In the course of seminars and lectures during my recent visit to India, I was taken aback by references to the U.N.'s oil-for-food scandal and was asked why, in one of my articles in The Hindu (May 25), I had been so dismissive about it. The story begins with sanctions as a bridge between diplomacy and force and ends with opposition to the United Nations being motivated by its failure to endorse the war on Saddam Hussein.

Once seen as an attractive non-violent alternative to war, sanctions became discredited for their harsh humanitarian consequences on the civilian population. Many of the contradictions, inconsistencies, perverse consequences, moral costs, and impassioned differences over when to lift sanctions came to a head with respect to the sanctions imposed on Iraq by the Security Council Resolution 661 after the first Gulf War. Around 80 per cent of Iraq's civilian population was adversely affected by the U.N. sanctions while the leadership enriched itself by cornering the black market for goods in the resulting scarcity. The humanitarian costs of the sanctions regime slowly but surely destroyed the fragile consensus in the U.N. Security Council. The feeling grew that the right to life, dignity, and livelihood of a people should not be forfeited to the international community because their leaders violated international norms.

In 2004, the oil-for-food scandal gave fresh life to critics who could not forgive the U.N. for having been proven right about Saddam's weapons of mass destruction. Allegations flew thick and fast well in advance of investigation and substantiation. While some of the charges were based on genuine and legitimate questions, others were ill-informed and some were ill-intentioned (the timing coincided with efforts to transfer authority for Iraqi nation-building and reconstruction from the United States-led coalition to the U.N.).

One would think that the cheerleaders for waging war on Saddam would have retreated into a period of quiet introspection. In fact, for a long time it was as difficult to find any trace of embarrassment, humility or repentance among them as to find a trace of the supposedly ubiquitous and deadly WMD in Iraq. Instead, many of those columnists and newspapers, clearly believing that attack is the best form of defence, went on the offensive against the U.N. and Secretary-General Kofi Annan. When Mr. Annan dared to caution against a major military offensive in Fallujah because of the heightened risk of civilian casualties, The Wall Street Journal described his letter as ‘a hostile act' (Nov. 8, 2004): not just wrong, not an error of judgment or a difference of interpretation, but an act of hostility towards the U.S. The fiercest attack focussed on the oil-for-food scandal. Thus William Safire, writing in his New York Times column (Nov. 15, 2004) accused Mr. Annan of ‘stonewalling' and ‘obstruction of justice.'

The oil-for-food programme (OFFP) ran from 1996 to 2003 with the goal of relieving the misery inflicted on Iraqis by Saddam. It was created to ensure that Iraq's oil money was used to meet the basic needs of the people and not for rearmament. In return for being allowed to export oil, Iraq would be required to transfer all revenues earned into a U.N.-controlled escrow account in Paris which would pay for the purchase of food and medicines. Saddam rejected this as an infringement of sovereignty. After five years of stalemate, with the increasingly devastating impact of the sanctions regime on the ordinary people, a deal was struck giving Baghdad the power to determine who bought the oil and supplied the relief goods.

Two separate scandals were rolled into one: smuggling and bill padding. The General Accounting Office (GAO) of the U.S. Congress estimated that the Saddam regime got $10.1 billion in illegal revenues from the OFFP. Of that, $5.7 billion came from oil smuggled out in violation of U.N. sanctions during and before the OFFP. Washington turned a blind eye to extensive sanctions-busting in the pre-war sale of Iraqi oil, according to a Senate investigation. U.S. oil purchases accounted for 52 per cent of the kickbacks paid to the regime in return for sales of cheap oil - more than the rest of the world put together and dwarfing the amounts allegedly paid to U.N. officials and European politicians. The U.S. administration "was not only aware of Iraqi oil sales which violated U.N. sanctions and provided the bulk of the illicit money Saddam Hussein obtained from circumventing U.N. sanctions," the report said. "On occasion, the United States actually facilitated the illicit oil sales." The OFFP worked much better in the northern Kurdish region where the U.N. was directly responsible and did not have to work through Saddam's henchmen and Iraqi government agencies.

