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1) Concerning the accusation, "pro-Saddam" 2) Holes in the State Department's report on Iraq

I must respond to the comments of Amina Baker which are insulting,
inflammatory, and untrue.

Ms. Baker's most offensive assertion is also her most puzzling, namely that
my opinions and those of others in CASI are somehow "pro sadam'"(sic).  This
is ludicrous: Saddam Hussein is vile*, and I can recall no message from CASI
that argues otherwise.  Only a complete mis-reading of my comments on oil
futures could infer a pro-Saddam stance.

Ms. Baker's ire is raised by the statement, "Saddam has absolutely no access
to oil-for-food funds"[1].  Yet this statement is plainly true and, in fact,
it reflects the very intent of OFF.  It is embodied in the UN resolution
under which OFF was chartered.  Oil for food funds are not available at the
discretion of Saddam Hussein, but rather are kept in a UN escrow account in
the Banque nationale de Paris .  The UN's 661 Committee agrees to each
disbursement.  The United Nations documents and periodically updates its
listings of all expenditures which show where every penny of Iraq's oil
sales are spent[2].  Any claim that Saddam Hussein has access to OFF funds
is farcical. 

Ms. Baker refers to the "latest reports published in new york" showing
"hussain has gained billions of dollars by the oil for food programme" and
that "his baathist party are benefiting daily by selling the food in the
black market".  Several issues are conflated here, which I will analyze
separately (and no references are given, but I assume their basis is the
recent State Department report on "Saddam Hussein's Iraq"[3]).  

The "billions" probably refers to the figure the State Department report
cites for Hussein's palace construction.  I have no idea whether the figure
is accurate or not; however, this amount has been cited in U.S. briefings
since 1996, and it thus predates the oil for food program, the first revenue
from which appeared on January 15, 1997.  It's possible the "billions"
refers to Forbes' recent $6B quess-timate of Saddam's overall wealth;
however, this wealth also predates oil-for-food (as Saddam has ruled a
once-vastly-richer Iraq since 1979).

Although Saddam has no access to OFF funds, the consolidation of contracting
and distribution under the embargo has created a shadow economy in Iraq.
Smuggling , black markets, and contractual kickbacks are all areas where
Saddam, his Ba'athist thugs, and the cruelly pressured middle class can turn
a dollar.  Ironically -- as with the rumored manipulation of oil futures --
these "opportunities" were birthed amid the economic constrictions and
distortions due to sanctions; they're amplified by the heightened control
over the economy now vested in Saddam's regime.  

As regards the selling of OFF goods on the black market, this has doubtless
occurred and will occur again.  However, the scale of such diversion appears
small and, in this regard, the oil-for-food program appears amazingly clean.

The State Department report lists three instances of Iraqi diversion into
black markets:
(1) the ship M/V Minimare and its contents, 2,000 metric tons of rice; 
(2) unspecified quantities of OFF baby milk, found in Persian Gulf markets;
(3) a shipment of baby talcum powder and bottles, seized by Kuwaiti

Only points (1) and (3) offer specifics, and on these the following is now

(1) The shipment of rice on the M/V Minimare was actually discussed months
before the State Department's report by the UN's Humanitarian Coordinator,
Hans von Sponeck.   In April 1999, he said "... we have just now had a case,
we don't know yet how it will end - 2,600 tons of rice coming into the
country, and we discover that the first layer of that rice is looking nicely
and good as it should. You go a little bit further down and what you get is
crusted, caked up with filth and dirt, infested stuff, obviously a supplier
who has tried to pull a fast one."  In other words, the rice was unfit for
human consumption and was rejected for OFF.  

That this shipment is the one referred to months later by the State
Department was confirmed recently by Mr. Bob Odeh, retiring head of the UN's
observation unit in Baghdad[4].

(3) As regards the shipment seized by Kuwaiti authorities, the items were
aboard a launch-sized Indian vessel called the Naurani. This seizure was
well-covered in the West, because early reports claimed baby milk powder was
being shipped (though this later proved to be talcum powder).  It was also
later revealed (though little reported) that these items were not part of
the OFF program at all.  Rather, they were purchased by a private
businessman, Tahsin Mahmud Rastam, and failed to meet Iraqi product
standards.  The items were being shipped back to the United Arab Emirates
following their rejection. This was confirmed by George Somerwill, Chief of
Information of UNOCHI[5]. 

In closing, let me add I took no particular offense in being called "naive"
by Ms. Baker.  Concerning Iraq, however, I have learned that true naivete
lies in blindly accepting the reports of the media.  And when the original
UN documents are available online to all, it is not only naive to ignore
them -- it is deeply negligent.

Drew Hamre
Golden Valley, MN USA
* It's commonly held that during his rise to power as a Ba'athist enforcer,
Saddam personally committed several murders.  This figure is dwarfed, of
course, by the hundreds of thousands killed during the wars with Iran and
Kuwait.  Ba'athist security forces remain among the most brutal in the
world, with a history of torturing children in front of their parents.
Saddam continues to repress Kurds and other ethnic groups.  His invasion of
Kuwait ended in an orgy of spiteful violence and caused an ecological
disaster of biblical proportions.  

