Ian Williams has covered the United
Nations since 1989.
And is the author of UNTold, the
real story of the UN in Peace and War.
The True UN Scandal
Who Pocketed the $10 Billion for
Iraq?
Ian
Williams
In
December 2006, Kofi Annan finished
his
two-term tenure as secretary general of
the United
Nations. Among his greatest
achievements
was undoubtedly shepherding
the
principle of "The Responsibility to Protect"
through to
adoption by the Heads of
State
Summit in the General Assembly in
September
2005. By beginning to put some
teeth in
the Universal Declaration of Human
Rights and
overturning the traditional
concept of
absolute national sovereignty,
this
prefigured a huge change in international
law, even
if, as the ongoing conflict in
Darfur
demonstrates, its implementation
leaves
much to be desired.
Sadly,
however, in the United States
at least,
many commentators tied Annan's
name to
the alleged "Oil for Food" (OFF)
scandal.
It is perhaps timely to take a retrospective
look at
this, not least since the
miasma it
raised at the time still lingers
around
both him and the organization.
Perhaps no
molehill has ever been made
into such
a mighty mountain.
Following
attacks by the conservative
UN-hating
media in the United States, and
to a
lesser extent in the United Kingdom,
Secretary
General Kofi Annan convened an
Independent
Inquiry Committee into the
OFF
program to be headed by the former
Federal
Reserve chair, Paul Volcker. His
committee
had unprecedented access to documents,
emails,
and phone and financial
records
across the world. Annan's act was
not that
of a man who had anything to hide.
In October
2005, and with the investigation
costing
almost $50 million dollars,
the
report1 came out, and in summer 2006
it was
followed with a prÈcis "Good Intentions
Corrupted:
The Oil for Food Scandal
and the
threat to the UN."2 Paul Volcker
wrote the
introduction but two of the investigators,
Jeffrey A.
Meyer and Mark G.
Califano,
authored the content. In contrast
to the
enthusiastic coverage from the conservative
media
about the so-called scandal,
the report
did not garner much media
attention,
perhaps because, in general, it
exonerated
the United Nations from the
hyperbolic
accusations made against it. Its
conclusions
are relatively sober, unexceptional,
and
essentially repeat those of many
previous
reports on the failings of UN
management.
The book
recounts examples of the five
ambassadors
holding permanent seats on
the
Security Council bypassing UN procurement
procedures,
and of U.S. naval cover
occasionally
being provided for oil smuggling
operations,
which, in total, amounted
to $8.4
billion of revenue for Iraq in defiance
of
sanctions. It notes the general apathy
of
Security Council members to reports
of
smuggling, kickbacks, and surcharges,
which
netted the regime another $1.8 billion.
It also
points out that the Security
Council
gave the UN Secretariat and the
Oil for
Food program the mandate and
framework
that made it possible for Iraq-
and many
companies and governments-to
manipulate
the program.
In the precis
to the report, Volcker
writes,
"I did not, and do not today, believe
that the
evidence developed by the committee
justifies
a sweeping allegation that
financial
corruption is or was characteristic
© 2007
World Policy Institute
of the
institution as a whole. Rather...there
is a culture
of inaction,' of a strong tendency
to evade
administrative responsibility.
That
culture is rooted both in the character
of the UN
organization and in broadly political
considerations."
It is, however,
that political context that
is mostly
missing from "Good Intentions
Corrupted,"
just as it was from the Volcker
report.
There were good reasons why the
Iraq
program was not robust in its enforcement
of
sanctions, no matter how much
shock the
report expresses about inattention
to such
details. It is unlikely that the Security
Council,
cognizant of the hardship that
Iraqi
sanctions caused,will ever again agree
to impose
such comprehensive and draconian
economic
sanctions. Indeed, another
lesson
from the affair may be that, in a
globalized
world, any attempt to micromanage
the
foreign trade of an entire country's
economy is
not only futile, but risks
disastrous
socio-economic consequences.
Since, the
Security Council has limited
subsequent
sanctions to rogue regimes or
against
strictly military trade.
