Who's Behind the Oil-for-Food Scandal?

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Once it became
clear some months ago that Saddam Hussein had been telling the
truth about not having weapons of mass destruction or connections
to al-Qaida, it should have been an embarrassment to the neo-conservatives
who talked President George Bush into war with Iraq.

They were
not in the least embarrassed, though, because they had known well
before the invasion that Saddam had done everything he could possibly
do to assure the world that he was no threat to the region, the
US and the world.

Their intent
all along was no secret: They wanted "regime change"
to fit their plans for an American empire, with a permanent outpost
in Baghdad.

To do this,
they had to clear out all the obstacles in their path – which
meant open assaults on the international institutions that had
been developed to prevent war, through diplomacy backed by the
threat of sanctions.

This meant
demeaning the United Nations, the UN Monitoring, Verification
and Inspection Commission (UNMOVIC) inspectors of chemical and
biological weapons under Hans Blix, and the International Atomic
Energy Agency under Muhammad al-Baradai.

France, Germany,
Russia and China had become obstacles to regime change in Baghdad,
either at the UN Security Council or at Nato, or both.

To neutralise
them with American public opinion, the neo-cons used their contacts
in the news media to broadcast the argument that these countries
were pursuing selfish interests related to Iraq’s oil.

Out of this
soup came the "oil-for-food scandal" which now threatens
to bring down UN General-Secretary Kofi Annan and besmirch the
UN and its affiliated institutions.

A headline
in the 4 December New York Times warns: "Annan’s post
at the UN may be at risk, officials fear."

It’s clear
enough the neo-cons and the news outlets that do their bidding
are behind the "scandal" story.

In the Times
account, Richard Holbrooke, the ambassador to the United Nations
under president Bill Clinton and an Annan backer, said: "The
danger now is that a group of people who want to destroy or paralyse
the UN are beginning to pick up support from some of those whose
goal is to reform it."

Yes, but
what’s going on? Where’s the scandal?

On the surface,
there has yet to be found a single person with his hand in the
UN cookie jar. All that has appeared to date are assertions that
various people associated with the management of the oil-for-food
programme in Iraq and the UN benefited financially through shady

It is further
alleged that UN officials looked the other way as Saddam Hussein
arranged kickbacks of billions of dollars that went into foreign
bank accounts, with inferences that he was using the cash to finance
his military machine and international terrorism, build palaces
to aggrandise himself, all the while diverting money from the
intended recipients – the poor Iraqi people.

To put all
this in perspective, remember that Saddam was the duly constituted
head of state in Iraq, his government not only officially recognised
by the US during the Iran/Iraq war, but also was given palpable
support in the war.

Why he invaded
Kuwait in 1990 is another story, but it is now absolutely clear
his dispute was only with the emir of Kuwait and not any other
country in the Middle East.

It has now
also been shown that Iraq had met the conditions of the UN Security
Council post-Gulf war resolution which demanded he destroy his
unconventional weapons before economic sanctions could be lifted
and the Iraqi government could resume the sale of oil.

From this
vantage point, it was the UN that took possession of the oil resources
of the Iraqi people.

By rough
reckoning, I find that if the sanctions had been lifted in 1991
(when they should have been lifted), Iraq would have earned enormous
amounts of money from the sale of their oil. At an average of
$10 a barrel of oil (bbl) over 14 years, they would have collected
$126 billion.

At a more
reasonable average over the period of $15 to $20, the Iraqi government
would have been able to pay all its creditors and at the same
time enable the Iraqi people to return to the high living standards
they enjoyed before the Iran-Iraq war (during which, I repeat,
the US supported Iraq).

It was because
of the UN economic sanctions that persisted because of US/British
insistence that the oil-for-food programme came into existence
in 1996.

This was
partly the result of UN reports that 1.5 million Iraqi civilians
had died because of the malnutrition and disease engendered by
the sanctions.

More directly,
it was because president Clinton bombed Iraq in early September
1996 during his re-election campaign that year, on the information
that Baghdad had violated the "no-fly zone" over Iraqi

It turned
out Saddam did not violate the "no-fly zone" but had
sent troops on the ground to Kurdistan at the request of the provincial
government, which had come under attack by Iranian-backed Kurds.

The reason?
Economic distress, with the region suffering from the same malnutrition
and disease afflicting all of Iraq.

The Kurds
are the friends of the neo-conservatives. They had to be helped
out of this distress. Hence, the oil-for-food programme, designed
to relieve all Iraqi citizens, but mostly Kurds, who would get
the lion’s share of the relief from the oil revenues.

