The U.N. is us:
Exposing Saddam Hussein's silent partner

The Bush Administration was still reeling from the revelations about Abu Ghraib prison this year when supporters of the President suddenly took note of a dramatic new scandal involving Iraq. “The richest rip-off in world history,” wrote William Safire; “fraud and deception that probably resulted in the deaths of thousands of Iraqis through malnutrition,” said Republican congressman Ralph Hall. The object of this ire was not Halliburton or any bungling by U.S. forces, nor was it a rogue nation or leader or any terrorist group. Instead, the loss of billions of dollars and countless Iraqi lives was laid at the feet of the United Nations.

“HOW HUSSEIN STOLE BILLIONS UNDER THE EYE OF THE U.N.'S OIL-FOR-FOOD PROGRAM,” was the headline in the New York Times. In the hearings he chaired in July, Congressman Hall spoke of “the trail of corruption unfolding on the world stage,” and introduced a speaker whose book on the U.N. is entitled Inside the Asylum. In both houses of Congress, legislation calling for the withholding of U.N. dues is pending.

The current criticism is based mainly on an April report by the General Accounting Office, as well as on a list published in January by the Iraqi newspaper Al-Mada, identifying those who received vouchers to buy oil from Iraq. The heart of the GAO's accusation is that “from 1997 through 2002 . . . the former Iraqi regime acquired $10.1 billion in illegal revenues related to the Oil for Food program.” Most recently, the Duelfer report, commissioned by the CIA, provided a more detailed version of the accusations. Given the elaborate safeguards built into the Oil for Food Programme, critics argued, how could such a theft occur without complicity?

It may turn out that particular individuals in the U.N. did receive payoffs from Iraq in the form of oil vouchers. But fraudulent acts by individuals —in direct violation of their employer's policies—are not the same thing as institutional failure. The U.N. barred employees from engaging in financial transactions with Iraq. And if Iraq's government used the Oil for Food Programme to get cash under the table from its business partners, then we should look at who designed the program in the first place.

What seems to be consistently overlooked—not only by right-wing pundits but at congressional hearings and in the New York Times—is a distinction of enormous significance: the U.N. is being attacked for the policies and failures of particular member nations. The Oil for Food Programme was not some concoction of Kofi Annan's. It was created by a vote of the members of the Security Council. And every aspect of how the program ran—what goods were allowed, the monitoring procedures, the transfer of funds, everything—was explicitly established by the members of the Security Council. Kofi Annan did not have a vote; but the United States and Britain did, and they approved of every resolution and decision that determined how the Oil for Food Programme worked. Whatever critics may say, “the U.N. bureaucracy” did not design a program that handed over cash to Saddam Hussein. The fifteen 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. The U.N.'s personnel operating the Oil for Food Programme did not set these policies. They simply executed the program that was designed by the members of the Security Council.

For the most part, the U.N. has not publicly defended itself. There is an internal investigation, led by former Federal Reserve Chairman Paul Volcker, and U.N. staff are making few public comments until the investigation is complete. Ironically, if it is true that Saddam Hussein's government smuggled and skimmed such vast amounts, much of the blame can be laid at the feet of the United States. For over a decade U.S. representatives have dominated decisions and actions regarding Iraq by the Security Council and its fifteen-member 661 Committee.¹1. So called because of Security Council Resolution 661, which established the Iraq sanctions regime in 1990. The committee operated by consensus, effectively giving each member veto power, a power the United States has made liberal use of. The United States is also on record as the committee member that most consistently and actively scrutinized Iraq's dealings under the Oil for Food Programme. Scrutiny of the country's physical borders—both land and sea—has also been dominated by the United States since the last Gulf War. Indeed, since then, no country has been in a better position to evaluate and control Iraq's business.

Saddam Hussein smuggled $6 billion worth of oil out of Iraq, according to the General Accounting Office, much of it via tanker in the Persian Gulf. But the U.N. Multinational Interception Force (MIF)—charged with interdicting smuggling—turns out not to be a U.N. operation at all. The MIF came about when the Security Council passed a resolution in 1991 inviting any U.N. member country to interdict Iraqi oil smuggling in the Gulf, if the occasion arose. The result was the creation of a loose-knit collection of ships from various nations—all under the command of a United States officer from the Fifth Fleet. The commanders of the “U.N.” interception force have consisted entirely of a series of United States rear admirals or vice-admirals. And the ships taking part were almost all U.S. Navy vessels. Although twenty or so other countries participated, their contributions were minuscule compared with the U.S. role. In 2001, for example, Denmark contributed one ship for three months; U.S. participation that year involved ninety ships. In 2002, Poland contributed one ship for four months; U.S. participation involved ninety-nine ships. A few Arab countries participated in other ways. Bahrain, Saudi Arabia, and Kuwait agreed to handle and dispose of ships that had been seized by the MIF. Britain's role was a bit larger than most other countries'; Britons always served as deputy commanders. But even Britain's role was dwarfed by that of the United States. In 2001 four British ships were involved, compared to the United States' ninety.