The
Background to OFF
In a
vindictive mood at the end of the
original
Gulf War in 1991, the Americans,
with
British and (at the time) French support,
instituted
a crushing package of economic
sanctions,
reparations, and monitoring
against
Iraq. Not since Versailles had
victors
imposed such measures on the defeated.
The
sanctions did not have a "sunset
clause."
A positive vote of the Security
Council
was necessary to lift them. It was
only
possible because, at that immediate
juncture,
the Soviet Union, and then Russia,
cooperated.
Later, other members asked for
"light
at the end of the tunnel"-a demonstration
that Iraqi
compliance with Security
Council
resolutions would lead to lifting
the
sanctions-but the United States
made it
plain that it would veto any such
attempt
while Saddam Hussein remained
in power.
The
original sin was the rush of enthusiasm
in the
aftermath of the Gulf War and
the Cold
War, when the UN looked likely
to become
the executor of Washington's foreign
policy. A
more independent secretariat
might have
warned of the pitfalls of the policy
the
Security Council adopted, although,
to be
fair, at the time few foresaw that sanctions
would
still be in effect a decade later.
As the
economy imploded and public
services
collapsed, it soon became apparent
that the
sanctions' primary victims were
ordinary
Iraqis. Indeed, Secretary of State
Madeleine
Albright ruminated on CBS's 60
Minutes in
1996: "We have heard that a half
million
children have died. I mean, that's
more
children than died in Hiroshima.... Is
the price
worth it?... I think this is a very
hard
choice, but the price-we think the
price is
worth it." She has since regretted
the
statement, but at least it had the benefit
of candor.
Clearly, Washington did think
that the
political and strategic benefits outweighed
the costs
paid by Iraqi civilians,
otherwise
it could have relaxed the sanctions.
Sadly, it
was the United Nations that
tallied
those casualty figures, though staff
members
saw their job as developing
economies,
not destroying them; saving
children,
not starving them. They tended to
see the
sanctions as an American-enforced
aberration
from the true mission of the UN
system.
High-profile officials-such as Assistant
Secretary
General Denis Halliday, in
September
1998, and Hans Von Sponeck, in
March
2000-resigned in protest against
complicity
in what Halliday called genocide.
It did not
help that the resolutions
earmarked
30 percent of the proceeds of oil
sales to
war reparations, which went mostly
to Kuwait
and major oil companies and
which
provided an additional pretext for
Baghdad's
defiance.
Without
firm opposition within the
United
Nations, for a few years during and
after the
Gulf War, Washington and its junior
partner in
London promulgated instruc-
tions
inside the UN as if it were an extension
of their
own foreign policy apparatus.
It was a
brave staff member who resisted
their
wishes-as indeed Egypt's Boutros
Boutros-Ghali
himself discovered when his
term as
secretary general was not renewed,
in part
because he was insufficiently cooperative
with
Madeleine Albright.
In the
Arab and Muslim world, and
even in
Western Europe, the palpable suffering
of Iraqi
citizens eroded support for sanctions
and
diminished the moral standing of
the world
organization. The stark contrast
between
the relentless application of pressure
on Iraq,
and the free diplomatic pass
given to
Israel in enforcing compliance with
Security
Council resolutions, also exacerbated
disaffection.
While legally significant,
the
contrast between resolutions censuring
Iraq,
which contained their own means of
enforcement,
and those against Israel, which
did not,
merely reinforced the perceived disparity.
Even
Saddam Hussein's cavalier disregard
for, and
defiance of, UN disarmament
resolutions
found defenders in the
face of
Washington's relentless antipathy.
As the
sanctions wore on and American officials
began to
call for regime change, UN
members
chafed at what seemed a blatant
attempt to
flout the bedrock principle of
national
sovereignty. (No UN resolutions
ever
mentioned overthrowing Saddam-
indeed
George H. W. Bush had deliberately
avoided
that option at the end of Operation
Desert
Storm in order to preserve the international
coalition.)
Clearly, if the sanctions
had needed
a reauthorization vote-as
peacekeeping
operations do-it is unlikely
there
would have been a Security Council
majority
to re-impose them, apart from the
potential
veto that the Russians, Chinese,
and later
the French might have wielded.
