THAT'S WHAT FRIENDS ARE FOR (via John Resnick):

Saddam's Global Payroll: It's time to take a serious look at the U.N.'s oil-for-food program. (THERSE RAPHAEL, February 9, 2004, Wall Street Journal)

In the seven years that Oil-for-Food was operational, (it was shut down in November and its obligations are being wound up) Saddam was able to skim off funds for his personal use, while at the same time doing favors for those who supported the lifting of sanctions, supplied him with his vast arsenal of weapons, and opposed military action in Iraq. Indeed, it was clear from the outset that Saddam would be able to use the program to benefit his friends. The 1995 U.N. resolution setting out the program--Resolution 986--bends over backwards to reassure Iraq that Oil-for-Food would not "infringe the sovereignty or territorial integrity" of Iraq. And to that end it gave Saddam power to decide on trading partners. "A contract for the purchase of petroleum and petroleum products will only be considered for approval if it has been endorsed by the Government of Iraq," states the program's procedures. Predictably, Saddam exploited the program for influence-buying and kickbacks, and filled his coffers by smuggling oil through Syria and elsewhere. With Oil-for-Food and smuggling, he was able to sustain his domestic power base and maintain a lavish lifestyle for his inner circle.

The system was ripe for abuse, in part because a divided Security Council gave Saddam far too much flexibility within the program. Oil-for-Food not only gave Iraq the power to decide with whom to deal, but also freedom to determine the official price of Iraqi oil, revenues from which went legally into the U.N.'s Oil-for-Food account. U.N. rules did not allow it to order Iraq to deal directly with end-users and bypass all those lucky middlemen who got deals from Saddam. Nor was the U.N. allowed to view contracts other than those between the oil ministry and the first purchaser, so it had no way of verifying that surcharges were being imposed by the middlemen on end-users. That enabled him to add surcharges to finance his own schemes while still making the final price competitive.

U.N. rules were ostensibly devised to prevent pricing abuses, but in one of the many indications of administrative failure, those safeguards appear not to have been enforced. In response, the U.S. and Britain tried often from 2001 to impose stricter financial standards, but Russia blocked changes. Then the U.S. and Britain instituted a system of retroactive pricing--delaying approval of the Iraqi selling price so that they could take account of the market price when giving their approval. This too met with grumbling from Friends of Saddam and while it reduced oil exports, it didn't end the corruption.

Since these same friends of Saddam were working to get rid of the sanctions regime and since WMD is so readily available on the global market, it doesn't take much imagination to see where we'd have been in a few years had we not gotten rid of the regime.

Posted by Orrin Judd at February 9, 2004 2:25 PM