April 16, 2005
The Guardian (UK)

Annan Says US and UK Allowed Iraqi Oil Scam

by Suzanne Goldenberg

Britain and America reacted angrily yesterday to accusations by the UN secretary general, Kofi Annan, that they were partly to blame for the oil-for-food scandal because for years they had overlooked the illegal trade in Iraqi crude. . . .

"The bulk of the money that Saddam made came out of smuggling outside the oil-for-food programme, and it was on the American and British watch," he told reporters.

"Possibly they were the ones who knew exactly what was going on, and that the countries themselves decided to close their eyes to smuggling to Turkey and Jordan because they were allies."

. . . the Liberal Democrats said the government had questions to answer.

"It was no secret that smuggling was taking place and that both Turkey and Jordan were beneficiaries," its foreign affairs spokesman, Sir Menzies Campbell, said. . . .

It is also widely acknowledged that the Iraqi regime earned far more from sanctions-busting - up to $11bn (5.8bn) - than from bribes from oil companies working under the oil-for-food programme, which earned Saddam's officials an estimated $2bn to $4bn. . . .


[Oil-for-Food was established in the mid-1990s, 1996-1997 in particular, to, under pressure from the world at large on the Security Council, particularly Washington and London, who drove the sanctions regime of the United Nations, to provide a means for the Iraqi people to have access to foodstuffs, pharmaceuticals and some basic equipment for education, the health care sector, agricultural sector. The government in Baghdad was allowed to sell a certain amount of oil, initially $4 billion gross per year. And that money was then used for sending out invitations, international bidding on foodstuffs, particularly pharmaceuticals. Those contracts were then approved or not approved by the Security Council in New York. The goods were delivered. The payments were made by the United Nations. No money went into the hands of the Iraqi people. The fact is, however, under sanctions -- sanctions is a form of warfare. Any opportunity the Iraqis had to find hard currency they naturally sought and obviously accomplished. Now, there was -- the scandal, quote, unquote, is in my view, nonsense. The United States was perfectly well aware of the trade between Turkey and Iraq under sanctions. They knew that Baghdad was exporting paraffin, gasoline and oil into Turkey. It was monitored by U.S. satellites. It was agreed upon with Turkey, because Turkey is an ally, a friendly NATO member and so on, and this was compensation to Turkey for the loss of revenue given the sanctions on Iraq, its close trading neighbor and partner. There is no scandal. Everything that has happened has been monitored by the United States and Britain. The contracts were approved by the United States and Britain. The kickbacks made by companies who provided supplies, in my view, were also known. And likewise, when it came to the sale of oil by Iraq, including some 40% going to American companies indirectly, including Chevron, of Miss Rice at one stage, they also paid those kickbacks indirectly and certainly in full knowledge of what they were doing.--Denis Halliday, "Fmr. Iraq Oil-For Food Head: Kofi Annan 'Should Open the Doors, Open the Files'," Democracy Now, November 17, 2004]

[While money derived from the off-the-book sale of oil did indeed go into the purchase of conventional weapons and the construction of presidential palaces, the vast majority of these funds were poured into economic recovery programmes that saw Iraq emerge from near total economic ruin in 1996.--Scott Ritter, " The oil-for-food 'scandal' is a cynical smokescreen," Independent, December 12, 2004]

[Yet two letters sent by the State Department to Congress in 1998 and 2002 clearly show that successive US administrations knew of sanctions-busting and turned a blind eye to it. Some US lawmakers are now demanding that the US also hold itself to account for those decisions and not shift all the blame to the UN.--Mark Turner, "US And Congress Knew Saddam Was Smuggling Oil," Financial Times, January 19, 2005]

George Monbiot, " Forget the UN. The US occupation regime helped itself to $8.8 bn of mostly Iraqi money in just 14 months," Guardian, February 8, 2005

Colum Lynch, "Treasury's Role in Illicit Iraq Oil Sales Cited," Washington Post, February 17, 2005

[There is a breathtaking hypocrisy to the indictment of Kofi Annan over the oil for food programme for Iraq. It was the US and the UK who devised the programme, piloted the UN resolutions that gave it authority, sat on the committee to administer it and ran the blockade to enforce it.--Robin Cook, "Why American neocons are out for Kofi Annan's blood," Guardian, April 1, 2005]

[The United States administration turned a blind eye to extensive sanctions-busting in the prewar sale of Iraqi oil, according to a new Senate investigation.

. . . Senate report found that US oil purchases accounted for 52% of the kickbacks paid to the regime in return for sales of cheap oil - more than the rest of the world put together.--Julian Borger and Jamie Wilson, "US 'backed illegal Iraqi oil deals'," Guardian, May 17, 2005]

[The United States handed out nearly $20 billion of Iraq's funds, . . .

Most of these funds came from frozen and seized assets and from the Development Fund for Iraq, which succeeded the U.N.'s oil-for-food program. . . .

An audit by the U.S. Special Inspector General for Iraq Reconstruction said U.S. auditors could not account for nearly $8.8 billion in Iraqi funds--Sue Pleming, "U.S. was big spender in days before Iraq handover," Reuters, June 22, 2005]

VIDEO: George Galloway, "Galloway v the US Senate: transcript of statement," The Times, May 18, 2005

[At the beginning of the Iraq war, the UN entrusted $23bn of Iraqi money to the US-led coalition to redevelop the country. With the infrastructure of the country still in ruins, where has all that money gone?--Callum Macrae and Ali Fadhil, "'Iraq was awash in cash. We played football with bricks of $100 bills'," Guardian, March 20, 2006] [The penalty, which is still being negotiated, would be the largest so far in the United States in connection with investigations of companies involved in the oil-for-food scandal.--Claudio Gatti and Jad Mouawad, "Chevron Seen Settling Case on Iraq Oil," New York Times, May 8, 2007]

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