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22–686 PDF 2005

THE U.N. OIL-FOR-FOOD PROGRAM: THE

INEVITABLE FAILURE OF U.N. SANCTIONS

HEARING

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY,

EMERGING THREATS, AND INTERNATIONAL

RELATIONS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

APRIL 12, 2005

Serial No. 109–43

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

GINNY BROWN-WAITE, Florida

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON NATIONAL SECURITY, EMERGING THREATS, AND INTERNATIONAL

RELATIONS

CHRISTOPHER SHAYS, Connecticut, Chairman

KENNY MARCHANT, Texas

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

JON C. PORTER, Nevada

CHARLES W. DENT, Pennsylvania

DENNIS J. KUCINICH, Ohio

TOM LANTOS, California

BERNARD SANDERS, Vermont

CAROLYN B. MALONEY, New York

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

LAWRENCE J. HALLORAN, Staff Director and Counsel

THOMAS M. COSTA, Professional Staff Member

ROBERT A. BRIGGS, Clerk

ANDREW SU, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on April 12, 2005 .............................................................................. 1

Statement of:

Conlon, Paul, owner, Transjuris e.K., Munich, Germany, former Deputy

Secretary, U.N. Security Council Iraq Sanctions Committee; Andrew

Mack, Director, Center for Human Security, University of British Columbia, former Director of Strategic Planning, Executive Office of U.N.

Secretary General Annan; C. Joy Gordon, associate professor of philosophy, Fairfield University .............................................................................. 74

Conlon, Paul .............................................................................................. 74

Gordon, C. Joy ........................................................................................... 105

Mack, Andrew ............................................................................................ 88

Schweich, Thomas A., Chief of Staff, U.S. Mission to the United Nations,

U.S. Department of State ............................................................................. 18

Letters, statements, etc., submitted for the record by:

Conlon, Paul, owner, Transjuris e.K., Munich, Germany, former Deputy

Secretary, U.N. Security Council Iraq Sanctions Committee, prepared

statement of ................................................................................................... 78

Gordon, C. Joy, associate professor of philosophy, Fairfield University,

prepared statement of ................................................................................... 110

Kucinich, Hon. Dennis J., a Representative in Congress from the State

of Ohio, prepared statement of .................................................................... 8

Mack, Andrew, Director, Center for Human Security, University of British Columbia, former Director of Strategic Planning, Executive Office

of U.N. Secretary General Annan, prepared statement of ........................ 92

Ruppersberger, Hon. C.A. Dutch, a Representative in Congress from the

State of Maryland, prepared statement of .................................................. 47

Schweich, Thomas A., Chief of Staff, U.S. Mission to the United Nations,

U.S. Department of State, prepared statement of ..................................... 23

Shays, Hon. Christopher, a Representative in Congress from the State

of Connecticut:

Letter dated August 24, 1990 ................................................................... 56

Prepared statement of ............................................................................... 3

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THE U.N. OIL-FOR-FOOD PROGRAM: THE

INEVITABLE FAILURE OF U.N. SANCTIONS

TUESDAY, APRIL 12, 2005

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON NATIONAL SECURITY, EMERGING

THREATS, AND INTERNATIONAL RELATIONS, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 11 a.m., in room

2247, Rayburn House Office Building, Hon. Christopher Shays

(chairman of the subcommittee) presiding.

Present: Representatives Shays, Kucinich, Duncan,

Ruppersberger, and Lynch.

Staff present: Lawrence Halloran, staff director and counsel;

Thomas Costa, professional staff member; Robert A. Briggs, clerk;

Andrew Su, minority professional staff member; and Jean Gosa,

minority assistant clerk.

Mr. SHAYS. A quorum being present, the Subcommittee on National Security, Emerging Threats, and International Relations

hearing entitled, ‘‘The U.N. Oil-for-Food Program: The Inevitable

Failure of U.N. Sanctions’’ is called to order.

The Oil-for-Food Program was destined to degenerate into commercialism and corruption. As the humanitarian adjunct to a prolonged and notoriously leaky United Nations sanctions regime

against Iraq, the Oil-for-Food Program inherited the habits of secrecy and self-interest that undermined international efforts to contain Saddam Hussein from the start.

