Oil For Food

OIL FOR FOOD….Paul Volcker’s preliminary report on the UN oil-for-food program is supposed to come out today, and in a preview essay in the Wall Street Journal this morning he says, “The findings do not make for pleasant reading.”

No doubt. The oil-for-food program, which allowed Saddam Hussein to sell limited amounts of oil in return for humanitarian aid (mostly food and medicine), was fatally flawed because Hussein was permitted to sell the oil to whomever he chose. This allowed him to hand out contracts to favored suppliers for less than the UN price and then extract kickbacks out of their profits. That much has been known for years, but the big open questions are: who were the people who gave Hussein kickbacks and how much money did they give him?

Whether the Volcker report names names remains to be seen, but the LA Times has a lengthy review of the scandal today that makes it pretty clear that no one is going to come out of this looking good:

In the end, national interests trumped vigilance, even for the U.S. and Britain. In one of the biggest and most blatant cases of oil smuggling, 14 tankers hired by a Jordanian company illegally lifted at least 7 million barrels of oil from an Iraqi port not approved or monitored by the U.N. in February 2003, one month before the U.S.-led invasion of Iraq.

….Oil traders were told informally that the U.S. let the tanks go because Amman needed oil to build up its strategic reserves before the U.S.-led invasion of Iraq, according to a joint report by the Financial Times and the Italian business daily Il Sole 24 Ore that was confirmed by U.N. officials. But Jordan sold most of the oil to Yemen, China and Malaysia.

Every country had their own parochial concerns. The United States considered Turkey and Jordan too important to provoke, and the rest of the Security Council had issues of their own as well:

The U.S. and Britain also looked the other way when their citizens and businesses traded favors for oil and brought it into the country in ways that skirted legality, say U.N. officials who oversaw oil contracts.

Russia was Iraq’s best customer and most powerful ally on the Security Council; it blocked several U.S. and British attempts to tighten controls on Iraqi imports and told Hussein’s government in advance when and where U.N. weapons inspections would take place, a former U.N. official said.

China was a consistent opponent of sanctions and interference with another country’s sovereignty, wary of precedents that could be used against it.

France fought attempts to reduce kickbacks that traders paid to Hussein’s regime for the right to buy discounted oil, and sent charter flights to Baghdad in a brazen challenge to sanctions it had voted to enact.

As they say, read the whole thing. It’s a pretty good roundup.

UPDATE: I haven’t read it yet, but here’s the full text of the Volcker report.

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