Wednesday, September 07, 2005

Oil for Fleece

The New York Times provides this summary of the Paul Volcker's final report. The report itself is available here at the Volker Commission site.

the Security Council received an 860-page report today excoriating their management of the oil-for-food program and saying the United Nations must be extensively overhauled ... The oil-for-food program scandal has deeply undermined the reputation of Mr. Annan, once thought of as the most outstanding secretary general since Dag Hammarskjold ... the report noted that the program helped keep the sanctions in place that it said deprived Saddam Hussein of the ability to acquire or develop weapons of mass destruction and that, thanks to the food and medicine that got to the 27 million Iraqis, "minimal standards of nutrition and health were maintained in the face of potential crisis." ... "despite uncertain, wavering direction from the Security Council"

One fascinating document --  Volume II - Report of Investigation: Programme Background -- details the smuggling, the role of the different countries, of Maurice Strong, etc and deserves really close attention. I hope to post on this later, if time permits, but commenters with the time available should look through it: this is how the UN system works.

Running Read

Some of the points that Volume II makes are:

  • "Iraq's top officials frequently instructed its civilian ministries to procure goods in behalf of ... the Ministry of Military Industrialization, the Ministry of Defence and the Mukhabarat ..."  (page 31) under OFF
  • "In the latter part of 2000, Iraq started requiring its oil and goods contracting partners to make side payments to Iraq outside of the United Nations escrow account ..." (page 31)

It traces the evolution of the oil-for-food program from the earlier program of sanctions maintained during the 1990s, a program to continuing inspections of Saddam's warmaking capacity by UNSCOM. A close reading of the history reveals a tug of war between Security Council members which wanted the sanctions lifted and those who wanted to keep them in place until it morphed into OFF under Boutros-Ghali.

  • "During the early 1990s, two men -- Samir Vincent and Tongsun Park -- insinuated themselves into the discussions involving the United Nations and Iraq that eventually became the Oil for Food Programme. ... Iraq eventually paid them large amounts of money during 1996 with the understanding that at least part of the money would be paid to the Secretary General to encourage him to be more favorable to Iraq in connection  with the ... programme" (page 72. NB, that would be Boutros-Ghali)
  • Maurice Strong and Tongsun Park
    1. Park receives $1M in cash from Tariq Aziz (page 105)
    2. Park deposits the money in Jordan's Housing Bank, which then issues a check for $988,885 to 'Mr. M. Strong', subsequently used to purchase shares in Cordex, a company connected to Maurice Strong. (page 105)
    3. "Although Mr. Strong stated he did not recall receiving the check from Mr. Park, when he was recently shown the back of the check, he recognized his signature on the endorsement." (page 106)
    4. "the committee has not found any direct evidence that Mr. Strong knew that the money was from Iraq" (page 111)
  • Platt Oilgram News notes that Iraqi oil is underpriced in 1998 and deduces this fact left room for generating kickbacks and other forms of corruption. (page 130)
  • "It is now well known that the Iraqi regime of Saddam Hussein derived far more revenues from smuggling oil outside the Programme than from its demand for kickbacks ... " (page 185)
  • "ultimately by early 2003, Jordan decided -- with the help of the United States -- to engage in the single largest series of smuggling transactions that took place during the entire Programme" (page 187. This is interesting because by this time the US was seeking authorization to invade Iraq).
  • "Diplomats interviewed by the (Volcker) Committee frequently brought up the position of the United States and, to a lesser degree, the United Kingdom ... One United Kingdom official stated that the 'Jordanian exception' was known to everyone and tolerated  because the United States and the United Kingdom wanted it to be tolerated" (page 198)
  • United States officials when interviewed said the exception was in place because Jordan "was important to us". The same explanation was given for smuggling through Turkey. (page 198)

29 Comments:

Blogger al fin said...

How can the UN be anything but corrupt? It is made up of mostly corrupt third world nations. The UN is simply business as is usually done in the lands of Annan et al.

9/07/2005 04:22:00 PM  
Blogger wretchard said...