Besides
the moral considerations, Iraq
represented
potential oil concessions and
trade with
Russia, China, and France. By
1997,
sanctions were losing support and
were about
to crumble completely. For the
majority
of the council, and for much of the
secretariat,
since the U.S. veto was an insuperable
obstacle
to lifting sanctions, the Oil
for Food
program was seen primarily as a
way to
mitigate the effect of the sanctions
on
ordinary Iraqis by providing food supplies.
In
contrast, for Washington, whose
basic
assumptions the Volcker report reflects,
the
purpose of the Oil for Food program
(to which
it reluctantly agreed) was to
maintain
sanctions in the face of growing
worldwide
reluctance to cooperate.
Smuggling
Condoned
Though a
hostile conservative press has accused
the Oil
for Food program of providing
billions
of dollars to the Iraqi regime, most
of the
smuggling was already under way before
the
program was established. This was
known to
Western intelligence services and
the
media-or indeed anyone who wanted
to know.
The Americans and the British
kept
sending mixed messages-not officially
condoning,
but never overtly condemning
Iraq's oil
trade with Western allies. Under
Article 50
of the charter, Iraq's neighbors,
like
Turkey and Jordan, were entitled to
compensation
for costs they incurred in
maintaining
sanctions. However, no one really
wanted to
pay up, least of all a U.S. administration
that had
for years found it difficult
to obtain
congressional approval of
UN dues.
So from the outset there was massive
oil-trading,
referred to as "smuggling"
in the
press and committee reports, across
the
borders to Jordan and Turkey, which the
Volcker
report confirms was well established
by the
time Oil for Food had begun.
The
American-allied Kurds in the north
siphoned a
significant percentage from oil
sales to
Turkey that passed through their
territory,
and the Jordanian economy would
have
collapsed without the oil trade across
the
border-for which Amman did ask permission
of the
Sanctions Committee, which
"noted"
the request without delivering
an
opinion. It was the diplomatic equivalent
of a wink
and a nudge. The Western
powers
only began to be irritated about the
"smuggling"
in 1997, when Damascus negotiated
a
rapprochement with Iraq and later
re-opened
the Syrian pipeline. The flurry
of
indignation from the British and others
was hard
to sustain, as they could not explain
why this
was in any way more censorious
than the
leakage to Turkey and Jordan.
The Matter
of Sovereignty
Anomalously,
Iraq was formally a sovereign
member
state of the UN even as it was being
treated as
a defeated nation. For example,
to respect
the letter of international law,
the UN
applied for Iraqi visas for its personnel
in the
Kurdish areas where Baghdad had
no
practical authority whatsoever, and allowed
the regime
to veto personnel.
The United
Nations Special Commission,
the
nominally UN weapons inspectors
team, had
proven to be an extension of U.S.
intelligence,
which played directly to Iraqi
Ba'athists'
paranoia. The Iraqis did not want
a fresh
team of weapons inspectors using the
cover of
the Oil for Food program serving
on behalf
of a state threatening military
action
against them. When the Security
Council
agreed to the Oil for Food program
after
initial American resistance, Saddam's
regime
showed that it could be equally opportunistic
in its
feigned principles, and
initially
cited national honor in resisting
inspections.
To get the
food to the population, UN
officials-who
cared more about the Iraqi
citizenry
than either Baghdad or Washington-
in effect
had to compromise with the
Ba'athists'
pretenses about "national honor"
to get the
program running. As a result,
while the
United Nations managed the escrow
fund into
which all oil sale revenue
went, and
which paid for the food, the program
had no say
about which companies or
countries
Baghdad chose to sell oil to, or to
buy food
and supplies from.
Unsurprisingly,
given hostility in Washington
and
London, Baghdad did not award
many
contracts to American or British companies,
and used
commerce to reward and
influence
countries like France, Russia, and
China,
whose votes they coveted in the Security
Council.
It would be naÔve to assume
that those
contracts had no influence in determining
their
votes. Certainly France's position
changed
considerably over this period.
At least
Baghdad's ill will towards Washington
had the
effect of sparing most American
companies
from the temptation to join
in the
kickback scheme.