Within days of adopting Security Council Resolution 661, imposing comprehensive economic sanctions on Iraq after the 1991 invasion of Kuwait, the committee formed to enforce the U.N. mandate

began to receive requests from Member States for exceptions and

waivers. Over the next 4 years, proposals to ease rather than enforce the sanctions would dominate deliberations of the so-called

661 Committee, which consisted of all permanent and rotating Security Council members.

But few governments beside the United States and the United

Kingdom consistently reviewed the growing volume of trade proposals. Others, over time, appeared to tire of the effort, choosing economic gain over continued political cost. Saddam and his would-be

trading partners intentionally swamped the panel with waiver proposals they knew would never be granted in an effort to portray

the sanctions as both inhumane and unsustainable.

The U.N. was at war with itself. Despite Security Council directives, some U.N. agencies resisted sanctions enforcement as antiVerDate 11-MAY-2000 11:17 Aug 16, 2005 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 D:\DOCS\22686.TXT HGOVREF1 PsN: HGOVREF1
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thetical to the institution’s neutrality and humanitarian mission.

Other U.N. sanctions regimes had foundered when dictators exploited this ambivalence by redirecting the intended coercive impacts of economic strictures onto oppressed civilian populations. It

was a lesson Saddam learned well and followed.

So it should have been of no surprise to anyone familiar with the

dynamics of the 661 Committee that the Oil-for-Food Program

weakened rather than strengthened the Iraq sanctions as an alternative to armed conflict. According to the Duelfer Report, the program ‘‘rescued Baghdad’s economy from a terminal decline created

by sanctions. The Regime quickly came to see that the Oil-for-Food

Program could be corrupted to acquire foreign exchange both to

further undermine the sanctions and to provide the means to enhance dual-use infrastructure and potential WMD-related development.’’

Sitting on the 661 Committee, a blind man could have seen that

outcome was inevitable. But for too long, we ignored the sordid realities of a U.N. security council mired in Saddam’s anti-sanctions

propaganda and the unseemly pursuit of commercial interests by

some Member States.

Our purpose today is to help lift the shroud of secrecy that still

blocks a complete view of the Iraq sanctions and the Oil-for-Food

Program. Access to most U.N. records on these programs continues

to be restricted. But thanks to Dr. Paul Conlon and the University

of Iowa Library, summary minutes of the 661 Committee meetings

from 1991 through 1994 and other U.N. documents are on the public record. They contain pointed references to Saddam’s recalcitrance, to the scams and forgeries that became Oil-for-Food

vouchers and kickbacks, to a U.N. bureaucracy ill-suited to complex

trading regulation and to a Security Council politically unwilling to

confront any of it.

Testimony today by our witnesses will provide unique perspectives on U.N. deliberations and bring additional transparency to a

process that grew fetid in secrecy. We appreciate their time and expertise as we consider the origins and implications of the Oil-forFood scandal.

[The prepared statement of Hon. Christopher Shays follows:]

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Mr. SHAYS. At this time the Chair would recognize the ranking

member, Mr. Kucinich.

Mr. KUCINICH. Mr. Chairman, thanks for holding this hearing. I

appreciate it very much.

I want to welcome all the witnesses and appreciate your participation.

I feel very strongly that the debate in Congress, the effect that

it might be having on the United States, I’m deeply troubled by the

fact that many Members on the other side of the aisle have already

reached a conclusion before all the facts have been presented. Last

week, the Senate voted along party lines to reduce U.S. funding for

U.N. peacekeeping activities as punishment for the mismanagement of the Oil-for-Food so-called scandal. Critics have already

called for the resignation of Secretary General Kofi Annan. They

have attacked Paul Volcker’s investigation before he has even

issued his final report.

They want the U.N. to dissolve and stop resisting the administration’s foreign policy goals. To do this, the White House nominated the most simplistic critic of the United Nations they could

find, John Bolton, as our next Ambassador. He’s famously used

dismissive rhetoric of the international body, once claimed if you

lopped the top 10 stories off the 38-story Secretariat building, it

wouldn’t make a bit of difference.

At his Senate confirmation hearings yesterday, he failed to show

a thorough understanding of the international body, a respect for

the U.S.’ binding obligations under international law, something

this administration seems to have a serious problem with, and

failed to show respect for the sovereignty of other nations.

Sadly, there were indeed mistakes made in the administration of

the Oil-for-Food Program and in some instances, corruption by individual U.N. officials. The Secretary General himself could have

been more forthcoming about his role.