Oil for Food is an interesting portrait of how international diplomacy actually operates. I wouldn't use the word "works". The report details how the US and UN repeatedly argued for tighter sanctions, and then it describes how it permitted smuggling to avoid offending important allies. Classic bureaucratic behavior. It describes the shady dealings of personages with sonorous titles and glittering international reputations with nongovernment organizations.

If I were to characterize it, I'd say everyone -- both Saddam Hussein and the Western Allies -- knew the UN and its bureaucracy for exactly what it was. No one was any more concerned with UN shennanigans than you would be worried about a bartender scooping up sordid little gratuities at a Prohibition speakeasy. Everyone was trying to bribe or intimidate everyone else.

Thanks for the Civics 101.

9/07/2005 05:30:00 PM  
Blogger Michael said...

Maurice Strong used to be a highly celebrated man here in Toronto. And he was supposedly very wealthy. It's surprising to see him accused of stealing money from the UN.

9/07/2005 05:37:00 PM  
Blogger wretchard said...

Here was this pile of money, an oil revenue stream, whose source was controlled by Saddam Hussein. Everyone wanted a piece of it. UN officials, traders, US enemies, US allies. Everyone. Then there was the program of sanctions, the direct outgrowth of leaving Saddam in power after Desert Storm. You had to square one with other and ultimately you couldn't. There were the No-fly zones, the parking of the fleet in the Persian Gulf, etc. These were real. Then there was OFF and smuggling. These were real too.

It was like keeping a pedophile under house arrest then giving him a global mail order catalog and telephone, or if you like, access to the Internet. Then, from time to time, you sent inspectors in to make sure he wasn't doing the dirty.

9/07/2005 05:48:00 PM  
Blogger exhelodrvr said...

I must be spelling something incorrectly on my Google search, because I haven't been able to locate any articles on the MSM noting the fact that they were wrong in suggesting that further work through the U.N. would have accomplished something prior to OIF.

9/07/2005 06:26:00 PM  
Blogger nomdeblog said...

michael
I’m from Toronto too but I’m not surprised.
Just curious, but are you surprised because he was
Celebrated?
Rich?
From Toronto?

9/07/2005 06:27:00 PM  
Blogger desert rat said...

The telling point is that both US and UK had knowledge of and had acquiesced to numerous violations of the Sanctions, as long as our 'friends' obtained the illicit benefits. Both Turkish and Jordanian excecptions prove the rule.

We were part and parcel to the chicanery, and have gotten the UN we deserved.

9/07/2005 06:43:00 PM  
Blogger wretchard said...

exhelodrvr,

OFF is an intresting example of applying an "acceptable" solution whether or not it is an effective solution. Rationing always and market controls always create black markets. The goal of this market control was to obtain a political result i.e. prevent Saddam Hussein from buying weapons. The same type of unintended effect gave rise to A. Q. Khan. By creating a nuclear regulatory regime, similar to international gun control, the UN created a market in Saturday Night Specials.

9/07/2005 06:43:00 PM  
Blogger Rick Ballard said...

Absent 9/11, what's the probability that the UN rifraff would'nt still be cashing checks signed by Saddam? OFF is one, just one, of what are hundreds of scandals. OFF was particularly lucrative but UN grifters will steal pennies from the eyes of the dead. They'll also stand and watch the dying carefully to make sure they have the first opportunity at the pennies.

9/07/2005 07:57:00 PM  
Blogger wretchard said...

I wonder what OFF tells us about the effectiveness of sanctions of any type. Maybe their principle usefulness is to lend the appearance of action to a problem. "See, we've imposed sanctions". But according to the Secret History of the World according to Volcker, international diplomacy is one big smokey back room.

Reading the Sykes-Picot memorandum, I was struck by the childlike map drawings. "Blue Zone", etc. like they drew it up with Crayola. Maybe they did.

9/07/2005 08:26:00 PM  
Blogger 49erDweet said...

Desert Rat makes a good point. We (our recent administrations and the state department/CIA careerists) are seemingly part of the problem. How can the rest of our nation be confident we can now ethicly participate in the solution?