Taking all
this into account, while the
Volcker
report spreads the blame among
the member
states, the Security Council,
and the
secretariat for the program's failure
to enforce
sanctions on Iraq, it misses the
point in
reprimanding the UN staff. To
many, and
very possibly a majority, while
the Iraqi
sanctions may have been legal under
the UN
Charter-they were illegitimate,
and
arguably immoral. Hence the
contrast
in outlook between the United
States, as
reflected in the Volcker committee's
report,
and much of the world. For
most of
the UN staff, the OFF program was
about
feeding Iraqis. For Washington it was
about starving
the regime of funds for rearmament.
It needs
reiteration that in both
contexts
it was hugely successful. By the
end, the
program was providing essential
food and
medical supplies for over 80 percent
of the
Iraqi population, and, as was
subsequently
proved by both Hans Blix's
UN
Monitoring Verification and Inspection
Commission
inspectors and their American
successors,
it was also successful in stopping
Iraqi
rearmament.
Indeed, it
was so successful that the
U.S.
occupation authorities asked the UN
to
continue the program after the 2003 invasion
and then
praised its performance
after it
ended. A surplus of more than $10
billion
dollars was handed over to the Occupation's
"Iraq
Development Fund" to be disbursed
under the
scrutiny of an international
monitoring
board. Such was the context
when Kofi
Annan asked Paul Volcker to
establish
and head the Independent Inquiry
Committee.
Yet surprisingly, the committee
did not
take into account the very political
circumstances
of its own creation.
How
Success Turned to Scandal
Within a
year of the Iraq invasion, the anti-
UN media
in the United States began to
trumpet
the "UN Oil for Food Scandal,"
which was,
according to the neo-conservative
columnist
Charles Krauthammer, "the
biggest
financial scandal in the history of
the
world." Some of the wilder pundits
claimed it
involved the mismanagement of
"hundreds
of billions of dollars." The real
target of
the attacks was the United Nations
itself,
and, especially, the reputation of the
secretary
general. When, in December
2004,
Republican senator Norm Coleman
of
Minnesota called for Kofi Annan's resignation,
the
Minneapolis Star-Tribune provided
a succinct
explanation of what lay
behind the
attacks. Describing Coleman's
call as a
"sordid move," a December 4,
2004,
editorial explained, "For months before
the
election, the right-wing constellation
of blogs
and talk radio was alive with
incendiary
rhetoric about Annan and the
oil-for-food
scandal.... This is really all
about
Annan's refusal to toe the Bush line
on Iraq
and the administration's generally
unilateral
approach to foreign affairs. The
right-wingers
hate Annan and saw in the
food-for-oil
program a possible chink in his
armor.
They went after it with a venomous
fury."
The story
of how Oil for Food mushroomed
into a UN
scandal begins with
Claudia
Rosett, a former Wall Street Journal
writer who
is now journalist-in-residence at
the
Foundation for the Defense of Democracies.
In a 2002
New York Times op-ed, just
after Bush
went to the UN to seek authorization
for an
invasion of Iraq, she called the
Oil for
Food program "an invitation to kickbacks,
political
back-scratching and smuggling
done under
cover of relief operations....
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."
The idea
that the UN had failed by not
backing
the U.S. invasion of Iraq, and that
Saddam
Hussein's continued malfeasance
could be
blamed on the UN, was very much
part of
the house philosophy of the Foundation
for the
Defense of Democracies. Its
board
included such GOP eminences as Steve
Forbes,
Jack Kemp, Jeane Kirkpatrick,
Frank
Lautenberg, Newt Gingrich, and
James
Woolsey, as well as Richard Perle
and
Charles Krauthammer. Its own website
advertised
its connections with the Iraqi
National
Council and Ahmed Chalabi, its
leader-in-exile.
Chalabi's position was crucial.
He
disliked, in particular, Annan's
special
representative, Lakhdar Brahimi,
who was
assembling an interim government
in Baghdad
and had correctly assessed the
lack of
indigenous support for Chalabi
in Iraq.
At one point, Chalabi had called
the
secretary general's office in New York
to
pressure Annan to appoint him to a position
commensurate
with his self-perceived
importance.
When Annan's office resisted,
Chalabi
and his team carried out their
threat to
propagate the claim that Benon
Sevan, the
retiring Oil for Food chief, was
on a list
of 267 people for whom Saddam
Hussein
had authorized commissions on
oil
trades. This claim provoked a rash
of stories
focusing on the alleged UN
connection.
