The Magazine

Oil for Food, Money for Kofi

From the April 7, 2003 issue: A bad program that has outlived its usefulness.

Apr 7, 2003, Vol. 8, No. 29 • By CLAUDIA ROSETT
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Along with the usual meals and medicine, Oil-for Food last year introduced such items--approved by Annan this past December--as $4 million for air conditioners, phones, and vehicles to support the workings of Saddam's so-called Ministry of Justice. Annan also signed off on $50 million to supply Baghdad's totalitarian Ministry of Information "with television and radio studio systems, mobile broadcasting vehicles, television, and radio transmission equipment"--all for the use of the same Saddam propaganda machine that coalition troops have been risking their lives to knock off the air.

Another intriguing item approved by Annan last December was $20 million earmarked for "a project of Olympic sport city," complete with a sports hotel and $10 million worth of "sports supplies and materials." It bears noting, though the U.N. report does not do so, that the person infamously in charge of Olympic sports in Iraq has been Saddam's son Uday, long known for his sadistic ways. According to a gruesome report in Sports Illustrated, Uday has tortured athletes who disappoint him with beatings and amputations.

Inside Iraq, the U.N. has had nine of its alphabet-soup agencies implementing the Oil-for-Food program, employing in recent times some 900 expatriates and 3,000 locals. Their job has been to ensure that distribution takes place in keeping with the plan drawn up by Saddam and approved by Annan. In other words, the U.N. has basically been in the business of shoring up a prime source of Saddam's control--his command-economy state dole.

One might argue that with Saddam removed from the helm, Oil-for-Food will revert to a more benign aid arrangement. In Kurdish-controlled northern Iraq--where Saddam has been required by U.N. rules to hand over 13 percent of his oil proceeds, but, thanks to U.S. and British overflights, has had no real jurisdiction these past 12 years--local folks have fared much better than in the rest of Iraq. And tapping into Iraq's state monopoly oil income to help rebuild the country is a plan that leaders of the coalition now fighting for free Iraq have also been considering.

But even for the allies, maintaining a central oil monopoly to fund a vast public dole would be a risky tactic--more likely to perpetuate a command economy, primed for the next dictatorship, than to foster a free society. The only real solution is, somehow, to privatize Iraq's oil riches, cutting the state out of the loop. That will need creative thinking and deep devotion to democratic principles. For anything even approaching such a project, the U.N. Oil-for-Food program is spectacularly ill-suited--with its sorry history and large vested interest in whatever it can retrieve of the Saddam setup.

Beyond that, if you like Enron-style transparency, you have to love Oil-for-Food. At any given time, the program oversees billions in Iraq's money, awaiting the sludge-slow U.N. process of allocation and disbursement. For the first few years the U.N. parked the cash in a French bank, the Banque Nationale de Paris. More recently, it diversified the funds--currently totaling some $13 billion--among a handful of banks. But the U.N. provides no bank statements to the public, does not disclose the names of the banks, and won't even say what countries they're based in. Auditing is an in-house affair, conducted by government employees of a rotating trio of member states, chaired this year by France.

Is this what American and British troops are now giving their lives to clear the way for? How about some genuine relief? When Annan's Oil-for-U.N.-Jobs program comes up for renewal in May, let's pull the plug.

Claudia Rosett is a columnist for the Wall Street Journal Europe.