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Volcker's Report & Annan

UNITED NATIONS byline Stephen Schlesinger - 1 December 2005 / www.MaximsNews.com/ The United Nations’ longest-running saga, the oil-for-food imbroglio, reached a critical point last month when Paul Volcker issued his final report on the tawdry episode. His findings will now presumably lead to the prosecutions of the various corporations and individuals involved. All of this is to the good. But, meantime, what about the collateral damage done to the key figure in this investigation, namely, UN Secretary-General, Kofi Annan?

Volcker’s investigation places much of the onus for this troubling event on the UN Secretariat’s office. However, a fair reading of Volcker’s conclusions is that Kofi Annan not only did not have a central role in this lamentable affair but bore scant responsibility from the onset. Instead the one nation which shoved the inquiry forward from the beginning was most culpable – the United States.

Let’s review the facts. Washington was complicit in two ways for what happened.

First, starting shortly after the end of the first Gulf War in 1991, it secretly allowed oil to be smuggled from Iraq to two US allies, Jordan and Turkey. Under this arrangement, Saddam Hussein managed to illegally rake in $11 billion of the $12.8 billion which he is estimated to have received overall unlawfully in the 1990s

and early 2000 from oil-related transactions.

Then, under the separate oil-for-food program which Washington helped to initiate in the Security Council in 1996, Hussein skimmed off the last $1.8 billion or so (far below original estimates of $4.4 billion) from various contractors.

Critics, however, have hammered Kofi Annan for allowing both operations to go ahead without tight supervision. One must remember, nonetheless, that, for the Jordan/Turkey undertaking, Washington controlled the venture exclusively and would not permit any outsider to oversee its activities, so Annan could do nothing about the smuggling.

On the second matter – the oil-for-food program – commentators have assailed Annan for 1) appointing a smarmy official as head of the UN unit carrying out, on behalf of the Security Council, operations on the ground in Iraq; 2) permitting Saddam Hussein to select his own trading partners; and 3) not arranging internal audits on the program’s transactions.

In all three instances, Annan was essentially blameless.

On the directorship of the UN Iraq program, Annan may have selected an inadequate and perhaps even venal lieutenant (though no real charges have yet been proven against him), but, in any case, this official had no influence over the contracting process.

On the contrary, this Secretariat team alerted the Security Council’s 661 committee – which alone approved all deals with Hussein and on which the US sat -- to pricing irregularities in Hussein’s contracts over seventy times. These warnings enabled the Security Council to tighten some of the rules on the bidding process.

But the American government, in the end, never heeded any of its particulars on kickbacks. Instead, it blocked or vetoed over 5,000 contracts solely on the possibility that the goods which Iraq purchased for “humanitarian” reasons might also be used for military purposes.

As to allowing Hussein to choose his own foreign collaborators or not imposing an internal audit, it was the Security Council (with Washington’s assent) which authorized Hussein to pick his own companies and which sidelined internal audits, not Annan.

Indeed, it was Annan himself, in the end, who set up the Volcker inquest to uncover serious transgressions. Annan made one mis-step – not forcefully enough investigating his son’s brief employment at one of the companies participating in the program. Yet there is no evidence that even that case had anything to do

with Saddam Hussein’s siphoning off $12.8 billion.

Needless to say, for all of its extraordinary importance, Volcker does not delve much into the lucrative smuggling episode. He dwells almost entirely on the oil-for-food program. Volcker’s explanation for this omission is that the mandate given to him by the UN was to examine the oil-for-food undertaking only.

But as the media and Congress for the past three years have totally focused on the entire boodle wrung from the criminal enterprise with Hussein -- $12.8 billion – the public really needed to know of all of the relevant details about where every one of those dollars came from and where every one of them went.

Volcker should have given greater emphasis to the exceptional size of the rip-offs from the American-backed bootlegging operations when tallying all the monies squeezed by Hussein from devious oil machinations. For Volcker not to do this is highly misleading and unfair to the Secretary-General.

The impression now has been left in the public sphere that Annan’s weak or complicit leadership was responsible for Hussein’s theft of the $12.8 billion.

This has led to the blackening of his reputation by critics in the United States who have called him corrupt, or, in the case of the Republican senator from Minnesota, Norm Coleman, who has demanded his resignation. These are cruel and libelous accusations.

The media bears a great deal of responsibility for permitting the oil-for-food story to assume the grotesque form it has taken.

But now that the Volcker probe is over, it is time for the press and the public to recognize once again Secretary-General’s faultlessness in this fiasco, pin the blame on America where it belongs and act to remove the cloud which hangs over Annan.

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Stephen Schlesinger's Columns in MaximsNews

Where Volcker Got It Wrong 1 December 2005
The Perils of UN Reform... 5 October 2005
Hyde-jacking the United Nations 23 June 2005
The Bolton Nomination 15 April 2005
The United Nations Under Siege 17 March 2005
The UN: An Annoying, Necessary Friend... 2 February 2005
Kofi Annan in Trouble... 8 December 2004
Bush's Global Test... 14 November
Bush's Strange U.N. Ramble... 4 October 2004
Act of Creation... 3 October 2004

See About Stephen Schlesinger.

Stephen Schlesinger

Stephen Schlesinger is Director of the World Policy Institute at the New School University in New York City since 1997.

The Institute is a foreign policy think-tank that hosts twenty-five Senior Fellows, publishes the quarterly magazine, World Policy Journal, and sponsors lectures and panel discussions.

Mr. Schlesinger received his BA from Harvard University and his JD from Harvard Law School.

His family has long been associated with Harvard, where his father, Arthur Schlesinger Jr. and his grandfather, Arthur Schlesinger Sr., both eminent American historians, taught, as well as his uncle, China historian John Fairbank and his maternal grandfather, Dr. Walter Bradford Cannon (at the Medical School).

In the early 1970s, he edited and published The New Democrat Magazine and also served as speechwriter for George McGovern during his campaign for the presidency in 1972. Thereafter he spent four years as a staff writer at Time Magazine.

In the next twelve years, he served as Governor Mario Cuomo's speechwriter and foreign policy advisor.

In the mid 1990s, he worked at the United Nations at Habitat, the agency dealing with global cities.

He is the author of three books, including Act of Creation: The Founding of the United Nations, which won the 2004 Harry S. Truman Book Award (See Reviews.); Bitter Fruit: The Story of the U.S. Coup in Guatemala (with Stephen Kinzer), and The New Reformers.

He is a specialist on foreign policy of the Clinton and Bush Administrations and a frequent contributor to magazines and newspapers, including The Washington Post, The Los Angeles Times, The Nation Magazine, and The New York Observer. In 1978 he was a finalist for the National Magazine Award.

Mr. Schlesinger has appeared on CNN, Fox TV, NPR and other media outlets and is a Columnist for www.MaximsNews.com.

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