Prisoners from the Kuwait war - along with the civilian population of Iraq -
remain hostages, caught between Saddam's desire to retain power, and the
West's obscenely cruel policies of containment.

[1] I consciously chose these words to echo the comment of Denis Halliday
(from Colin Rowat's post of 99.09.21): "Contrary to State Department
issuances, the Office of Sevan knows full well that the government in
Baghdad has no access to OiI for Food monies."
[2] The resolutions and the financial updates are all available from the
UN's OIP web site, at
[3] Following are the web addresses for the U.S. State Department's special
briefing on Iraq (September 13, with Spokesman James Rubin and
Undersecretary Martin Indyk):
> Report:
> Transcript: 
[4] The association and the conversation with Count von Sponeck are here:
     The conversation with Mr. Odeh is summarized in Harriet Griffin's CASI
post of 99.10.01
[5] The Economist (Aug 21-27, 1999, page 36);

> -----Original Message-----
> From: Amina Baker []
> Sent: Thursday, November 25, 1999 10:12 PM
> To:   Hamre, Drew
> Cc:   'Iraq-CASI - Discussion'
> Subject:      Re: 1) More on oil futures  2) Boutros-Ghali on sanctions
> to drew and all others with the same pathetic naive pro sadam opinion, i
> do not know whehter many of you are plain ignorant or you simply have not
> read the latest reports published in new york, they found that saddam
> hussain has indeed gained billions of dollars by the oil for food
> programme. what makes saddam wealthy are a number of factors, one of which
> is this!!! we are not assuming that saddam is making money, it is a fact
> that saddam and his baathist party are benefiting daily by selling the
> food in the black market in asia, s.e asia etc etc. now i am sure that
> those of us who actually doo want to help the cause of iraq will agree
> that and evil amn of his power, who has and remains to kill his own
> people, will do anything and everything in his power to gain all the funds
> he can for meeting his needs. so please next time a statement is made, i
> suggest it is thought about first...
> a very angry AB!!  
> On Wed, 24 Nov 1999, Hamre, Drew wrote:
People sometimes assume that, because of Saddam Hussein's great wealth, he
*must* be diverting oil-for-food monies or otherwise bleeding humanitarian
resources from Iraq.  In countering, it should be stressed that Saddam has
absolutely no access to OFF funds.  Instead, as noted yesterday, Saddam can
resort to other sources of income including the oil futures market.
Ironically, nine years of sanctions have vested in Saddam a unique degree of
individual leverage over oil market prices, as evidenced by this past week's
fluctuations stemming from the Iraqi OFF announcement.

This scenario is discussed in the following:

        Institute for National Strategic Studies "ECONOMIC SANCTIONS AGAINST
IRAQ (1990- )"
"Some oil traders (claimed) that Saddam and his entourage had also enriched
themselves by speculating in oil futures, manipulating the market to their
advantage by periodically sending false signals that they were about to
comply with Resolution 986. The prospect of a substantial increase in world
supply resulting from the sale of Iraqi oil would trigger a price drop in
oil futures, only for the price to soar up again, each time Saddam derailed
implementation of the oil-for-food program with another incident.
Reportedly, since the end of the Gulf War, Saddam had used $2 billion of his
covert income to build huge palaces for himself and his supporters."

<Note: This article also cites Thomas L. Friedman, "Follow the Money," The
New York Times, 13 October 1996, E-13>

        Iraq Since the Gulf War by Franklin Foer

c) "Unvanquished" by Boutros Boutros-Ghali, Random House, 1999
Page 209:  "Some speculated that Saddam was playing this game (negotiating
oil-for-food) as a way to manipulate the world oil market.  This was not
implausible.  Whenver the oil-for-food talks were reported to go well, the
world market price of oil fell in anticipation of Iraqi oil coming onto the
market; when Saddam Hussein broke off talks, the price of oil rose ...  I
did not, however, accept this theory.  Saddam Hussein thinks of himself as a
romantic hero confronting the forces of evil.  He is totally isolated and
shielded from hard information about world affairs."

More generally, here's a great quote from BB-G concerning the Iraq sanctions
(also page 209):  "Again we are confronted the fundamentally contradictory
character of sanctions: the innocent population suffers greatly but the
oppressive regime feels little or nothing, while the process only deepens
its control over the people."

Regarding the reasons for the 2-week OFF turn down, a very believable (and
exasperated) explanation comes from Iraq's Ambassador Hasan in the report at :  "What can you export in two
weeks? What kind of a distribution plan can you submit? What kind of
commodities can you bring to the country in two weeks? It's ridiculous to
extend it for two weeks this program with all of its complexities," Hasan

Drew Hamre
Golden Valley, MN USA

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