The interception force was by all accounts quite active. It boarded hundreds of ships each year through 2001. In 2002, during the Bush Administration's lead-up to the war, the MIF boarded over 3,000 ships, then did the same in 2003. The U.S. commander made annual reports to the 661 Committee. But that was the only involvement with the U.N., and the only U.N. body involved—not the secretary general, not “the U.N. bureaucracy,” just a committee of the fifteen nations that sat on the Security Council. If Hussein did indeed smuggle $6 billion worth of oil in “the richest rip-off in world history,” he didn't do it with the complicity of the U.N. He did it on the watch of the U.S. Navy.

While the Fifth Fleet intercepted ships carrying illicit Iraqi oil, the U.S. position on overland oil smuggling to Jordan and Turkey was somewhat different: outright approval. In May 1991, under the first Bush Administration, as Iraq's neighbors began to complain about the effects of the sanctions on their countries, the United States quietly decided to grant an informal “exemption” to Jordan, permitting it to import Iraqi oil in clear violation of the sanctions. This convenient arrangement continued for the next decade, with the blessing of three U.S. administrations. According to the Duelfer report, Iraq's income from these arrangements with Jordan totaled some $4.4 billion. Turkey, like Jordan, complained 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 former Assistant Secretary of State Robert Pelletreau. By 1997 the volume of oil being smuggled from Iraq to Turkey had grown to 1,000 trucks per day, transporting millions of tons of oil per year . . . all while U.S. planes enforcing no-fly zones flew overhead. Iraq's illicit income from Turkey, according to the Duelfer report, came to $710 million.

About $1.5 billion of Hussein's ill-gotten gains, according to the Duelfer report, came from kickbacks. The Iraqi regime is said to have worked out deals with manufacturers to buy goods at inflated prices—5 percent or 10 percent above market price—the seller then returning the difference under the table. It may well be that there were systematic kickbacks. But if there were, they didn't happen for lack of oversight on the part of the U.N. The Oil for Food Programme had one of the most rigorous, elaborate systems of monitoring and verification imaginable. It was designed by the Security Council and implemented by the Secretariat. Before Iraq could purchase a single item—including food or medicine—it had to submit a detailed proposal for each six-month period, showing where the areas of greatest need were and how these purchases would address those needs. Each proposal was accompanied by a list, several hundred pages in length, of every single item and the quantity Iraq wanted to purchase, for every category that was in the proposal. U.N. staff then looked over the list, based on input from UNICEF and other U.N. agencies, to ensure that the list corresponded to the correct humanitarian priorities. Only then could Iraq sign a contract with a vendor to buy the approved goods. Once the contract was signed, it was circulated to the Office of Iraq Programme (OIP),²2. The OIP ran the Oil for Food Programme. as well as UNSCOM (later UNMOVIC),³3. The U.N. Special Commission on Monitoring, replaced in 1999 by the United Nations Monitoring, Verification and Inspection Commission, was mandated to disarm Iraq of its WMDs and to monitor any further developments or acquisitions. and the entire 661 Committee. Once the contract was approved, and the goods were shipped to Iraq, an independent inspection agent (first Lloyd's Register and later Cotecna) inspected them on arrival. The Iraqi government then transported them to their destinations. If there were security concerns, the U.N. provided additional monitoring. Chlorine, for example, was essential to water purification, but it also could be used to produce chemical weapons. So UNICEF provided monitors who tracked every single chlorine canister from contracting through arrival in Iraq, including transport to its destination, installation in an approved facility, and then disposal of the empty canister. U.N. staff in Iraq also provided monitoring of the Oil for Food Programme as a whole, looking at equity, efficiency, and adequacy. Staff from UNICEF, the World Health Organization, the World Food Programme, the U.N. Development Programme, and other agencies conducted thousands of site visits to confirm that food was arriving in the villages where it was needed, that medical supplies were arriving at the clinics, and that school supplies, potable water, and agricultural supplies were being distributed properly.

This process gave every member of the Security Council the opportunity to review nearly every contract for Iraqi imports; and every member had the right to question any contract, to delay it, and to veto it. When the U.N. staff found that a price was suspiciously high, they asked the company for an explanation. If the explanation wasn't satisfactory, they notified the 661 Committee, giving every member the opportunity to block or delay contracts to prevent kickbacks. On more than seventy occasions, the OIP told the committee it was concerned that a price was so high it might allow for kickbacks, and gave the committee all the documentation. In not a single instance did the United States choose to block any transaction due to suspected kickbacks.

