EVENTS

Date:	Wednesday, December 8, 2004
Time:	4:00 PM -- 5:30 PM
Location:	Wohlstetter Conference Center, Twelfth Floor, AEI 1150 Seventeenth Street, N.W., Washington, D.C. 20036

December 2004

The United Nations Oil-for-Food Scandal

Over the past few months, congressional and Central Intelligence Agency inquiries have unveiled the magnitude of the United Nations Oil-for-Food scandal. The Senate Permanent Subcommittee on Investigations estimates that Saddam Hussein's government illicitly siphoned $21.3 billion from the program, roughly twice as much as originally estimated. Hussein used the funds to purchase weapons, to pay off foreign businessmen and politicians and, according to the House Committee on International Relations, to reward terrorist sympathizers. Numerous officials from the United Nations and from foreign governments and businesses have been implicated in the scandal. Who, ultimately, will be deemed responsible for the scandal? What can we learn from it? How will it affect the future of the United Nations and its relationship with the United States? These and other questions were addressed at a December 8 AEI panel discussion.

Claudia Rosett
Foundation for the Defense of Democracies

The Oil-for-Food program was established by a UN resolution in 1995 and began operation by the end of 1996. The aim of the program was to provide "equitable distribution of humanitarian relief to all segments of the Iraqi population throughout the country." The purpose of Oil-for-Food was to ease the pain of the Iraqi people caused by the UN sanctions that were meant to weaken Saddam Hussein. From the beginning it was intended to be a "limited and temporary program."

Right now there are ten investigations on the Oil-for-Food program underway. Saddam Hussein skimmed $17 billion while the Oil-for-Food program existed. The UN program essentially allowed Saddam to corrode the entire system. There are now papers that reveal arms smuggling through Syria, Jordan, Yemen, and links to terrorist organizations. He was able to do all of this under the veil of the Oil-for-Food program, yet the Secretariat refuses to acknowledge that they are, in large part, to blame.

This program reveals that the United Nations essentially functions as a secret society. The deal struck with Saddam was one of great privilege. The people of Iraq were never consulted. It was assumed that all of Iraq's oil belonged to Saddam Hussein; therefore, the oil was his to dispose of as he saw fit. The UN gave him great confidentiality; one could not even find the names of his contractors. His scams could have easily been stopped if there had been transparency.

What the UN allowed Saddam to do was recreate his network of dirty financing of arms deals that he set up in the 1980s. Beyond this network, the graft that prevailed was not just specific to a region; it happened on a global scale. The Oil-for-Food system allowed Saddam to set up illicit bank accounts in various countries. The Pentagon followed these bank accounts and released a report that showed overpriced contracts and indicated the prevalence of graft.

How did the Secretariat miss all of this? One can only draw two possible conclusions, either there was gross ineptness or it was complicit with the corruption. Both conclusions lead one to recognize the tremendous need for reform. The UN needs greater transparency; it should not be allowed to operate as a secret society.

George A. Lopez
University of Notre Dame

Three significant issues have come out of the debate over the Oil-for-Food program. First, people focus on the UN and the secretary-general when, in fact, the locus of inquiry should be on the Security Council. The imposition of sanctions was created by Security Council resolutions 661-687, and resolution 986 established the Oil-for-Food program. Later, resolution 1409 made the program "Oil-for-Stuff." Those who claim that the secretary-general is singularly responsible fail to understand the dots and connecting lines that made it impossible to reform the program without first having it signed off by the 661 committee. Second, the data needs to be examined in greater detail. Take the $14.4 billion in the General Accountability Office study and look were it goes. The companies that have been critiqued are, among others, French and Russian. The third critique that needs to be called into question is the evaluation of Paul Volcker and the impossibility of his investigation task, including the allegation that the investigators have become part of the UN cloaking system.

There are three dimensions to this crisis of dialogue: First, those who critique the
Oil-for-Food program do so with the presupposition that from the very beginning the system was perverse. They look particularly at the contracts to sell Iraqi oil under the table to Jordan. Resolution 661 established a trade-off with Jordan for its support of the sanctions system and cooperation with multinational weapons interdiction forces. Second, with regards to secrecy, the Oil-for-Food program was the least secret program that came out of the Security Council. From the beginning, the program sought to achieve a high level of transparency. For example, the secretary-general issued a report every ninety days that was posted on the Internet. Third, the claim that the program was managed inefficiently is off base.  When the Oil-for-Food program was changed to "Oil-for-Stuff," in 2000 it was the Secretariat that brought the 661committee a number of cases where food was being dramatically overpriced and oil under-priced. More than seventy contracts in question were brought before the 661 committee, and the first two countries to sign off and approve of them were the United States and Great Britain. 

