The following is an archived copy of a message sent to a Discussion List run by the Campaign Against Sanctions on Iraq.

Views expressed in this archived message are those of the author, not of the Campaign Against Sanctions on Iraq.

[Main archive index/search] [List information] [Campaign Against Sanctions on Iraq Homepage]

[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

[casi] Kofi Annan, Saddam's biggest partner in stealing ?

Dear List members,

Claudia Rosett in The Wall Street Journal of 25 September argues

that Kofi Annan is not a disinterested person when it comes to the
present debate on Iraq and Sanctions. An argument the Kurdish side in
the discussion has advanced - and underpinned with statistics from the
OFF program -  ever since the debate has started.

Alexander Sternberg

Opinion Journal

Kofi Annandersen
Enron-style accounting at the U.N. Oil-for-Food Program.

Wednesday, September 25, 2002 12:01 a.m.

Who is Saddam Hussein's biggest business partner?

The United Nations. The same U.N. whose secretary-general, Kofi Annan,
stands as one of the chief ditherers over removing Saddam. Here are the
ingredients of a conflict of interest.

Under the U.N.'s Office of the Iraq Program, which supervises the
six-year-old Oil-for-Food Program, the U.N. has had a hand in the sale
of more than $55 billion worth of Iraqi oil. Iraq ships oil out to
U.N.-approved buyers under the terms of the sanctions agreement. The
U.N. vets the inflow of "humanitarian" imports into Iraq.

The process is simple. Iraq contracts to import goods, and the U.N.
gives the outside vendors cash collected from the oil sales. The U.N.
has approved about $34 billion in such deals so far. The money it hasn't
yet doled out--at least $21 billion--sits in U.N.-administered bank
accounts. U.N. officials refuse to divulge much information about these
accounts--not even the countries in which they're held.

Measured in dollars, this is by far the U.N.'s largest program. The sums
involved are large enough--and their handling has been perverse
enough--for this program to deserve more attention than it has so far

Conceived in 1995 as a way to deliver humanitarian aid despite sanctions
against Iraq, Oil-for-Food has matured into an unholy union between
Saddam Hussein, with his command economy, and the U.N., with its big,
buck-passing bureaucracy. By now, the two are effectively partners in
what might just as well be called the Oil-for-U.N.-Jobs program. Even
with its weapons inspectors barred from the country, the U.N. by now has
10 agencies employing 900 international staffers and 3,000 Iraqi
nationals inside Iraq to administer the program, plus another 120 or so
in New York.

Combining Iraq's oil exports and aid imports, they oversee a flow of
funds averaging about $15 billion a year, more than five times the
U.N.'s core annual budget. Even assuming the utmost integrity by the
U.N. staff, it is worth asking whether Mr. Annan and his entourage might
by now have a stake in the status quo. In which case, listening to Mr.
Annan's views on Iraq makes about as much sense as once upon a time
heeding Arthur Andersen's pronouncements on Enron.

Making this picture all the more Enron-like is the extent to which Mr.
Annan and his crew have winked at Iraq's gross violations of U.N.
agreements, and not only on weapons inspections. The U.N. sanctions on
Iraqi oil sales were meant to stop Saddam from diverting oil revenues to
his own uses. Instead, they provide a facde of control that is
dangerously misleading. Saddam has been getting around the sanctions via
surcharge-kickback deals and flat-out smuggling, to the tune of $3
billion a year, according to the dossier released yesterday by Britain's
Prime Minister Tony Blair.

Back in May, The Wall Street Journal's Alix Freedman and Steve Stecklow
gave a thoroughly documented account of how Iraq "has imposed illegal
surcharges on every barrel of oil it has sold, using a maze of
intermediaries to cover its tracks." Last week, the Washington-based
Coalition for International Justice released an exhaustively researched
70-page report, detailing Saddam's dodges and how this year alone,
despite "smarter" U.N. sanctions, he will rake in billions for his
"personal treasury." When President Bush on Sept. 12 addressed the U.N.,
he charged that Saddam has "subverted" Oil-for-Food, "working around the
sanctions to buy missile technology and military materials."

So the remaining virtue of the U.N.'s Iraq program would have to be the
humanitarian relief. Not quite. Under the Oil-for-Food deal, it is not
the U.N. but Saddam who decides what is needed, who in Iraq gets what,
and which countries he should contract with. He must submit his
proposals to the U.N. Security Council, which can turn them down. But
the bulk of his requests are approved. The U.N. then disburses the cash
from the "Iraq accounts" and monitors the delivery, trying to ensure it
follows Saddam's plan.

