Conservatives use oil-for-food to hammer U.N., ignore facts

Conservative media figures are engaged in an aggressive campaign to use the scandal surrounding the United Nations oil-for-food program to discredit the United Nations as a whole. The attacks focus on Saddam Hussein's manipulation of oil-for-food to obtain illegal revenue, which he used to prop up his ailing regime.

But these attacks on the United Nations frequently deny or ignore three important facts: (1) as members of the U.N. committee charged with monitoring the sanctions regime, the United States and other U.N. Security Council members played at least as large a role in monitoring oil-for-food as the oft-derided “U.N. bureaucracy” but apparently did little to address corruption in the program; (2) Saddam obtained a much larger portion of the illicit revenue used to prop up his regime through oil smuggling outside U.N. auspices than he did through the elaborate kickback schemes he devised under oil-for-food; and (3) oil-for-food achieved considerable success in alleviating the acute suffering of the Iraqi people that resulted from U.N. sanctions following the 1991 Gulf War.

Oil-for-food has been targeted by conservatives who have long been critical of the United Nations. For example, FOX News managing editor and chief Washington correspondent Brit Hume's dismissal of the United States' own oversight role in oil-for-food (discussed below) on the December 5 broadcast of FOX Broadcasting Company's FOX News Sunday was only one of several attacks he made on the United Nations during the program. “The deeper problem here, of course, is the U.N. itself,” Hume said, when asked about Senator Norm Coleman's (R-MN) call for U.N. Secretary-General Kofi Annan to resign. “This scandal is really, really a sign of what the U.N. has become. It is an enormously corrupt bureaucracy up there. It's a world unto itself. Self-dealing, I think, is rampant.”

Security Council, U.S. oversight of oil-for-food

On the December 5 edition of FOX News Sunday, Hume dismissed any suggestion that the United States bears some responsibility for lax oversight of the scandal-ridden oil-for-food program. Hume replied to Washington Post staff writer Ceci Connelly's suggestion that “you have to look a little bit carefully in terms of how much scrutiny and oversight we were giving all of those years as well” by insisting that “oversight of the oil-for-food program was the U.N.'s own job.” In fact, as a member of the so-called "661 committee" -- the committee established by U.N. Security Council Resolution 661 to monitor Iraq's compliance with the newly established sanctions regime -- the United States had the power to veto all sales of Iraqi oil and all Iraqi purchases of goods financed with oil-for-food revenues.

Security Council Resolution 986, which established the oil-for-food program, stipulated that the 661 committee approve all Iraqi oil sales under the program:

The Security Council ... Authorizes States ... to permit the import of petroleum and petroleum products originating in Iraq ... subject to the following conditions:

(a) Approval by the Committee established by resolution 661 (1990), in order to ensure the transparency of each transaction and its conformity with the other provisions of this resolution, after submission of an application by the State concerned, endorsed by the Government of Iraq, for each proposed purchase of Iraqi petroleum and petroleum products.

The 661 committee also had the power to scrutinize and approve all Iraqi imports of foodstuffs and other goods. The 1996 Memorandum of Understanding between the U.N. Secretariat and Iraq, which established guidelines for implementing the oil-for-food program, stipulated:

The purchase of medicine, health supplies, foodstuffs, and materials and supplies for essential civilian needs of the Iraqi population throughout the country ... will follow normal commercial practice and be on the basis of the relevant resolutions of the Security Council and procedures of the 661 Committee.

The memorandum also required that Iraq submit a detailed “Distribution Plan,” including a “categorized list of the supplies and goods” that Iraq intended to buy with oil-for-food revenues, how such purchases addressed specific humanitarian needs of the Iraqi people, and how the Iraqi government would distribute them, for review by, among others, the Secretariat and the 661 Committee.

It further required that “exporting States,” i.e., countries intending to sell goods to Iraq, “submit all relevant documentation, including contracts, for all goods to be exported under the Resolution [986] to the 661 Committee for appropriate action according to its procedures.” These applications included detailed technical information about all goods. Because the committee operated by consensus, each Security Council member had the power to or veto individual contracts or delay them pending further scrutiny. (This flow chart summarizes the complex procedures for contract approval.)

Finally, the memorandum gave the 661 Committee access to review the periodic audits of the U.N.-managed escrow account where Iraq's oil revenues were held.

The United States was probably aware of illicit dealings under oil-for-food but chose to look the other way for strategic reasons. One of the chief mechanisms that Saddam used to profit illegally from oil-for-food -- and to bribe others -- was kickbacks. Saddam would sell oil for below-market price and then demand kickbacks from the purchasers, or he would purchase goods at inflated prices and divert kickbacks to individuals or companies he wanted to bribe.

The Government Accountability Office's examination of oil-for-food corruption, released in April, made it clear that U.S. officials were aware of kickbacks but took only minimal steps to confront the problem:

In March 2001, the United States informed the Security Council about allegations that Iraqi government officials were receiving illegal surcharges on oil contracts and illicit commissions on commodity contracts. According to OIP [Office of the Iraq Program] officials, the Security Council took action on the allegations of surcharges in 2001 by implementing retroactive pricing for oil contracts. However, it is unclear what actions the sanctions committee took to respond to illicit commissions on commodity contracts.

The Washington Post reported on November 13 that Edward Mortimer, communications director for the U.N. Secretary-General's office, claimed that the 661 Committee chose to approve 70 separate contracts beginning in late 2001 that were “potentially overpriced”:

Over the next 18 months [after “the Greek captain of the oil tanker Essex admitted conspiring with Iraq to smuggle $10 million worth of crude oil” in October 2001], U.N. officials presented the sanctions committee with 70 contracts that were potentially overpriced, Mortimer said. But “nobody placed a single contract on hold,” he said -- including the United States and Britain, Baghdad's toughest critics on the Security Council.

