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[casi-analysis] FT letter re: Oil for Food infractions - with weblink

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Hi folks

As you know, there is a lot of oil-for-food stuff going on in the media. I couldn't ignore the lead 
letter in today's FT (reproduced online), so I wrote the following letter.



1) letter from Mabro
(if that gets broken:

Sir, Nobody should condone or excuse giving and accepting bribes, as allegedly happened under the 
oil-for-food programme. It is important, however, to understand how bribing was made possible. 
Unfortunately, most articles on this issue (for example your reports of April 15) seem to miss 
important points.

First, the US's Middle East policy from 1991 to 2000 was to maintain the political status quo in 
the region. This implied keeping Saddam Hussein in "contained" power. The reversal occurred in 2000 
to 2001 when the motto became regime change and democratic reforms. The oil-for-food programme was 
consistent with the 1991-2000 policy objective.

Second, those who designed the programme wanted it to generate as much revenue as possible so as to 
maximise help to the long-suffering people of Iraq. There was a difficulty, however. US oil 
companies were a very significant potential importer of Iraqi oil, but they were barred from buying 
it directly from Iraq. They could obtain it instead from intermediaries, which they did. At one 
point they were purchasing as much as 1m barrels a day!

The price of Iraqi oil had to be set below its market value to enable these and other companies to 
buy it at the market price from the intermediaries, and for these intermediaries to make a return 
on the transaction. The discount on the market value was a gate wide open to abuses. It enabled 
Saddam to obtain a share of the margin gained by intermediaries (if you do not pay we shall sell to 
somebody else) and to allocate some of these attractive contracts to political friends. As the 
discount on market value made the contracts profitable, the greedy offered bribes to obtain them 
and some in authority may have accepted them.

Third, the implementation of the programme, including approval of the prices for Iraqi oil, was 
under the supervision of the Security Council sanction committee, comprising member countries that 
include the US and the UK. For them to say that they saw nothing, understood nothing or approved 
nothing that has bad implications calls into question either competence or truthfulness.

Robert Mabro, President, Oxford Institute for Energy Studies, Oxford OX2, UK

2) letter from Rai


Robert Mabro is correct to cast doubt on US and British protestations of ignorance over Iraq's 
oil-for-food infractions ('Apparent ignorance of oil-for-food infractions raises questions over US 
and UK monitoring', letters, 19 April).

However, he is incorrect when he asserts that 'those who designed the [oil-for-food] programme 
wanted it to generate as much revenue as possible so as to maximise help to the long-suffering 
people of Iraq'.

Firstly, those who designed the programme actually put a financial cap on the revenue that the 
programme was allowed to generate. The limit set in 1995 by UN Security Council Resolution 986 was 
$2bn of oil sales every 180 days. After much protest, Resolution 1153 raised the to $5.3bn in 
February 1998. The limit was not removed until December 1999 with Resolution 1284.

Secondly, those who designed the programme required one-third of Iraq's oil revenues to be set 
aside to compensate companies, governments and individuals harmed by Iraq's invasion of Kuwait. 
Whatever the merits of this policy, this was not 'generating as much revenue as possible so as to 
maximise help to the long-suffering people of Iraq.'

Those with long memories will recall that the first oil-for-food deal offered in 1991 offered Iraq 
less than $1bn every six months for humanitarian spending, a quarter of the $3.8bn recommended by 
the UN Secretary-General's own investigation. (The deal was rejected by Iraq.) Again, it is hard to 
see this as 'maximising help to the long-suffering people of Iraq'.

The truth is that the oil-for-food programme was a device designed to prolong the life of the 
sanctions regime, not to provide maximum relief to the people of Iraq.

On 8 March 2001, explaining his proposed changes to the sanctions system to Congress, US Secretary 
of State Colin Powell was emphatic that 'this wasn't an effort to ease the sanctions', it was 'an 
effort to rescue the sanctions policy that was collapsing.'

Earlier, in January 1999, an unnamed US official 'with responsibility for Iraq' explained US 
sanctions policy to The Washington Post: 'We bought seven years and that's not bad ... The longer 
we can fool around in the [security] council and keep things static the better.'

The US wasn't able to keep things entirely 'static', and was forced, slowly and reluctantly, to 
allow the loosening of the sanctions regime on Iraq. The US was not the benevolent designer of a 
'maximum revenue/maximum relief' oil-for-food programme.

Milan Rai
Justice Not Vengeance

Milan Rai
Justice Not Vengeance
landline 0845 458 9571 (UK) +44 1424 428 792 (int)
mobile phone (0)7980 748 555

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