The result is that U.N.-approved aid goes to reinforce Saddam's control
over what is already a Soviet-league state-run economy. Part of what
helped Saddam rise to power in the first place was Iraq's embrace in the
1960s of Soviet-style central planning, which by rationing goods and
controlling people's livelihoods serves as a powerful tool for political

Today, with private business largely smothered, except in
Kurdish-controlled northern Iraq, the only significant source of foreign
exchange is oil. All oil in Iraq belongs to the state. Saddam decides
who will benefit from its sale, and who will be deprived. "The
government of Iraq has the sole responsibility for allocating the
money," says an official of the U.N.'s Oil-for-Food Program. "We cannot
tell them, we only advise them." An author of the Coalition for
International Justice report, Susan Blaustein, notes that Saddam has
stolen Iraq's oil from his fellow countrymen. She points out that in
accommodating this arrangement, "the U.N. is colluding in that theft."

The U.N. designates that Kurdish-controlled northern Iraq is to receive
a share of the Oil-for-Food revenues, with some of that administered on
the ground directly by the U.N. It is Saddam, however, who controls the
buying of food and medicine. Though the U.N. has allocated $6.8 billion
for northern Iraq since the start of the program, only $4.6 billion has
been contracted for. Even less has been delivered. Under the category of
medical supplies, for example, only 28% of the total allocated funds
have been translated into goods received. While billions sit in U.N.-run
accounts, sources in the north report shortages of such staples as
surgical gloves.

Delving into these matters gets tough, because the U.N. shuns
transparency. Given that more than $20 billion from the Iraq program is
now sitting in U.N. escrow accounts awaiting some combination of
Saddam's planning and U.N. processing, one wonders which banks, and
which of those countries now taking part in the Iraq debate, might be
getting thick slices of Saddam's business. A few years ago, all
Oil-for-Food funds were kept at a French bank, Banque Nationale de
Paris. More recently, the funds have been diversified among five or six
banks, according to U.N. treasurer Suzanne Bishopric. But the U.N. does
not permit her to disclose the names or locations of the banks, or
details such as interest accrued.

"We don't like to make public where our money is," says Ms. Bishopric.
Who audits the program? It's a strictly insider job: The U.N.
secretariat, supplemented by a rotating set of member nations, with the
task currently delegated to the government of the Philippines.

Neither does the U.N. disclose which countries get what amount of
Saddam's trade. Oil industry experts say France and Russia--both of
which have resisted removing Saddam--have led the pack, with billions in
deals. Russia being a big oil producer itself, these purchases are not
for home consumption, but for resale at a profit. An official in the
U.N. controller's office says he is forbidden to disclose figures on
Iraqi trade with individual countries. "If I did, I would get an earful
from the countries' missions."

In another craven move, the U.N.'s Iraq program even allowed Saddam to
dictate in October 2000 that he no longer wanted the Oil-for-Food
accounts to be held in the currency of the enemy, meaning U.S. dollars.
Obediently, the U.N. switched all Iraq funds from that stage forward to
euros, in effect helping Saddam impose his own version of sanctions on
the U.S.

What helped breed this monstrosity of a program was a system that at its
inception sounded worthy enough. To fund most of its operations, the
U.N. has to assess its members, rattling the cup for funds. Not so with
Iraq. Oil-for-Food aims to make Saddam's government pay for all the
evaluating and inspecting and directing meant to ensure that Saddam's
oil gains go for humanitarian uses. So the U.N.
plan allocates various percentages of the revenues for different parts
of the program.

Today, that means 59% for Baghdad-controlled central and southern Iraq,
13% to the autonomous Kurdish north, 25% for Gulf War reparations and
0.8% for weapons inspections (what weapons inspections?). And--oh
yes--2.2% for U.N. administration of the program, $1.2 billion so far.
That's enough that the U.N. secretariat, awash in Iraqi cash, has turned
over a surplus $211 million for aid to Iraq. That still leaves a
cumulative $1 billion bankrolling U.N. administration of a program that
by now, in effect, has the U.N. working, on commission, for Saddam. As a
man of integrity, Mr. Annan might want to footnote that in the debate
over what
to do about Iraq.

Ms. Rosett is a member of The Wall Street Journal's editorial board. Her

column appears Wednesdays here and in The Wall Street Journal Europe.

Copyright  2002 Dow Jones & Company, Inc. All Rights Reserved.

Sent via the discussion list of the Campaign Against Sanctions on Iraq.
To unsubscribe, visit
To contact the list manager, email
All postings are archived on CASI's website:

[Campaign Against Sanctions on Iraq Homepage]