John G. Ruggie, assistant secretary-general and senior adviser for strategic planning under Annan from 1997 to 2001 and current director of the Center for Business and Government at Harvard University's Kennedy School of Government, agreed in testimony before the House International Relations Committee that U.S. policymakers were aware of corruption in oil-for-food but suggested a rationale for the United States' relative passivity: the desire to maintain the sanctions regime to contain Saddam, even at the cost of tolerating a degree of corruption in oil-for-food:

Every member [of the 661 Committee] had the right to hold up contracts if they detected irregularities, and the US and Britain were by far the most vigilant among them. Yet, as best as I can determine, of those 36,000 contracts not one - not a single solitary one - was ever held up by any member on the grounds of pricing.

Several thousand were held up because of dual-use technology concerns. What does this suggest about US and British motives, as permanent members of that committee? Stupidity? Complicity? Or competing priorities? I strongly suspect it was the last. Support for the sanctions was eroding fast. Saddam's allocation of contracts significantly favored companies in some of the countries that were also represented on the committee. So it seems reasonable to infer that the US and Britain held their noses and overlooked pricing irregularities in order to keep the sanctions regime in place and to put all their efforts into preventing dangerous technologies from getting into Saddam's hands.

A December 7 editorial in the Financial Times (subscription required) cited the same figure on contracts and also noted that concerns about dual-use technology were the only grounds that the United States and Britain cited to hold up contracts. The editorial added: “The oil-for-food policy was devised and run by the member states of the UN Security Council, not by the UN Secretariat.”

Saddam gained more from illicit oil smuggling than from oil-for-food

FOX News host Bill O'Reilly expressed outrage on the December 6 edition of The O'Reilly Factor that “the U.N. oil-for-food program degenerated into a criminal enterprise, feeding Saddam more than $20 billion in illegal revenue.” On the December 3 edition of the nationally syndicated Rush Limbaugh Show, radio host Limbaugh put the figure at "$22.3 billion at last count." In fact, the amount is, at most, one-fourth of what O'Reilly and Limbaugh claimed. And Saddam obtained a much larger portion of the illicit revenue he used to prop up his regime through oil smuggling outside U.N. auspices.

The GAO report estimated that of the $10.1 billion in illegal oil revenues, only $4.4 billion came from “surcharges against oil sales and illicit commissions from commodity suppliers,” i.e., kickbacks, compared to $5.7 billion from oil smuggling that was outside of U.N. control.

The Central Intelligence Agency's Duelfer report similarly estimated that of the nearly $11 billion in illicit income that Saddam obtained from August 1990 until March 2003, only $1.7 billion, or 16 percent, came through oil-for-food [Volume 1, PDF p. 158]. According to the U.N. Office of the Iraq Program (OIP), sales of oil under oil-for-food generated $65 billion in revenue.

The U.S. played an equally substantial role in tacitly allowing Iraqi oil smuggling outside the auspices of oil-for-food. Again, the motivation was apparently to hold the sanctions regime in place in order to prevent Saddam from re-emerging as a threat to the world. The Duelfer report found that “Iraq's bilateral trade Protocols with neighboring states [Syria, Turkey, Jordan, and Egypt] provided Saddam with his largest source of illicit income during UN sanctions.” In particular, “Jordan was the key to Iraq's financial survival from the imposition of UN sanctions in August 1990 until the implementation of the UN's OFF program.” The Duelfer report estimated that Iraq gained $4.4 billion in illicit revenue through trade with Jordan; $2.8 billion from Syria; and $710 million from Turkey. The Duelfer Report depicted efforts to combat this smuggling as ineffectual: “The UN Sanctions Committee 'took note' in May 1991 of Jordan's oil imports from Iraq. Essentially, the Committee neither approved nor condemned Jordan because of its dependence on Iraqi oil at the time.”

Former assistant secretary of state for near eastern affairs Robert Pelletreau spoke more bluntly about the U.S. position on Iraqi oil smuggling to Turkey in an the December 2004 Harper's Magazine article by Joy Gordon. Gordon wrote: “Turkey, like Jordan, complained that that the sanctions were harming its economy. And Turkey, like Jordan, was a crucial ally the United States needed to appease. The result was a decision by the United States 'to close our eyes to leakage via Turkey,' according to ... Pelletreau.”

The U.S. was also by far the largest contributor to the Multinational Interception Force, the naval fleet authorized under U.N. Security Council Resolution 665 to intercept oil tankers carrying illicit Iraqi oil.

At the very least, Iraqi oil smuggling was far from a secret before the U.S.-led invasion. For example, an August 5, 2001, Associated Press article bore the headline “Iraq's Oil Money Undermines Sanctions.”

Oil-for-food's humanitarian achievements

The Office of the Iraq Program (OIP) reports that the oil-for-food program supervised the distribution of $31 billion of humanitarian goods, with another $8.2 billion “currently in the humanitarian pipeline.” Billions more in oil-for-food revenues were allocated to Gulf War reparations.

Despite corruption, oil-for-food did achieve significant success in its goal of alleviating widespread suffering and malnutrition that prevailed in Iraq 1991 to 1996 due to sanctions. The OIP reports that “The nutritional value of the food basket” -- which all 27 million Iraqis were entitled to receive monthly and on which an estimated 60 percent depended entirely -- “almost doubled between 1996 and 2002 from 1200 to 2200 kcal/person/day.”