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The UN Oil-for-Food Program: Who Is Guilty?

The Management of the United Nations Oil-for-Food Programme (five volumes)

a report by the Independent Inquiry Committee into the United Nations Oil-for-Food Programme
Paul A. Volcker (Chairman), Richard J. Goldstone (Member), and Mark Pieth (Member).
2,160 pp., available at www.iic-offp.org

Manipulation of the Oil-for-Food Programme by the Iraqi Regime (one volume)

a report by the Independent Inquiry Committee into the United Nations Oil-for-Food Programme
Paul A. Volcker (Chairman), Richard J. Goldstone (Member), and Mark Pieth (Member).
2,160 pp., available at www.iic-offp.org

The shadow of potential disasters, some global in scope, mostly man-made in origin, hangs heavy over the fifth year of the new millennium. There is a widespread feeling that our planet is out of sorts—maybe out of control—and that there is little sign of the leadership or strategy that might get it going in the right direction again. The desire for wholehearted international action that could at least slow down a universal catastrophe like global warming is lacking. Expediency rules the policies of most of the governments mainly responsible, although it is encouraging that several governments, the governors of at least ten states in the United States, and a number of major corporations are beginning to take steps to curb carbon emissions on their own. Nonetheless, it seems still to be widely accepted that the short-term interests of the economy and the industrial sector outweigh the need to avert a global disaster that will, in time, blight the lives of billions of people, and animals as well.

Thomas L. Friedman wrote in a recent article about the political situation in the United States:

It is the yawning gap between the huge problems our country faces today…and the tiny, fragile mandate that our democracy seems able to generate to address these problems that is really worrying.1

Reading the final declaration of the September 2005 summit meeting at the United Nations, which brought 155 heads of state and government to New York, one might reach a similar conclusion about the world in general. International politics, as reflected in the United Nations, in spite of the efforts of Secretary-General Kofi Annan, now largely concern compromise and half-measures. The North–South difference has succeeded the forty-year East–West deadlock as a brake on international policy and action.2 National self-interest and short-term thinking seem, for the time being at least, to have overcome practical idealism and an urgent sense of common purpose.

It is hardly surprising that the United Nations,3 originally the embodiment of practical idealism on an international scale, is not thriving in such an atmosphere. In June 1945, when the representatives of fifty states signed the Charter at San Francisco, the idea of a new world inspired a sense of optimism and a spirit of enthusiasm. It was to be a world where the ideals and principles of the Charter would be paramount. The victorious wartime alliance was widely and confidently expected to live on indefinitely as the backbone of the future peace. With the possible exception of a very few American, British, and Soviet officials, the delegates at San Francisco had never heard of nuclear weapons. Nor had they heard of the balance of terror, the cold war, interdependence, environmental degradation, the population explosion, the information revolution, globalization, global terrorism, global warming, global poverty, global epidemics, nuclear proliferation, the threat of failed states, and other phenomena that are now part of our daily lives. The positive, even visionary, international atmosphere of 1945 evaporated with the cold war and has never been recaptured.

Obviously the United Nations should be seen as an indispensable universal organization through which governments can more effectively address the great problems of our time. In 2005, therefore, there has been much talk of reforming the world organization, and some tentative steps toward that ever-elusive goal have been taken. The September 2005 summit meeting produced a long and much-qualified manifesto that included some signs of genuine progress, such as the creation of a peace-building commission intended to assist countries emerging from conflict to avoid falling back into it again, and the recognition of the obligation of governments in the UN to protect suffering populations under certain conditions, particularly genocide, if the government in question is unable to do so or is itself inflicting the suffering. The almost daily atrocities in Darfur painfully demonstrate the very real obstacles to be overcome before this becomes a practical proposition.

1.

A strong independent report on some particular UN activity may also provide an incentive for reform. The so-called Volcker Report4 on the Iraq Oil-for-Food Program, and especially the overwhelming interest of the press in the more gossipy aspects of it, hung over the year of UN reform like a recurrent thunderstorm at a community picnic.

The Oil-for-Food Program was created in 1996 by the UN Security Council in an agreement with Saddam Hussein. It was intended to counter the calamitous shortages of food and other essentials in Iraq caused by the sanctions that had been imposed by the UN after Iraq invaded Kuwait in 1990 and that continued after the Gulf War ended. Among their other provisions, the sanctions provided that Iraq could not sell its oil internationally until it showed that it had destroyed any weapons of mass destruction that it possessed and had shut down any programs to produce them. The Oil-for-Food Program provided that the proceeds from specially permitted sales of Iraq’s oil were to pay for food, medical supplies, and other basic necessities for Iraq’s 26 million people. This enormous operation lasted from 1997 until the invasion by the US coalition in March 2003.

The Independent Inquiry Committee was established on the initiative of Secretary-General Kofi Annan and with the agreement of the Security Council in April 2004, after serious charges concerning the management of the program, based originally on captured Iraqi documents, had been made and aired with much colorful exaggeration in the press. Among the charges were claims that UN officials and many others had benefited from illegal payments in their dealings with Saddam Hussein’s government, which had itself received kickbacks and other illegal payments in return for granting contracts to various private companies. The Inquiry Committee was to look into a question of fundamental importance for the United Nations: the competence, accountability, and integrity of the UN, and especially of its Secretariat, in carrying out a large and complex emergency program.

