United States, United Kingdom, and Spain have jointly put forward a
draft United Nations Security Council resolution calling for the
lifting of economic sanctions against Iraq and the phasing out of
the oil-for-food program. France and Russia have opposed the move,
arguing that sanctions should be lifted and oil for food ended only
after Iraq has been declared free of weapons of mass destruction by
U.N. inspectors and the United Nations has been given a lead role
in shaping the future of Iraq.
Bush Administration must resist the temptation to enter into a quid
pro quo agreement with other members of the Security Council who
are seeking a bigger role for the United Nations in post-war Iraq
in exchange for supporting the U.S. resolution. A U.N.-controlled
post-war administration would merely serve as a Trojan horse for
European nations opposed to regime change, enabling them to stake
their economic and strategic claims in Iraq.
for food has become a cash cow for the U.N. and a lucrative source
of contracts for Russian and French companies. The revenues from
the past sales of Iraqi oil, now controlled by the U.N., are the
sovereign property of the Iraqi people and should be turned over as
soon as possible to the new Iraqi Assistance Fund, to be held by
the Central Bank of Iraq.
Background of Oil for Food
The oil-for-food program was established by the United
Nations Security Council in 1995 "as a temporary measure to provide
for the humanitarian needs of the Iraqi people" while economic
sanctions remained in place. Of Iraq's population of 24 million, 60
percent are dependent on food shipments administered through oil
for food. The program was briefly suspended on the eve of the Iraq
War but has been resumed and extended until June 3.
According to the Congressional Research
Service, between 1996 and 2003, the program generated over $63
billion in revenues for the Iraqi regime. The New York Times
estimates that $13 billion is currently held in trust by the United
little oversight from the U.N., the Iraqi dictatorship was able
both to circumvent and to exploit the oil-for-food program.
According to the U.S. General Accounting Office (GAO), the Iraqi
regime generated $6.6 billion in illicit earnings through
surcharges and oil smuggling in the period between 1997 and 2001.
Official United Kingdom estimates put the figure as high as $9
General Tommy Franks has aptly described
oil for food as the "oil for palace" program. The U.S. government
believes that the Iraqi regime used $2 billion of funds provided by
the program to build nine presidential palaces. The British
government's report on Iraq's weapons of mass destruction,
published in October 2002, concluded that the Iraqi regime also
used illicit oil revenues to develop its chemical, biological,
nuclear, and ballistic missile programs.
from Oil for Food
European powers, including France and Russia, have called
for the preservation of the oil-for-food program, largely out of
economic self-interest. Although the program was established to
benefit the Iraqi people, Saddam Hussein's regime manipulated it to
reward countries that helped advance its diplomatic interests,
particularly France and Russia. French and Russian companies stand
to lose substantial business if the program is ended. The
Washington Times reports that, according to U.N. records, Russian
firms won about 21 percent of all oil-for-food deals in a recent
six-month period. French firms pocketed 6 percent of contracts
during the same period. The Times of London has calculated that
over the last seven years, Russian companies received $7.3 billion
of business through oil for food; French firms earned $3.7
for food is the world's largest United Nations program. As Claudia
Rosett pointed out in The Wall Street Journal, the U.N. oversees "a
flow of funds averaging at least $15 billion a year, more than five
times the UN's core annual budget." Oil for food is administered by
10 U.N. agencies employing over 1,000 staff internationally and in
New York, as well as 3,000 Iraqi nationals. The U.N. has collected
a 2.2 percent commission on every barrel of oil sold, and this has
generated more than $1 billion in revenue.
Until 2001, all Iraqi oil revenues were
held in an escrow account run solely by Banque Nationale de Paris.
The money is now kept by several unnamed international banks, all
approved by Saddam's regime. The program is shrouded in a veil of
secrecy, with little transparency or public accountability. There
is no system of external auditing or publishing of accounts. The
identity of the banks holding the Iraqi funds is still kept
Dealing with this problem effectively will require several
- U.N. sanctions against Iraq should be
lifted immediately, not simply suspended. Washington must resist
making concessions to Moscow and Paris on this issue.
- The Bush Administration should reject
calls to link the lifting of economic sanctions and the ending of
oil for food to the readmittance of U.N. inspectors to Iraq or the
U.N.'s being given a central role in running post-war Iraq.
- All money held in escrow accounts by the
United Nations should be handed over as soon as possible to the new
Iraqi Assistance Fund.
- U.N. oil-for-food accounts should be
opened to full public scrutiny by private-sector auditors in order
to uncover possible financial and other irregularities. Measures
should be taken against individuals and businesses that profited
illegally from the oil-for-food program.
The spectacle of countries that bitterly opposed the
policy of sanctions against Saddam's dictatorship attempting to
preserve the sanctions regime and the oil-for-food program is
utterly abhorrent. Iraq's oil revenues must be returned to the
Iraqi people. Governments that tried to prevent the removal of
Saddam Hussein from power must not be permitted to blackmail the
international community and hold the Iraqi nation hostage.
Dr. Nile Gardiner, is Jay Kingham
Fellow in International Regulatory Affairs, and James A. Phillips
is Research Fellow in Middle Eastern Affairs, in the Kathryn and
Shelby Cullom Davis Institute for International Studies at the