It was not because the United States lacked information. Of the fifteen members on the committee, the United States took the job of examining and assessing Iraq's dealings the most seriously, drawing on sixty technical experts to scrutinize contracts. The United States held up contracts for months, sometimes for years, asking questions again and again about the exact chemical makeup of medical-laboratory supplies, or how much weight a truck could carry, or whether or not a computer used a Pentium chip. Concerned about security, the United States blocked yogurt makers, child vaccines, ambulances, equipment for water purification, truck tires, electrical generators. . . 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.

In examining contracts, “the U.S. and Britain were by far the most vigilant,” testified John Ruggie, a professor at Harvard University, at the Senate hearings on the accusations against the U.N. this year. Among the tens of thousands of contracts reviewed, “not one—not a single solitary one—was ever held up by any member on the grounds of pricing.” According to Ruggie, the United States and Britain “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.”

How Iraq sold its oil was also under scrutiny, and the United States did act on what it perceived to be skimming by Hussein in these deals. The solution it enacted, however, succeeded in almost bankrupting the entire Oil for Food Programme within months.

In December 2000 the “oil overseers”—oil specialists appointed by the secretary general to monitor Iraq's oil sales—reported to the 661 Committee that Iraq was setting its prices unusually low, and that this left room for cash payments under the table. Since the terms of the Oil for Food Programme required every single sale of Iraqi oil to be approved by every member of the Security Council, the United States and Britain came up with a novel solution. Instead of approving prices at the beginning of each sales period (usually a month), in accordance with normal commercial practices, the two allies would simply withhold their approval until after the oil was sold—creating a bizarre scenario in which buyers had to sign contracts without knowing what the price would be. The rationale was that this allowed the members of the 661 Committee to then set the price at the fair market value—as they determined it to be, weeks later. The oil overseers told the committee that this might stop the kickbacks but that it would be absolutely disastrous for the funding of the humanitarian goods. They offered a variety of other solutions, but the United States and Britain insisted on this one. And the results were in fact disastrous. Oil sales collapsed by 40 percent, and along with them the funds for critical humanitarian imports. On February 26, 2002, the director of the Oil for Food Programme informed the Security Council that $7 billion in urgent humanitarian contracts could not be paid for, because of the shortfall from the new pricing policies. The Oil for Food Programme, the lifeline for the entire Iraqi population, was badly compromised—not because Saddam Hussein had skimmed 5 percent or 10 percent but because the United States and Britain had adopted a punitive measure so extreme that it nearly bankrupted the entire program.

In the end, there may well have been smuggling, and there may well have been skimming at the margins of the Oil for Food Programme. But these did not occur for lack of oversight. The program's elaborate structure of monitoring was simply unprecedented within the history of international governance. Every purchase was scrutinized for possible military uses. Every purchase was reviewed to ensure that it conformed to humanitarian priorities. Nine different U.N. humanitarian agencies were involved, as well as arms inspectors, as well as the Secretariat, as well as the entire Security Council. Every sale of oil, and every purchase of oil equipment and spare parts, was reviewed by the U.N.'s oil overseers, as well as every member of the Security Council. Hundreds of U.N. staff in Iraq monitored the arrival and distribution of goods, and were thoroughly involved in monitoring every aspect of Iraq's economy and social services. In addition, under the terms of the Oil for Food Programme, the secretary general provided thorough, detailed reports to the Security Council every ninety days, for seven years. If the Iraqi government managed to misuse funds, it happened not because there was a lack of oversight but despite the most elaborate structure of oversight imaginable.

Saddam Hussein may well have ended up with more money in his pockets than he should have. Perhaps it was even in the billions. But little of the blame can credibly be laid at the feet of “the U.N. bureaucracy.” Far more of the fault lies with policies and decisions of the Security Council in which the United States played a central role. It is particularly ironic to hear the United States speak of the U.N. as a global center of corruption and incompetence. We might want to remember one occasion in particular when the U.N. exercised its responsibility for careful oversight. It was January of 2003, when Colin Powell insisted that Iraq was rife with weapons of mass destruction ready to be unleashed against Iraq's neighbors, and against the United States. The Security Council would not authorize an invasion of Iraq. The members of the council wanted evidence, not speculation; and there wasn't any, because there weren't any weapons of mass destruction after all. Perhaps it is unsurprising that today the only role it seems the United States expects the U.N. to play in the continuing drama of Iraq is that of scapegoat.

Response: March 2005, page 6

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The U.N. is us: Exposing Saddam Hussein's silent partner

The U.N. is us:
Exposing Saddam Hussein's silent partner