With so
much smoke, the media
seemed to
assume that there had to be a
fire.
Interestingly, these stories were mostly
in the
op-ed pages. The Wall Street Journal
news
section undertook some sterling investigative
work that
did not point at corruption
in the UN,
but rather at collaboration
between
private companies and member
states in
providing revenue for Baghdad.
In March
2004, Annan, backed by the
Security
Council, appointed former Federal
Reserve
bank chair Paul Volcker to head
an
inquiry. Soon, however, the same people
who had
demanded the inquiry began to
accuse
Annan of under-funding it. When he
then
obtained $30 million from residual OFF
funds set
aside for administration, he was
immediately
accused of taking bread from
Iraqi
children's mouths.
The New
York Post denounced the inquiry
as a
cover-up, and New York Times
columnist
William Safire referred to Annan's
"manipulative
abuse of Paul Volcker," whose
reputation
for integrity was "being shredded
by a web
of sticky-fingered officials and see-
no-evil
bureaucrats desperate to protect the
man on top
who hired him to substitute
for-and
thereby to abort-prompt and
truly
independent investigation."
The chorus
grew louder following the
leak of a
letter in which Annan cautioned
the
U.S.-led coalition against a frontal assault
on
Fallujah. Fox television's Bill
O'Reilly
declared that "it's becoming increasingly
clear that
UN chief Kofi Annan
is hurting
the USA." On November 24,
2004, the
National Review declared "Annan
should
either resign, if he is honorable, or
be
removed, if he is not." And, on December
1, 2004,
writing in the Wall Street Journal, Senator Norm Coleman called for An-
nan's
resignation. When asked, President
Bush did
not repudiate Coleman's call with
any
expression of confidence in Annan, but
called
simply for the investigation to take
its
course. A week later, Prime Minister
Tony Blair
joined much of the world in expressing
support
for Annan, to whom delegates
in the
General Assembly gave a standing
ovation.
By this
time, the Volcker committee
had won
over the conservative press, albeit
inadvertently.
The interim reports publicized
many
allegations from the UN's own,
widely
derided Office of Internal Oversight
Services,
without publishing rebuttals from
UN staff.
The hostile press also welcomed
the
Volcker inquiry's censure of Annan over
his son's
involvement with Cotecna, a company
contracted
to inspect food deliveries.
Kojo Annan
had lied to his father in declaring
that he
had severed his relationship with
the
company, and it was discovered that he
had
concealed continuing payments from
Cotecna.
Volcker's
team found no evidence that
the
Secretary General had in anyway been
involved
in the procurement scandal but
held that
he had not treated these allegations
seriously
enough. Annan had asked for
the advice
of his (U.S.-appointed) undersecretary
general
for management, and of his
undersecretary
general for legal affairs, who
told him
that since he had no contact with
the
procurement process, he did not need to
take
further action. And, though Volcker
countered
that he should not have believed
his son
and authorized a major inquiry, the
published
report effectively cleared Annan
and the UN
of the vast majority of the corruption
charges
leveled by the conservative
media.
Apart from Annan's involvement,
this was a
lesser matter than the ever-
growing
billions that the critics alleged
the UN had
squandered.
About
Benon Sevan
In the
face of allegations of tens of billions
floating
from the gulf, the sole finding of
direct UN
corruption was leveled at Benon
Sevan, the
Cypriot head of the $100 billion
program,
who declared $147,000 in gifts
over four
years from an aunt, which the
committee
decided had come as commission
on
otherwise legitimate oil trades from a
company
run by his friends. If true-and
the
evidence the committee adduced was
circumstantial-this
was clearly unethical,
but not
necessarily illegal. They also took
Sevan to
task for his style of management.
Sevan did
run the program at arms' length
from the
secretariat, but his colleagues,
while
admitting that he could be stubborn
and
idiosyncratic, also pointed out that
secretariat
interference in OFF would have
slowed
down its work. By insulating it from
bureaucratic
interference, many believe the
Cypriot
abetted the program.
Sevan returned
to Cyprus in 2005 and
has not
been in New York since, which does
not
necessarily imply an admission of guilt.