Query: Does what we are learning now about US/UK responses concerning OFF shed any light on the first GB's decision to cut short the 1992 gulf war while SH's forces were in retreat and so obviously discumbobulated and vulnerable? That lack of pursuit decision has always been suspect.

W is now tackling one of the most important political failures of the past 50 years. Buena suerte, amigo. We are hopefull for great things from your keyboard.

9/07/2005 08:32:00 PM  
Blogger Cutler said...

We're limited by the environment we work in. Like 3rd and Frth Republic French politicians who were corrupted by the immobile and scandolous system they were forced to operate in, we too were forced to deal with the reality that our 'alllies' were getting paid under the table, but we were barely even holding on to the sanctions as they stood. It hasn't ended, France is still an 'ally,' so too is Germany, the result of 40 years of political and cultural inertia. When everyone crooked, you have to deal with that unfortunate fact and pick your battles.

9/07/2005 08:37:00 PM  
Blogger Cutler said...

"France is still officially"

Just so noone thinks I've lost my mind.

9/07/2005 09:09:00 PM  
Blogger WichitaBoy said...

Who's Mr. Big here? My money has been on Strong, but I'd be quite interested to see if Wretchard can apply his trenchant analytical skills to get more.

"Here was this pile of money..." That beginning seems to always presage a tale of woe.

9/07/2005 09:58:00 PM  
Blogger desert rat said...

Kofi's abilities or the lack of them were well known.
The Rowanda travesty occurred on his watch. His capabilities and capacities were known and documented prior to his elevation to Lord High Priest King at the New World Order's UN.

Makes you wonder, the WHOLE thing stinks like the New Orleans Super Dome.

Will "The Donald" get to remodel the HQ building? Can he make it smell "SWEET" again, or will the backflushed sewage take it beyond restoration?
Will we have to raze and rebuild?
Or just raze and walk away

9/07/2005 10:08:00 PM  
Blogger Buddy Larsen said...

The day the Clintonistas won the White House, the Oil-for-Food scandal became inevitable. That's when the big party started, the harmless-sounding Dot-Com Bubble (from which the world economy is only in the last 2-3 years recovering), replete with offshots such as Enron, Global Crossing, WorldCom, Credit-Suisse, and dozens of other above-the-fold organized-crime capers, was the financial-analog to Saddam's petro-preying.

When a country like USA elects a president like Clinton, then, if there's treasure somewhere, and the guards can be beat, then there's no question as to what happens next.

These are the folks who flatter you so they can rob you, and will later, when you're smarter and finally angry, tell you they're doing you a favor, teaching you how the real world works, and you're some sort of deviant ingrate for not cooperating.

And if 51% can be convinced--and that's always doable--then, hell, the world is in the hands of a crime-syndicate. It's that simple, and that profound.

The John Bolton world is real, too, though. Easy to understand why the inside-gamers hate him so.

9/07/2005 10:11:00 PM  
Blogger Fresh Air said...

49er--

I have it on the very good authority of a general who was involved in the First Gulf War that the rationale for stopping was the one we have always heard: They didn't want to destablize the Middle East and risk letting Iran get the upper hand.

Chalk that one up to Scowcroft & Baker. Thanks, guys.

9/07/2005 10:25:00 PM  
Blogger Ralf said...

Cutler

We're limited by the environment we work in. Like 3rd and Frth Republic French politicians who were corrupted by the immobile and scandolous system they were forced to operate in, we too were forced to deal with the reality that our 'alllies' were getting paid under the table, but we were barely even holding on to the sanctions as they stood. It hasn't ended, France is still an 'ally,' so too is Germany, the result of 40 years of political and cultural inertia.

Germany had nothing to do with the OFF scandal. A lot of people automatically assume that we did, bacause Schröder opposed the war on Iraq, but it simply isn't the case.

9/08/2005 02:25:00 AM  
Blogger raymondshaw said...

ralf,

I think it more accurate to say that Schröder opposed Bush, period.

9/08/2005 05:14:00 AM  
Blogger Aristides said...

It's more accurate to say that Herr Schröder opposed America as a political strategy, instead of a geopolitical strategy.

