International Herald Tribune
President George W. Bush’s call to lift economic sanctions against Iraq would mean the end of the United Nations oil-for-food program, which has overseen the country’s oil sales since 1996.
Not only are France and Russia likely to object, but they may well support efforts by Secretary-General Kofi Annan to modify the oil-for-food system, which is due to expire on May 12, and give it a large role in rebuilding the country.
Whatever Annan’s reasons for wanting to reincarnate the operation, before he makes his case there’s something he needs to do: open the books.
The oil-for-food program is no ordinary relief effort. Not only does it involve astronomical amounts of money, it also operates with alarming secrecy.
Intended to ease the human cost of economic sanctions by letting Iraq sell oil and use the profits for staples like milk and medicine, the program has morphed into big business. Since its inception, the program has overseen more than $100 billion in contracts for oil exports and relief imports combined.
It also collects a 2.2 percent commission on every barrel – more than $1 billion to date – that is supposed to cover its administrative costs. According to staff members, the program’s bank accounts over the past year have held balances upward of $12 billion.
With all that money pouring straight from Iraq’s oil taps – thus obviating the need to wring donations from member countries – the oil-for-food program has evolved into a bonanza of jobs and commercial clout.
Before the war it employed some 1,000 international workers and 3,000 Iraqis. The Iraqi employees – charged with monitoring Saddam Hussein’s imports and distribution of relief goods – of course all had to be approved by the Ba’ath Party.
Initially, all contracts were to be approved by the Security Council. Nonetheless, the program facilitated a string of business deals tilted heavily toward Saddam’s preferred trading partners, like Russia, France and, to a lesser extent, Syria.
About a year ago, in the name of expediency, Annan was given direct authority to sign off on all goods not itemized on a special watch list. Yet shipments with Annan’s go-ahead have included so-called relief items such as “boats” and boat “accessories” from France and “sport supplies” from Lebanon – sports in Iraq having been the domain of Saddam’s elder son, Uday.
On Feb. 7, with war all but inevitable, Annan approved a request by the regime for TV broadcasting equipment from Russia. Was this material intended to shore up Saddam’s propaganda machine?
It is impossible to find out for certain. The quantities of goods involved in shipments are confidential, and almost all descriptions on the contract lists made public by the United Nations are so generic as to be meaningless.
For example, a deal with Russia approved last Nov. 19 was described on the contract papers with the enigmatic notation: “goods for resumption of project.” Who are the Russian suppliers? The United Nations won’t say. What were they promised in payment? That’s secret. Putting a veil of secrecy over billions of dollars in contracts is an invitation to kickbacks, political back-scratching and smuggling done under cover of relief operations.
Of course, with so little paperwork made public, it is impossible to say whether there has been any malfeasance so far – but I found nothing that would seem to contradict General Tommy Franks’ comment that the system should have been named the “oil-for-palace program.”
Why, for example, are companies in Russia and Syria – hardly powerhouses in the automotive industry – listed as suppliers of Japanese vehicles? Why are desert countries like Libya, Syria and Saudi Arabia delivering powdered milk?
As for the program’s vast bank accounts, the public is told only that letters of credit are issued by a French bank, BNP Paribas.
Kurdish leaders in northern Iraq, entitled to goods funded by 13 percent of the program’s revenues, have been trying for some time to find out how much interest they are going to receive on $4 billion in relief they are still owed. The UN treasurer told me that no outside party, not even the Kurds, gets access to those figures.
Lifting the sanctions would take away the remaining UN leverage in Iraq. If the oil-for-food operation is extended, however, it will have a tremendous influence on shaping the new Iraq. Before that is allowed to happen, let’s see the books.
Claudia Rosett. The writer, a former foreign correspondent for The Wall Street Journal, is writing a book on dictatorships and democracy, “When UN sanctions invite corruption”.