The Real Scandal

The Oil-for-Food program may have been corrupt, but more dangerous dealings have been ignored

Frida Berrigan

Republicans have called for Kofi Annan's resignation.

Was the U.N.’s Oil-for-Food program (OFF) rotten? It looks like it. The U.N. Security Council created the program in 1996 to mitigate the impact on the civilian population of the economic sanctions aimed at toppling Saddam Hussein. It allowed Hussein’s government to use the revenue from oil sales to purchase food, medicine and other humanitarian commodities. 

The program is over and the sanctions have been lifted, but a number of recent reports have revealed that the program was used as a conduit by Saddam Hussein to generate illicit revenue to buy weapons. 

In July, the Government Accountability Office (GAO) published a report asserting that Hussein had used the program and other illicit means to generate more than $10 billion. Charles Duelfer, the CIA’s Special advisor for strategy regarding Iraqi Weapons of Mass Destruction, agreed with the GAO’s total figure, but estimated that just 16 percent, or about $1.7 billion, was related to the OFF.

These revelations, along with a swirl of other allegations — including the purported involvement of Kojo Annan, the secretary-general’s adult son, and assertions that the former head of the OFF, Benon Sevan, took bribes — have elicited a prompt response from U.N. Secretary General Kofi Annan. The Secretariat asked Paul Volcker, the former U.S. Federal Reserve chairman, to head a probe into the OFF. Volcker will release a preliminary report in January, with final conclusions to be published by mid-2005

Members of Congress have been quick to believe the worst of the allegations and demand the severest penalties. Sen. Norm Coleman (R‑Minn.), chairman of the Permanent Subcommittee on Investigations, led the vitriolic charge against the United Nations in a December 1 Wall Street Journal op-ed article. Coleman’s subcommittee has initiated a series of investigations into the OFF; in the article he blamed Kofi Annan for the corruption he has supposedly uncovered. He also made the unsupportable but damning claim that Hussein’s stolen billions are funding the current insurgency in Iraq, writing that our troops would probably not have been placed in such danger if the United Nations had done its job in administering the sanctions and oil for food.” Coleman concluded by calling for Kofi Annan’s resignation: As long as Mr. Annan remains in charge, the world will never be able to learn the full extent of the bribes, kickbacks and under-the-table payments that took place under the United Nations’ collective nose.”

Coleman’s crusade has a lot of support. A House of Representatives resolution calling for Annan’s resignation in order to restore confidence” in the United Nations as an institution has 52 signatures. Companion bills in the House and Senate propose withholding a percentage of U.S. dues to the United Nations until it cooperates with a congressional investigation, separate from Volcker’s investigation. 

But members on both side of the aisle oppose these punitive acts. Sen. John McCain (R‑Ariz.) recently expressed his confidence that Volcker, a smart guy, and tough,” will carry out a full and complete investigation.” Sen. Carl Levin (D‑Mich.), the ranking Democrat on Coleman’s subcommittee, called the attack on Annan unwarranted and unfair.” 

Levin is right. Conservative attempts to blame Kofi Annan obscure many facts — chiefly that the Secretariat did not oversee the OFF. The Security Council created the program and was responsible for its policing. The United States is one of the council’s five permanent members. 

If Annan should not be held responsible, then who should?

The evidence points to Washington. The skimming, smuggling and kick-backing that occurred under the OFF appears to be small compared with the amount of revenue Saddam Hussein generated through illegal government-to-government transactions with Jordan, Syria and Turkey that had the tacit approval of Congress and the White House under Presidents H.W. Bush and Clinton.

The Duelfer report found that Jordan inked $4.5 billion in oil deals with Saddam Hussein, making it Baghdad’s single largest source of revenue besides the OFF and the key to Iraq’s financial survival.” This trade was unauthorized but formally acknowledged by a Security Council concerned that Jordan’s economy might collapse without access to the oil. Illegal trade with Turkey generated $710 million for Saddam Hussein. Despite the fact that Washington knew that both these allies were illegally aiding the Hussein régime, Congress continued to release billions in military aid to Jordan and Turkey. 

With Turkey, it was plain illegal,” explained David Mack, deputy assistant secretary of state for Near East Affairs during the period, to The Associated Press. It was smuggling, but everybody just said, Oh well, geez, it was too hard to try to do anything about that.’ ” 

Including the $2.8 billion in Iraqi trading with Syria, Duelfer’s report estimated that about $8 billion of the $11 billion in total illicit revenue was generated by these trade deals. Kofi Annan couldn’t stop them, the Security Council looked the other way and Congress implicitly green-lighted them for years. 

The rest of the illicit money was generated through a complex system whereby the Hussein régime overpaid contractors for food and other humanitarian goods, only to be repaid in cash. Searching for instances of this abuse is like looking for a needle in a haystack. But according to Joy Gordon, a professor at Fairfield University and author of a forthcoming book on the sanctions against Iraq, on more than 70 occasions evidence was brought to the Security Council body charged with implementing the sanctions. 

In the December issue of Harper’s, Gordon noted that In not a single instance did the United States choose to block any transaction due to suspected kickbacks.” While apparently unconcerned with evidence of Hussein’s exploitation of the program, U.S. contract examiners were vigilant about dual-use items, blocking billions of dollars in humanitarian contracts because of concerns that they could have some military application. In July 2002 alone, the United States had placed nearly $5 billion of these contracts on hold. 

If Coleman and other members of Congress want to hold someone accountable, they could start by cleaning out their own house and examining the continued practice of providing billions in military aid to nations like Jordan and Turkey that act at cross purposes with U.S. foreign policy. That’s the real scandal.

Frida Berrigan is a senior program associate with the New America Foundation’s Arms and Security Initiative and a member of the Campaign for a Nuclear Weapons Free World.
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