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The UN oil-for-food program in Iraq:
The real scandal

January 14, 2005 | Page 5

SOME REPUBLICANS are clamoring for the resignation of United Nations (UN) Secretary General Kofi Annan in the wake of allegations of financial mismanagement in the Iraq oil-for-food program administered by the UN before the U.S. invaded Iraq in 2003. ELIZABETH SCHULTE reports on what really happened--and explains what the real scandal is all about.

THE UN has released some of the findings from more than 50 internal audits into charges of financial mismanagement in the oil-for-food program in Iraq. The program, which began in 1996, allowed Iraq to sell oil on the world market in UN-approved contracts. It was allowed to buy food, medicine and other basic supplies with revenues from the sales.

The aim of the program was to offer some relief to the Iraqi population, which suffered the brunt of crippling U.S.-led economic sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait, which led up to the 1991 Gulf War. The UN sanctions remained in place until 2003, when they were lifted at the request of Iraq's new military occupiers--the U.S. government.

Last April, a report by the General Accounting Office (GAO)--Congress' investigative agency--charged that the former Iraqi regime made $10.1 billion in illegal revenues from the oil-for-food program between 1997 and 2002.

In November, Senate Republicans, led by Norm Coleman (R-Minn,), initiated a committee to investigate the allegations--and accused oil-for-food program administrators of rampant corruption. Coleman has called for Kofi Annan to be fired--for "covering up" the mismanagement, according to Annan. He claimed in a Wall Street Journal commentary that his committee is "gathering evidence Saddam gave hundreds of thousands--maybe even millions--of oil-for-food dollars to terrorists and terrorist organizations."

But Coleman's claims don't match with the findings of former U.S. Federal Reserve Chair Paul Volcker, who headed up a UN-appointed commission to investigate the oil-for-food program.

Some results from that investigation released last week didn't corroborate accusations of bribery or corruption. But they did uncover shady accounting with the oil-for-food program's three main contractors that were hired to inspect transactions.

For example, according to one report obtained by the New York Times, Lloyds Register--a British customs service that monitored sales of food and other basics in Iraq--billed the Office for Iraq Program for 1,800 days when Lloyds agents weren't even in Iraq. Despite this, the Lloyds contract was extended several times.

If the oil-for food program was bilked, it went on under the watchful eye of the world's main powers, especially the U.S. "Whatever critics may say, 'the UN bureaucracy' did not design a program that handed over cash to Saddam Hussein," Joy Gordon wrote in Harper's magazine last month. "The 15 members of the Security Council--of which the United States was by far the most influential--determined how income from oil proceeds would be handled, and what the funds could be used for."

For example, the GAO report charges that the Iraqi government smuggled $6 billion worth of oil out of Iraq--under the oil-for-food program administrators' watch. But the UN Multinational Interception Force charged with preventing smuggling on the seas is made up almost exclusively of U.S. ships--and is under the command of the U.S.'s Fifth Fleet.

In cases of overland smuggling to Jordan and Turkey, all that these U.S. allies had to do was ask. In 1991, Bush Sr.'s administration gave Jordan an exemption allowing it to import Iraqi oil in violation of the sanctions.

Gordon points out that every member of the UN Security Council had the opportunity to review, question, delay and veto almost every contract for Iraqi imports. In more than 70 instances when the committee was alerted to prices high enough that they may have signaled kickbacks, the U.S. never chose to block a transaction.

However, the U.S. often did hold up contracts for months--or even years--to question medical supplies. "Concerned about security, the United States blocked yogurt makers, child vaccines, ambulances, equipment for water purification, truck tires, electrical generators," reports Gordon. "In July 2002 alone, $5 billion of contracts for critical humanitarian supplies for Iraq were on hold--nearly all at the behest of the United States."

This is the scandal that no committee will investigate: the impact the sanctions had on the people of Iraq.

With the stated purpose of stopping Saddam Hussein from manufacturing "weapons of mass destruction," the sanctions banned so-called "dual-use" items. Chlorine, which is needed to purify water, was considered a "dual-use" item.

"The corruption evident in the oil-for-food program was real, but did not originate from within the United Nations, as Norm Coleman and others are charging," former UN weapons inspector Scott Ritter wrote in Britain's Independent newspaper. "Its origins are in a morally corrupt policy of economic strangulation of Iraq implemented by the United States as part of an overall strategy of regime change.

"Since 1991, the United States had made it clear--through successive statements by James Baker, George W. Bush and Madeleine Albright--that economic sanctions, linked to Iraq's disarmament obligation, would never be lifted even if Iraq fully complied and disarmed, until Saddam Hussein was removed from power. This policy remained unchanged for over a decade, during which time hundreds of thousands of Iraqis died as a result of these sanctions."

This is the real scandal.

"Sanctions killed 1 million Iraqis"

DENIS HALLIDAY is a former head of the UN's humanitarian program in Iraq who administered the oil-for-food program--and who resigned in protest against the U.S.-led sanctions on Iraq. He spoke to Socialist Worker about the recent oil-for-food controversy.

THE REAL scandal in my mind is the fact that the UN sustained sanctions on the people of Iraq for 13 years, and by so doing--and neglecting the reality of the consequences that were well reported to them in the Security Council--they killed well over a million Iraqis. Two-thirds of those were probably very young children. That is a scandal.

To impose those sanctions--and sustain those sanctions after the Gulf War, when they knew perfectly well that the U.S. had destroyed the civilian infrastructure of Iraq, its water systems and power--contributed to the single greatest killer of children.

Sad to say, even after an occupation of almost two years, the fact is that contaminated water is killing the children of Iraq today.

The oil-for-food program wasn't to actually resolve the issue of health. It was to at least maintain the population at a level it had reached by that stage, which was already below acceptable standards.

It was also to allow Iraq to pump oil and then take 30 percent of that money--hard-earned money in oil revenues working under conditions that were difficult--and give that money to Kuwait for compensation. Not that I'm against reparations, but we have a lot of other examples where these reparations have not been paid.

To take the money at the very moment when children were dying--as [then-Secretary of State Madeleine] Albright acknowledged back in 1996, half a million children had already died--is an outrage. That is another scandal.

We will be reminded that the UN is not made up of the secretary general and the secretariat. The UN is an intergovernmental organization made up of member states. In the case of Iraq and sanctions and smuggling, these same members states--led by Britain and the U.S.--knew all about this program, developed this program, designed this program, approved the contracting process, approved the oil sales process.

They knew about it all the way through, and they got reports as to what was happening. They knew about kickbacks on contracts. They knew there were surcharges on oil sales. This was all reported to them, and they did nothing about it.

The smuggling of oil into Turkey and Jordan was understood and condoned by Washington--in that Turkey and Jordan were both allies, and both were suffering economically from the sanctions on Iraq, their trading partner. So all of this was known, there's no scandal there.

The scandal is that the U.S. and Britain, who imposed and sustained the sanctions more than any other members states then turned around and winked and allowed the smuggling to go on and put hard revenue into the hands of Saddam Hussein, which was the very purpose of sanctions in the first place. Those are the issues we should be looking at.

Why are they raising it now? For all the wrong reasons. Clearly, American oil companies were buying oil from Saddam Hussein, and they were indirectly paying surcharges. American companies had contracts with Iraq and may have worked on the kickback game, as did many other friends and allies of the U.S. Everybody is involved here. Nobody's going to be clean.

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