In New
York, he faced a politically motivated
prosecution
in an atmosphere poisoned
by media
allegations. In January 2007, a
U.S.
district attorney filed charges against
him. He
denies guilt and cannot be extradited.
Indeed,
one suspects that the Volcker
team's
report devotes a chapter to him because,
in the
end, this was the only substantial
accusation
of serious impropriety against
any UN
official directly related to the program.
For all
the time, money, and effort put
into the
Volcker report, there are several
significant
omissions that obscure an accurate
overall
judgment of the Oil for Food
program.
For example, the inquiry does not
look into
what happened to the $10 billion
in OFF
surpluses that were handed to the
American
occupation authorities for the Development
Fund for
Iraq, for which no accounting
has been
provided either to Congress
or to the
International Advisory and
Monitoring
Board. It was not in his committee's
mandate,
said Volcker, to determine
how much
money was handed out, much of
it in
no-bid contracts, to companies close to
the White
House. Stuart W. Bowen, the
U.S.
special inspector general for Iraq reconstruction
since
October 2004, has also been
unsuccessfully
trying to find out what happened
to the $10
billion, which had been
augmented
by a matching amount from
frozen
Iraq reserves. Notably, the press that
had
fulminated against the United Nations
has been
silent on this matter.
Similarly,
little attention has been paid
to the
fact that the Oil for Food program
funneled
$20 billion of Iraqi oil revenues to
the largest
reparations scheme since Versailles.
Even at
current reduced rates, 5 percent
of Iraqi
oil money will be diverted indefinitely
to pay the
balance of $30 billion
in
accepted claims. Kuwait has refused to
discuss
dropping these reparation demands.
These
figures clearly overshadow Sevan's alleged
$147,000
in payoffs-both in quantity
and their
effect-but have not had one-
The True
UN Scandal
hundredth
of the media coverage. The Security
Council
voted for both handovers of
cash,
which perhaps makes a much stronger
case for
political reform of the organization
than the
Volcker report makes for the long
accepted
need for managerial reforms.
Neither
the United Nations nor any
other
organization should be allowed to excuse
incompetence
or corruption by pointing
the finger
at other organizations and
countries.
There were serious faults in the
OFF
program, inherent in the mixture of political
controls
and motives behind it, and,
as Annan
himself said, it was far too ambitious
a program
for the UN to undertake.
But, it is
legitimate to contrast the froth
and
indignation over OFF with the relative
silence
from the same critics over the missing
funds
provided to Iraq. What was immediately
apparent
was that the UN reconstruction
effort
proved incapable of defending
itself
against a politically motivated assault
on its
integrity. Though there is a big
constituency
for the United Nations within
the United
States, it is essentially passive:
with a few
honorable exceptions, no leading
figures
stood up to defend the organization.
Even as
Kofi Annan retired, the stains lingered
on both
him and the organization.
Among the
obvious lessons are that the
international
community should never impose
such
draconian economic sanctions on a
nation,
and that such resolutions should, in
any case,
contain a sunset clause to prevent
veto
holders maintaining penalties in pursuit
of selfish
national interests. The biggest
lesson,
however, is the need for an independent
and strong
international civil service in
the
secretariat. This has not been helped by
the
failure of successive U.S. administrations
to pay UN
assessments on time and their
tacit
connivance in slander campaigns. In an
interview
with Kofi Annan just before he
resigned,
he put it with typical understatement:
"There
have been times when it has
been
tough, particularly when some people
on the
Hill or the right wing begin attacking
the UN and
the secretary general, and
no one
pulls them back even though that's
the same
organization that you are going to
turn to
tomorrow. If you undermine the organization
to that
extent, your own population
may ask
you ëWhy are you going to
this
organization that you've discredited so
much?'"
Why, indeed?ï
Notes
1. The
Volcker reports are available online at
www.iic-offp.org.
2. Jeffrey
A. Meyer and Mark G. Califrano, Good
Intentions
Corrupted: The Oil-for-Food Scandal and the
Threat to
the U.N., introduction by Paul A. Volcker
(New York:
PublicAffairs, 2006).
WORLD
POLICY JOURNAL ï WINTER 2006/07
