is fatally flowed.  Out of the total $15.9 bn in the “award”, at least $12 billion was inflated by elementary computational or conceptual errors.  Another $2 billion of the analysis are questionable, involving projections of the oil market which are improbable.

Errors were in both directions.  Two large mistakes were in Kuwait’s favour, overstating the compensation due.  But another, smaller mistake had the effect of lowering the claim.

The net effect is gross inflation of the damages and thus gross exaggeration of the amounts of compensation, since the errors of overstatement outweigh those in the opposite direction.

It is unclear how the errors passed scrutiny at the UN, since they are simple and can be easily tested against information freely available in the public domain.

The error is a factor of 4 to six, or more.  This raises serious questions about the  reliability of the process at the UN Compensation Commission.  Such errors, if  they are verified and then remain unrectified, undermine confidence in such international tribunals.
For a summary of the critique  see:
“Critical Review of UNCC Award For Lost Production And Lost Reserves” by  Thomas R Stauffer, Middle East Economic Survey (MEES), 29 January 2001.
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