The remaining $4.4 billion can be accounted for in two ways: underpricing Iraqi oil and overpricing goods purchased in return. U.N. overseers raised concerns about price discrepancies and apparent surcharges in oil sales to the Security Council's Iraq sanctions committee in 2000. The U.N.'s Office of Internal Oversight Services ordered 59 audits of the OFFP between 1996 and 2003. Seven of its reports identified "a variety of operational concerns involving procurement, inflated pricing and inventory controls."

The sanctions committee (not U.N. bureaucrats) decided whether or not to approve contracts. The U.S. and the U.K. acted on concerns raised by U.N. officials and put on hold thousands of contracts. These related mainly to concerns about dual-use technologies, not price padding, bribes and kickbacks. Not a single one of the 36,000 contracts was ever cancelled.

Why not?

We can take an educated guess. The sanctions committee reflected the competing priorities of the Security Council and especially of the U.S. and the U.K. Their chief concerns were to disarm Saddam, starve him of resources to rearm in the future and minimise the collateral harm to his people. These goals were achieved. They probably chose to overlook pricing irregularities in the OFFP in order to keep the sanctions regime going and stop Saddam from acquiring dangerous weapons.

The OFFP worked. Over the life of the world's largest humanitarian aid programme delivering $31 billion worth of food and medicines, a basic food ration was provided for the 27 million Iraqis, the average caloric intake jumped by 83 per cent from 1,200 to 2,200 kilocalories per day, malnutrition among Iraqi children was halved, and the mortality rate of children under five plummeted.

In response to the scandal, Mr. Annan acted with alacrity in seeking a full investigation - which only the Security Council could authorise - and appointed people of impeccable integrity for the purpose: the former U.S. Federal Reserve Chairman, Paul Volcker (chair), the former special prosecutor from the Hague Tribunal, Richard Goldstone, and Swiss Professor Mark Pieth, an internationally recognised specialist on money laundering. Mr. Annan promised full cooperation with the panel in providing all necessary documents and records, requiring U.N. officials to cooperate with it, and making its report public. He affirmed that U.N. officials would not be permitted to hide behind claims of diplomatic immunity. All promises were honoured.

In an interim report, the Volcker committee described the scandal as a painful episode that had revealed some institutional weaknesses. In "a tainted procurement process," prescribed rules and regulations were overridden for essentially political considerations. But it also confirmed that the major source of illicit funds to the Iraqi regime were sanctions violations outside the OFFP framework, namely smuggling to Jordan, Turkey, Syria, and Egypt. And it failed to find evidence of any systematic misuse of funds dedicated to administration of the OFFP. Its main report, published in September 2005, came to the less than flattering conclusion of not proven rather than exoneration of the Secretary-General. But it repeated also the ‘real accomplishments,' both humanitarian and disarmament, of the OFFP.

Since then, and following the revelations of the Volcker committee, we have also learnt how the single biggest kickback to the Iraqi regime, worth $A30 million, was paid by the government-backed AWB wheat exporting company in Australia. Once again, U.N. officials alerted the Australian government to suspicions of illegal transactions. In almost a classic illustration of ministerial deniability that exceeds the bounds of credulity, Canberra reported back that all was well and a subsequent, carefully-controlled inquiry process was little more than a whitewash of ministerial responsibility. This is what The Australian, a newspaper that cannot be accused of UN-loving liberal-left sympathies, had to say about the wilfully blind oversight of AWB activities in Iraq: "Short of a neon sign flashing ‘Saddam bribes hidden here' it is hard to imagine what more [Foreign Minister Mr. Alexander Downer] and DFAT [Department of Foreign Affairs and Trade] would have needed to comprehensively investigate AWB, long before the Volcker inquiry belled the cat" (March 29, 2006).

So yes, I remain convinced that the OFFP as a ‘U.N.' scandal was largely a media beat-up that served to disguise the primary responsibility of member states driven by commercial (Australia) and strategic (U.K. and U.S.) calculations. In comparison to other more serious U.N. failings, the oil-for-food scandal was a minor and inconsequential footnote to history.

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