But let’s step back for a minute, and instead of pointing fingers,

let’s remind ourselves who and what the United Nations is. The

United Nations is a multi-lateral organization composed of its

Member States, and by far the most influential Member State continues to be the United States. We have a permanent seat on the

security council, we have the largest mission of any country at the

United States. We provide the most funding for U.N. programs. We

review and have veto power over every single substantive decision

made by the Secretary General and the U.N. Secretariat, including

those made by the Oil-for-Food Program.

Even former Secretary of State Colin Powell admitted that the

United States is partially to blame, when he stated that recently,

‘‘The responsibility does not entirely on Kofi Annan, it also rests on

the membership and especially on the Security Council. And we are

a member of the Security Council, it was the Security Council that

had the responsibility for the day to day management of the program.’’

The Oil-for-Food Program was not a failure. And any attempts

to characterize it as such is flat-out wrong and distorts the facts.

The humanitarian program achieved its goals, which were to keep

the Iraqi people from starvation. Caloric intake increased and communicable diseases declined significantly among the Iraqi popuVerDate 11-MAY-2000 11:17 Aug 16, 2005 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 D:\DOCS\22686.TXT HGOVREF1 PsN: HGOVREF1
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lation. The program halved malnutrition among children, eradicated polio, improved access to fresh water, public transportation,

electricity, cleared minds, helped rebuild schools, clinics, housing

and other infrastructure.

We should be taking credit for the enormous success of the program, not pointing to it as an example of the U.N.’s shortcomings.

In this case, the U.N. was dealt a lousy hand. Members of the Security Council differed on their support for sanctions and support

for the Iraqi government. Sanctions weren’t supposed to last for a

decade. They did so only because the United States kept pushing

for them while inspectors looked and looked for a WMD program.

The program was forced to make compromises with the corrupt

regime of Saddam Hussein, allowing it to choose its own contractors. No one disputes that Saddam Hussein used every method at

his disposal to bribe officials, smuggle oil, subvert and avoid sanctions and deceive the world in order to maintain a stranglehold on

Iraq. We’re all concerned at the alleged abuse of the program, from

kickbacks and over-pricing of Oil-for-Food contracts.

I’m particularly disappointed that we were complicit in the Pro- gram’s failure by allowing Saddam Hussein to sell $8 billion worth

of oil to Jordan, Turkey, Egypt and Syria in violation of the very

sanctions we pressed to impose, money that could have been spent

to better the lives of the Iraqi people. Before we go around blaming

the United Nations, let me remind you that three administrations,

both Democrat and Republican, said nothing about kickbacks and

scanned each and every contract for dual-use items. Sixty U.S. officials were employed to scrutinize each and every contract. We

placed holds, we delayed contracts, but never once did we use our

veto power to stop a contract because of pricing concerns.

We share responsibility with the Secretariat for allowing the

abuses that occurred. Mr. Chairman, our job as congressional overseers requires us, may require us to throw stones, but we live in

a glass house. Let us not forget that the U.N. Oil-for-Food Program

became the Development Fund for Iraq in November 2003, and was

then turned over to the U.S.-led Coalition Provisional Authority.

According to the Special Inspector General for Iraq, Stewart

Bowen, Jr., however, the Coalition Provisional Authority could not

account, could not account for nearly $9 billion in Iraqi reconstruction funds distributed in less than a year. And as we learned in our

subcommittee hearing last month, nobody in the White House, the

State Department or the Pentagon is even looking into this missing

money. Where is the outrage? Why aren’t there multiple committees looking into this scandal? Why hasn’t the subcommittee called

CPA head Paul Bremer to account for the $9 billion?

This is what this oversight committee should be investigating.

U.S. mismanagement, U.S. waste, U.S. fraud, and U.S. abuses.

Notwithstanding, Mr. Chairman, I’m pleased to learn that you

have agreed to hold such a hearing in June and that you have continued to work with the minority in asking for revealing documents.

As I conclude, I want to say that last month, another report was

published which further destroyed what little credibility the United

States has left at the United Nations. The bipartisan report of the

Presidential Commission on Intelligence Capabilities of the United

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States Regarding Weapons of Mass Destruction under the direction

of former Judge Silberman and former Senator Robb stated that

most of our intelligence about Iraq’s WMDs was ‘‘dead wrong.’’

Iraq’s unmanned aerial vehicles pose no threat, they had no mobile

biological weapons laboratories, aluminum tubes were not used to

make centrifuges for the enrichment of uranium. These are the examples pointed to as evidence by Secretary Powell in his address

to the United Nations, where he said, every statement I make

today is backed by sources, solid sources, not assertions, what we’re

giving you are facts and conclusions based on solid intelligence.