I’m not sure
about all the details of how the programme was managed in the
years since. But when the neo-cons raised the corruption issue
at the UN through their friends in the news media, Annan finally
saw he had to respond.

He said he
would investigate the allegations and persuaded former Federal
Reserve chairman Paul Volcker – arguably the most respected, squeaky
clean political figure in America – to undertake the investigation
and make a report, which is expected sometime next month.

Annan has
rejected calls for his resignation coming from a US Republican
Senator Norman Coleman of Minnesota.

Without naming
him, it was clearly Coleman to whom he referred at a press conference
last weekend when he said: "My hope had been that once the
independent investigative committee had been set up [under Volcker],
we would all wait for them to do their work and then draw our
conclusions and make judgments. This has not turned out to be
the case."

Why were
Annan’s hopes dashed by Coleman, a freshman senator who chairs
the permanent subcommittee on investigations?

My educated
guess is that the neo-cons who continue to have serious influence
on the Bush administration through Vice-President Dick Cheney’s
office, knew full well that if the Volcker commission did its
job honestly, it would be able to report that the oil-for-food
programme worked pretty much as it was designed to work.

It would
have found that nothing criminal or corrupt was done and that
even Saddam had done nothing any other head of state in his shoes
would not have done under similar circumstances.

It is perfectly
obvious that Coleman saw a chance to make a splash with assertions
that corruption at the UN was already a known fact.

His "smoking
gun" was the news that Kofi Annan’s son received payments
of $150,000 over several years from a company that was a contractor
in the oil-for-food programme.

Where did
this news come from? The New York Sun, a tiny newspaper
founded by Canadian mogul Conrad Black four years ago as a mouthpiece
for the neo-cons.

Richard Perle,
the most prominent of the neo-con intellectuals who misled Bush
to war with Iraq, has been a long time partner of Conrad Black
and a director of the Jerusalem Post, one of Black’s many
media holdings.

Perle is
also the guiding light for Rupert Murdoch’s Fox News media empire,
plus the National Review, and a galaxy of staff members
of both political parties in the US Congress.

Claudia Rosett,
who writes for the Wall Street Journal’s editorial page,
was assigned to take on Volcker and in several articles has practically
painted him as a lapdog of Kofi Annan, at the very least a foot-dragger
who should already be able to condemn the UN for corruption.

The game
plan is of course to force Volcker to issue a report that smears
the UN and threatens it with a cut-off of US funds unless there
is a house cleaning.

But what
if Volcker finds that the only "wrong" was committed
by the Baghdad government in selling Iraq’s own oil to its neighbours,
particularly to Turkey and Jordan, and that the revenues were
deposited in state bank accounts and used for legitimate state

We also know
the oil that went through the hands of the UN agency set up to
make sure the revenues went to the people, not to the Iraqi government,
also had to have the cooperation of Baghdad in lifting the oil
and delivering it.

A 2.5% "kickback,"
as it has been termed by Rosett, Coleman and the neo-con press
corps, can be more properly be termed a "fee" for facilitating
this process.

If these
fees were paid into the government, not to numbered bank accounts,
the regime would have to be judged clean on that count by Volcker.
He is in a tight spot.

What about
the damning report of Charles Duelfer and his Iraqi Survey Group,
which announced last month that Saddam Hussein destroyed all of
his weapons of mass destruction and their programmes in 1991?

In his report,
he also brought up the oil-for-food programme, which was never
part of his mission when he was appointed by Bush to check further
into Iraq’s WMD intentions.

who could not pretend to have found WMD when none existed, clearly
used the oil-for-food programme to distract attention from his
central finding.

The report
gratuitously contained the thesis that if Saddam someday wanted
to rebuild his WMD capabilities, he could be using the programme
to that end, with the complicity of the French, Russians, Chinese,
United Nations and major oil companies.

Logic should
tell you, though, that the neo-cons have been behind this hoax
from the start, that they never intended to lift the sanctions
on Iraq even while knowing back in 1991 that Saddam almost certainly
had complied with that first UN resolution.

The Iraqis
who are in a position to clear all this up and demonstrate that
while certain transactions might appear suspicious on the surface,
but can be fully explained, are not available for testimony.

The regime
is under lock and key and not available to Rosett or Coleman.
Volcker presumably has access to them, but is not sharing his
findings with the US Congress, which he is not required to do.

His report
to the UN will be made public and judgments can then be made.
It may be there is no scandal at all. Just another trick of the
neo-conservatives to blow away anyone who gets in the way of their
plans for a global empire.

This article
originally appeared on al-Jazeera.

10, 2004

Wanniski [send him mail]
runs the financial/political advisory service Wanniski.com.
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