In six volumes containing 2,160 pages in all, produced at a cost of about $35 million paid out of Oil-for-Food Program funds, the Volcker Report is certainly the most detailed and searching ever undertaken. The Volcker team’s seventy-five investigators and other staff, with their seemingly limitless access to people, information, e-mails, papers, business dealings, correspondence, itineraries, and telephone logs, were able to expose even the smallest details of an enormously complicated program. The report’s final volume, for example, lists in 192 pages of fine print “Humanitarian Goods Purchased by the Government of Iraq” classified by the “Supplier” of the goods, all the way from “Tipper Truck; Trailer; Spare parts” at $6,342,840 from Russia, to “Mydolate Eye Drops” at $9,500 from Pakistan.

There are also 142 pages of “Surcharge Payments Associated with a Contracting Company” (i.e., extra, illegal payments above the market price made by companies dealing with Iraq in order to get contracts), thirty-five pages listing “Known Underlying Oil Financiers,” and, in fifty-five pages, “Oil Sales Summary by Contracting Company and Contract.” Other volumes go into immense detail about the administration of the program, including matters of accountability and of individual behavior and personal integrity. A number of international operators, including the recently arrested South Korean businessman Tong-Sun Park, were investigated by Volcker’s staff to find out whether they were illegitimately implicated in dealings with the Oil-for-Food Program. Practically everybody even remotely involved with Oil-for-Food seems to have been interviewed except Saddam Hussein and his ministers, the principal culprits.

The last and largest volume, “Manipulation of the Oil-for-Food Programme by the Iraqi Regime,” came out almost two months after the rest of the report. It deals with vast sums of money and hundreds of oil and other companies, government agencies, and banks, as well as with Saddam Hussein’s success in getting surcharges and kickbacks for oil and humanitarian supplies under the program. But it has attracted far less sustained attention and few of the righteous cries of scandal that greeted the previous volumes, which dealt mostly with the UN management of the program. A former French ambassador to the UN, it is true, is under investigation in France for allegedly trying to profit from the program, and the Indian foreign minister, Natwar Singh, has had to resign for similar alleged reasons, but public interest in the final volume quickly flagged.

The charges against the UN Secretariat, on the other hand, were front-page news almost throughout the more than one-year duration of the Volcker inquiry. Neoconservative journalists and politicians in particular, doubtless recalling the UN’s and Kofi Annan’s lack of enthusiasm for the invasion of Iraq and the Security Council’s refusal to endorse the US invasion in 2003, indulged in furious accusation and exaggeration, sometimes even attacking Paul Volcker himself. William Safire of The New York Times, an early advocate for this group, proclaimed the Oil-for-Food Program to be “history’s largest swindle,” at one point claiming that $20 billion was stolen from the program. A reporter on MSNBC referred to “the $100 billion oil for food scandal” when that sum was in fact the total amount of the entire program’s transactions. Long before the inquiry’s final report was available, Senator Norm Coleman of Minnesota was demanding the resignation of Secretary-General Kofi Annan, and others chimed in to similar effect. The UN Secretariat was widely denounced as an “oil-drenched” sea of corruption and incompetence. Outraged legislators in Albany canceled a carefully worked out and mutually advantageous plan for temporarily rehousing the UN while its fifty-five-year-old building underwent a much-needed modernization.

Now that the Volcker Report is complete, it is well worth a look at what it actually says.

2.

A document seldom quoted is the press release entitled “Independent Inquiry Committee Finds Mismanagement and Failure of Oversight: UN Member States and Secretariat Share Responsibility,”5 issued by Volcker and his two colleagues when the main body (five volumes) of the report was released. This release provides a valuable summary of the inquiry’s main conclusions. It in no sense exonerates the UN Secretariat from mismanagement or failure of oversight; but it does provide a much-needed, and balanced, account of the inquiry’s general verdict, and the unusual difficulties the program faced, as well as the actual sums of money involved.

The release also reminds the public of what the Oil-for-Food program had actually done. In the Inquiry Committee’s words:

This very large and very complex Programme accomplished many vital goals in Iraq. It reversed a serious and deteriorating food crisis, preventing widespread hunger and probably reducing deaths due to malnutrition. While there were problems with the sporadic delivery of equipment and medical supplies, undoubtedly many lives were saved. At the same time things went wrong, damaging the reputation and credibility of the United Nations…. However, responsibility for what went wrong with the Programme cannot be laid exclusively at the door of the Secretariat. Members of the Security Council and its 661 Committee6 must shoulder their share of the blame in providing uneven and wavering direction in the implementation of the Programme.

  1. 1

    Thou Shall Not Destroy the Center,” The New York Times, November 11, 2005.

  2. 2

    It is risky to try to describe briefly such a complex subject. The leading interests of the South are development; reducing poverty; reducing obstacles to free trade like farm subsidies in the US and Europe; and preserving state sovereignty in an unequal world, by using the South’s majority vote as leverage in the UN General Assembly.

    The North sees the UN as a forum for putting forward its political views; is more prepared to take action against errant states; champions human rights, peace and security and UN peacekeeping (ironically now carried out largely by soldiers from the South); favors more development by the private sector; and wishes to give more administrative power to the secretary-general to counter micromanagement from the General Assembly.

  3. 3

    My own relationship with the UN is as follows: I retired from the Secretariat twenty years ago after forty years of international service. I have known Kofi Annan and some of his senior colleagues for many years.

  4. 4

    The three members of the Independent Inquiry Committee were Paul A. Volcker, former chairman of the US Federal Reserve (chairman); Judge Richard J. Goldstone of South Africa, former prosecutor of the International Criminal Tribunals for former Yugoslavia and Rwanda; and Mark Pieth of Switzerland, an expert on money-laundering, who has been working in the Organization for Economic Cooperation and Development (OECD).

  5. 5

    Independent Inquiry Committee into the United Nations Oil-for-Food Programme, Press Release, September 7, 2005.

  6. 6

    So called after the Security Council’s Resolution 661 that established the sanctions in 1990.

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