April 27, 2004


Commentary Magazine has a detail article on the disgrace that is the UN Oil-for-Food program.

From the start, the program was poorly designed. Saddam had blamed the fate of starving Iraqi children on the sanctions regime and specifically on the United States. Seeking to address these charges, the Clinton administration went looking for a compromise; with the Secretariat in the lead, the Security Council agreed to conditions on Oil-for-Food that were, to say the least, amenable to manipulation. Saddam, the author of the miseries of Iraq, was given the right to negotiate his own contracts to sell Iraqi oil and to choose his own foreign customers. He was also allowed to draw up the shopping lists of humanitarian supplies—the "distribution plans"—and to strike his own deals for these goods, picking his foreign suppliers. The UN also granted Saddam a say in the choice of the bank that would mainly handle the funds and issue the letters of credit to pay these suppliers; the designated institution was a French bank now known as BNP Paribas....

To all this, the UN added another twist. Unlike most of its relief programs, in which both the cost of the relief itself and UN overhead were paid for by contributions from member states, Oil-for-Food would in every respect be funded entirely out of Saddam’s oil revenues. The UN Secretariat would collect a 2.2-percent commission on every barrel of Iraqi oil sold, plus 0.8 percent to pay for UN weapons inspections in Iraq.

If the aim of this provision was to make Saddam bear the cost of his own obstinacy, the effect was to create a situation in which the UN Secretariat was paid handsomely, on commission, by Saddam—to supervise Saddam. And the bigger Oil-for-Food got, the bigger the fees collected by Annan’s office. Over the seven years of the program, oil sales ultimately totaled some $65 billion. On the spending side, the UN says $46 billion went for aid to Iraq, and $18.2 billion was paid out as compensation to victims of Saddam’s 1990-91 occupation of Kuwait. As for commissions to the Secretariat, these ran to about $1.9 billion, of which $1.4 billion was earmarked for administrative overhead for the humanitarian program (the UN says it turned over $300 million of this to help pay for relief, but no public accounting has ever been given) and another $500 million or so for weapons inspections in Iraq. Discrepancies in these numbers can be chalked up to interest paid on some of the funds, exchange-rate fluctuations, or simply the murk in which most of the Oil-for-Food transactions remain shrouded to this day....

The arrangement actually helped strengthen Saddam’s chokehold at home. With sanctions effectively forbidding all other foreign commerce, Iraq’s only legitimate trade was whatever flowed through Saddam’s ministries under the supervision of the UN program. Thus the UN gave to Saddam the entire import-export franchise for Iraq, taking upon itself the responsibility for ensuring that he would use this arrangement to help Iraq’s 26 million people. The success of the program depended wholly on the UN’s integrity, competence, and willingness to prevent Saddam from subverting the setup to his own benefit.

Read the whole thing for the sordid history and more details on how the scam worked.

Posted by richard at April 27, 2004 05:37 PM