To indict the Oil-for-Food program, the United Nations, and the secretary-general leaves us in the embarrassing situation that the corruptors may in fact be us. Each of the states in the Security Council that were privy to the corruption within the inner circle decided there must be an overriding reason to allow the operation of abuse. With an effective sanctions system, we introduced the Oil-for-Food program and the system was willing to tolerate leakage, inconsistency, and small amounts of unexplained movement of money, because we were turning around the daily caloric intake of the Iraqi children and the Iraqi people were being eased of their pain.

What is left to investigate? From 1997 to 1999, most of the "revelations" that have been discussed in the last five weeks were part of the daily press record. There are no new revelations. Participants knew what was going on but believed it served a system. What ought to be examined is less of the graft and corruption, and more of how we will manage a complex and elongated humanitarian program in the future.

Danielle Pletka
AEI

Congress was profoundly concerned about diversions from the Oil-for-Food program. It did not appreciate the "wink and a nod" the 661 committee gave to Jordan. It did not give its imprimatur to the violations by Syria and smuggling by Iran. There were plenty of hearings and private meeting by staffers and members of Congress to discuss concerns over what was happening.

When discussing the Oil-for-Food program, there are really two issues: the larger issue is whether or not the United Nations is functioning as we had originally intended. The institution was established to ensure world peace and security. We need to look at our experiences over the last several years and determine whether or not they indicate that the UN is living up to its mission.

The Oil-for-Food scandal indicates a systemic problem. The dysfunctional condition of the Security Council and the unwillingness of member states to put their money where their mouths are have adverse affects on the UN. The graft and corruption that occurred under the auspices of the Oil-for-Food program portrays how badly the Iraqi people were served. There are deep-rooted problems in the institution, and the remedies are unclear. However, the unwillingness of the people who make up the bureaucracy to accept that this is a genuine problem is very troubling.

It is important to take note that the members of the Security Council and the 661 committee actually had a smaller and smaller role over the course of the Oil-for-Food program. The Secretariat was ultimately responsible for what was going into Iraq, while the members of the 661 committee focused on "dual-use" goods.

The UN desperately needs accountability and transparency. It needs to begin taking seriously questions of sexual harassment and the disgusting behavior that goes on during peacekeeping operations. It is enormously important that from top to bottom the UN become a transparent institution with accountability for all its employees. If not, the distrust that many of us feel will only increase.

Edward Mortimer
United Nations

Two very different pictures have been painted with regard to the transparency of the
Oil-for-Food program. Both pictures are probably right. It is true that information about the program was made available but also true that the UN does not have the same culture and methods of accountability as the U.S. government. The UN, by nature, is a multicultural institution that has to take into consideration different standards and ways of doing business. There is, however, room for improvement. Back in April, the secretary-general said that one of the lessons of the program would be the need for greater transparency.

Charles Duelfer's report shows that Saddam Hussein got rid of his weapons of mass destruction in 1991, largely due to the aggressive UN inspections. By 2003 he had not begun to reconstitute his arsenal of weapons of mass destruction. The sanctions worked, but no one imagined that the sanctions would last for thirteen years. The longer they were imposed, the more Iraqis suffered. It was thought that the international community should have Saddam Hussein use the country's oil to meet the needs of the people. It was not until 1995 that Saddam was willing to discuss this proposition, and a year of negotiations passed before the program was able to start.

The UN had to craft a deal that he was willing to accept. In the end, he was willing to have this money put into an account and used under the supervision of the UN, with the condition that he chose the suppliers of goods and companies allowed to buy the oil. He had leverage and used it to extract kickbacks from importers and levy illicit surcharges on exporters. How could the UN miss this? The UN was quite aware of what was going on. In the case of the surcharges on oil, the Secretariat drew them to the attention of the Security Council.

Kickbacks were much more difficult to detect, because the range of imports was very wide. The definition of "humanitarian" was stretched in order to ensure that the Iraqis could live normal civilian lives. The Secretariat alerted the committee members to at least seventy cases where goods were overpriced and action should have been taken by committee members.

The figure of $21 billion is an exaggeration. This figure includes what went on under trade protocols with Jordan, Syria, and Egypt. The Security Council took note of the Jordanian protocol without condemning or approving it. The program was not perfect, and the imperfections should not be blamed solely on the member states or the Secretariat.

AEI staff assistant Kara Nichols Barrett prepared this summary.