Germany has done great work in Afghanistan. Her help is appreciated.

The reports on OFF show us what is and was. Three questions come to mind.

1. Can we do anything about such a dynamic?

2. Should we do anything about such a dynamic?

3. Will we do anything about such a dynamic?

9/08/2005 05:39:00 AM  
Blogger wretchard said...

Aristides,

Scroeder felt secure in using America as his domestic political whipping boy because he never seriously believed it could lose the fight against terrorism. During the late 19th century, the British were the favorite whipping boy of US newspapers. Grover Cleveland actually threatened war on Britain over a boundary dispute between Venezuela and Guyana. The Monroe Doctrine was invoked. Part of the reason for Cleveland's actions apparently, was the popularity of anti-English positions with the Irish immigrants. There was no real danger to the US in taking that stance, nor any danger to England come to that.

9/08/2005 05:58:00 AM  
Blogger Cutler said...

I was not trying to link Germany to OFF, but I was acknowledging that the German government is a political enemy, no matter what they do or do not do in Afghanistan.

9/08/2005 06:04:00 AM  
Blogger Cutler said...

Sorry if I was unclear.

9/08/2005 06:04:00 AM  
Blogger Dan said...

What was the point of the smuggling through Jordan and Turkey, though? That they'd be angry with us and do it anyway since their neighbors were, and thus we "let" them? Or what?

9/08/2005 06:36:00 AM  
Blogger RPD said...

I think it's a bit off base blaming the Clintonista for this. So much of international diplomacy devolves down to a series of poor and unappetizing options. Inevitibly you have a number of decisions to make based on selecting what is 'least bad'.

Jordan and Turkey were undoubtedly benefitting from the oil smuggled through them, so it probably became necessary to tolerate it to reain their support for the no fly zones, invasion etc.

9/08/2005 09:08:00 AM  
Blogger heather said...

Maurice Strong. A spawn of Canada's Central Librano government. One of Paul Desmarais' creatures.

Maurice made part of his fortune when Trudeau and Co. rammed the National Energy Policy through Canada's political system... a grandchild of this fix is Total Fina Elf (remember Petro Fina? And Petro Canada???) And of course, our Prime Minister Chretien's son in law is the largest stockholder in that noble oil company, which is why Canada (like any other 3rd world country) did NOT support the US's invasion of Iraq... because Total Fina Elf had a really good deal going with Saddam, one which would make it a truly huge oil company (and provide lotsa money for Canada's Librano rulers.)

I was interested to see that good ol' Maurice has been pushing the Kyoto Protocol (with Al Gore) - one must assume there is a lot of free money sloshing around in that "project".

Watch Maurice: he has always known where the loose money is... the great pity is, he will just move on - to the next 'big thing.'

9/08/2005 10:45:00 AM  
Blogger Cedarford said...

ultimately by early 2003, Jordan decided -- with the help of the United States -- to engage in the single largest series of smuggling transactions that took place during the entire Programme" (page 187. This is interesting because by this time the US was seeking authorization to invade Iraq).

The US gave the same rationale for it's facilitating it's ally Turkey avoiding sanctions.

So now we know the Bushies can join the French and Russians as fully complicit in Oil for Food corruption. Bravo!

The problem was never with the UN leadership so much as it was with powerful member nations sanctioning dodges for state enrichment or neocon realpolitik in the case of America, it seems.

Desert Rat summarizes best:

The telling point is that both US and UK had knowledge of and had acquiesced to numerous violations of the Sanctions, as long as our 'friends' obtained the illicit benefits. Both Turkish and Jordanian excecptions prove the rule. We were part and parcel to the chicanery, and have gotten the UN we deserved.

9/08/2005 03:50:00 PM  
Blogger Cutler said...

Nuts, the point is we have to deal with the situation presented to us, not how we want it to be. We're not omnipotent.

9/08/2005 07:28:00 PM  
Blogger Aristides said...

Wretchard,

Thanks for the link. I had not known of this episode.

A lost perspective, I think, in the modern and mainstream media.

9/09/2005 09:05:00 PM  

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