The Magazine

Saddam's Business Partners

From the May 30, 2005 issue: How the Oil-for-Food scandal happened and why it matters.

May 30, 2005, Vol. 10, No. 35 • By STEPHEN F. HAYES
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WHEN UNITED NATIONS SECRETARY GENERAL Kofi Annan quipped several years ago that he could "do business" with Saddam Hussein, he meant it figuratively. In light of the substantive charges coming out of the ever-expanding Oil-for-Food scandal, the throwaway line seems revealing or at least ironic.

"I think we have to take him literally," says Republican senator Norm Coleman, who is leading one of eight investigations into the corruption and mismanagement of the U.N.'s largest-ever humanitarian relief effort.

The basic outline of the scandal is simple: Saddam Hussein used the Oil-for-Food program to circumvent U.N. sanctions imposed after the Gulf war and to enrich himself and his allies. He did this by bribing leading journalists and diplomats and demanding kickbacks from those who profited from selling Iraqi oil. That he was able to do so indicates at least that the U.N. badly mismanaged the program it set up in December 1996. None of this is particularly astonishing. No one is surprised to learn that Saddam Hussein cheats, that politicians take bribes, and that the competence level of the U.N. bureaucracy is, well, suboptimal.

Nevertheless, the details of the Oil-for-Food scandal--who participated, and what they apparently did--are jaw-dropping. Vladimir Putin's chief of staff, Alexander Voloshin, appears to have accepted millions of dollars in oil-soaked bribes from Saddam Hussein. The same appears to be true of the former interior minister of France, Charles Pasqua, a close friend of President Jacques Chirac. And the same appears to be true of three high-ranking U.N. executives including Benon Sevan, handpicked by Kofi Annan to administer the Oil-for-Food program. Oil-for-Food money even went to terrorist organizations supported by the Iraqi regime and, according to U.S. investigators, might be funding the insurgency today.

Through seven years' worth of deals that should never have been made, compromises that should never have been struck, and concessions that should never have been granted, Oil-for-Food strengthened Saddam Hussein. What we know about all of this now is a fraction of what will eventually be uncovered. But even this limited understanding should mean an end to Kofi Annan's term as secretary general. The sad history of U.N. incompetence on Iraq generally and in the Oil-for-Food program specifically is enough to make you wonder why George W. Bush settled for John Bolton rather than, say, John Rocker to push for reform at the world body.

AMONG THE MANY BIZARRE ASPECTS of the U.N. Oil-for-Food program is its premise: If we, the international community, allow Saddam Hussein to take in more money by selling oil, we can end the suffering of the Iraqi people even while maintaining U.N. sanctions.

Saddam Hussein argued that Iraqis were dying because the sanctions deprived him of the money to save them. And while there is little doubt that the sanctions left Iraqis much poorer than they were before the Gulf war--annual incomes dropped nearly to a third of what they had been in 1990--it was less clear that Saddam Hussein was similarly destitute.

"Saddam's family profits from covert sales of Iraqi oil and dominance of the black market, where many of the donated medicines and food end up," said then-CIA director John Deutch in public testimony before the House Permanent Select Committee on Intelligence on September 25, 1996. "Iraqi government funds are used to maintain lavish lifestyles. Baghdad, for example, has begun working on 48 new palaces and VIP residences during the past five years, increasing the total number of estates available to Saddam Hussein to at least 78."

Iraqis were dying because Saddam Hussein was killing them. He was actively killing them, Deutch said, by executing his political opponents and by draining the marshes of central Iraq that provided sustenance to hundreds of thousands of Shiites. And he was passively killing them by refusing to cooperate with U.N. inspectors and stealing food and medicine intended to ease their suffering.

None of this mattered to France and Russia, Hussein's chief backers on the Security Council. From virtually the beginning, they wanted the sanctions to end so that they could resume their robust, pre-Gulf war business with the Iraqi government. But Hussein made their argument difficult. For the first five years after the 1991 cease-fire, he had continually violated its terms. He had failed to account for his stockpiles of weapons of mass destruction. He had not cooperated fully with U.N. weapons inspectors. He had smuggled oil out of his country for sale on the black market. He had harbored a fugitive from the 1993 World Trade Center bombing. He had attempted to assassinate President George H.W. Bush. He had amassed troops on the Kuwaiti border, threatening a new attack. And he had dispatched 40,000 Iraqi soldiers to attack the Kurds in northern Iraq.