So Mr. Chairman, as we go into these hearings, let’s dismiss the

hypocrisy. Some in the administration take a holier than thou pose,

more holier than thou than the Vatican, without the credibility of

the Vatican sponsor. We still don’t know all the details of what

happened with Oil-for-Food. Let’s give Mr. Volcker an opportunity

to finish the investigation, let’s help further, not hinder, the muchneeded institutional reforms that Secretary General Annan is attempting to make at the United Nations, and let’s find an Ambassador to the U.N. who will inspire the body, not denigrate it.

The U.N. is not perfect, but it still needs the leadership and support of its most powerful member. Let’s all work together to solve

the many problems that still face Iraq. The U.N. needs to move involved in Iraq, not less. Thank you, Mr. Chairman. Welcome to the

experts. I yield back.

[The prepared statement of Hon. Dennis J. Kucinich follows:]

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Mr. SHAYS. I thank the gentleman.

Mr. Duncan.

Mr. DUNCAN. Thank you, Mr. Chairman, and thank you for calling this hearing on this very important topic. First of all, I want

to commend you because no one has looked into this scandal more

than you have. Second, I want to commend you for the series of

hearings that you continually hold through this subcommittee into

many, many important topics, doing almost more with this subcommittee than I’ve ever seen any chairman do with any subcommittee in the Congress.

This Oil-for-Food scandal has been described by many people as

an unprecedented level of corruption. Most of the reports have said

it involves $10 billion worth of corruption, some reports have said

much more than that. I think the only reason that more people are

not horrified by this is probably because of something I heard the

very respected political analyst Charlie Cook say in a talk several

months ago, he said that he thought it was impossible for any

human being to comprehend any figure over $1 billion. But $10 billion or $20 billion, whatever it might be, is just an

unbelievable, staggering amount of money. Apparently there is

going to be an effort to try to excuse some of this or in some way

justify it or gloss it over by saying that some good things were done

with some of the money that came through this program. I think

that’s ridiculous. How anybody can attempt to defend what has

gone on through this Oil-for-Food Program is beyond me.

And I think the people that are involved with this, in fact, the

entire United Nations should be ashamed and embarrassed about

this, but they probably aren’t, because it’s not money coming out

of their pockets. I think that’s the problem with so many things,

so many wasteful things that we do through the Federal Government.

But I certainly hope we don’t have to sit here and listen to an

attempt to try to justify or gloss over what happened, and we don’t

have to listen to a lot of testimony about the good things that came

out of this program. With every penny that was spent through this

program, good things should have happened, and they didn’t. So we

need to, we don’t need to find out what went right in this program.

Everything should have been that way. What we need to find out

is what went wrong and why, and what’s being done about that to

correct that situation, so that this level of corruption, this level of

scandal, this unprecedented level, will not happen again.

Thank you very much.

Mr. SHAYS. I thank the gentleman very much.

I ask unanimous consent that all members of the subcommittee

be permitted to place an opening statement into the record and

that the record remain open for 3 days for that purpose. Without

objection, so ordered.

I ask further unanimous consent that all witnesses be permitted

to include their written statement in the record, and without objection, so ordered.

We have two panels. Our first panel is comprised of one individual, Mr. Thomas Schweich, Chief of Staff, U.S. Mission to the

United Nations, U.S. Department of State. Our second panel will

be Dr. Paul Conlon, Mr. Andrew Mack and Dr. Joy Gordon, who

18

was reluctant to give me a high-five, even though she is a constituent and from Fairfield University. [Laughter.]

Witnesses were told, the purpose of the hearing is to examine the

U.N. Security Council management of the Iraqi sanctions and the

Oil-for-Food Program, and the implications of U.N. failure to maintain the integrity of the sanctions regime. Witnesses were asked to

provide their views.

Mr. Schweich, the State Department witness, was also asked to

address: one, the Department’s view of the Iraq sanctions in retrospect; two, the Department’s view of how the 661 Committee functioned; three, the Department’s view of how possible future sanction regimes might work; and four, the status of ongoing Department efforts to review and declassify U.S. Government reporting of

the Iraq sanctions and Oil-for-Food.

Let me say that there is much of what my ranking member said

that I happen to agree with. I don’t take the position that the Secretary should resign. But what I do take, and I think the full committee takes this, that there needs to be transparency and that

Members shouldn’t be allowed to deny access to other Member

States and their elected officials to examine how their money was

spent and how their money was being used.

So at this time, Mr. Schweich, I would welcome you to stand so

we can administer the oath to you.

[Witness sworn.]

Mr. SHAYS. And say to you that we have a 5-minute rule, but we

will roll it over another 5 minutes, we’ll stop you at 10. So if you’re

somewhere between 5 and 10, that’s fine, you need to kind of put

the ball in play here. Bottom line is, what Mr. Kucinich and I

want, and what Mr. Duncan wants as well, we just want to understand the truth of this program. Then we will disagree on what

those facts tell us. But we will have good information from you.

We appreciate your being here. The floor is yours.

STATEMENT OF THOMAS A. SCHWEICH, CHIEF OF STAFF, U.S.

MISSION TO THE UNITED NATIONS, U.S. DEPARTMENT OF

STATE

Mr. SCHWEICH. Mr. Chairman, distinguished members of the

subcommittee, I welcome this opportunity to appear before you

today to discuss the U.N. Security Council’s management of the

multi-lateral sanctions regime on Iraq, including the Oil-for-Food

Program, to share with you our thoughts on how sanctions regimes

might be made more effective.

I will also update you on the status of the Department’s efforts

to provide Congress with access to documents related to these matters.

Mr. Chairman, let me start by discussing why the Iraq sanctions

were imposed and why the Oil-for-Food Program was established.

Four days after Iraq invaded Kuwait, the Security Council adopted

Resolution 661, in 1990, that imposed comprehensive trade and financial sanctions against the former Iraqi regime. The U.S. Government supported this measure as part of a larger strategy to

force Iraq to cease hostilities and to withdraw its forces from Kuwait.

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At the end of the Gulf war in 1991, the Security Council adopted

Resolution 687, that extended comprehensive sanctions on Iraq to

ensure that Saddam Hussein complied with the major provisions of

the cease-fire. By retaining the sanctions, the Council also sought

to deny Iraq the capability of rearming or reconstituting its weapons of mass destruction and other military programs. The sanctions

were not anticipated to remain in place for more than a year or two

before Saddam complied.

We now know that Saddam chose not to comply. By 1995, in the

wake of deteriorating humanitarian conditions in Iraq, many in the

international community called for an end to the restrictions, reflecting concern that the impact of the sanctions was being borne

primarily by the innocent Iraqi civilian population. In April 1995,

the Security Council adopted Resolution 986, establishing the Oilfor-Food Program, to alleviate the serious humanitarian crisis

while maintaining comprehensive restrictive measures to deny Saddam access to items that he could use to again pose a threat to his

neighbors in the region.

The sanctions committee that was established under Resolution

661 in 1990, the 661 Committee, monitored the implementation of

the overall sanctions regime on Iraq and after the adoption of Resolution 986, it also monitored the implementation of the Oil-for-Food

Program. The 661 Committee, like all sanctions committees, operated as a subsidiary body of the Security Council. Unlike the Council, decisions were made on a consensus basis, requiring the agreement of all parties and members.

In addition to providing general oversight of the Oil-for-Food Program and to monitoring Member State compliance with the sanctions, the committee through each of its members, was also responsible for reviewing humanitarian contracts, oil spare parts contracts and oil pricing submitted on a regular basis by Iraq to the

U.N. for approval. The U.S. delegation was an active participant in

all such reviews.

The efforts of the United States and United Kingdom to counter

or address non-compliance were often negated by other members’

desires to ease sanctions on Iraq. The atmosphere in the committee, particularly as the program evolved during the late 1990’s, became increasingly contentious and polemic. The fundamental political disagreement between members over the Council’s imposition of

comprehensive sanctions was often exacerbated by the actions of

certain key Member States in advancing self-serving national economic objectives.

In retrospect, although the consensus rule often stymied progress

in the committee, that same consensus rule helped the United

States achieve its objectives in a number of critical ways. The imposition of a retroactive pricing mechanism and our ability to place

holds on humanitarian contracts that contain potential dual-use

items were both made possible by the use of the consensus rule.

Judging the success or failure of the Iraq sanctions depends on

the view of their objectives. Clearly, they failed to force the regime

of Saddam Hussein to comply with its international obligations.

But they did succeed in limiting Iraqi efforts to rebuild their military capabilities after the Gulf war.

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As regards the Oil-for-Food Program, similar considerations

apply. The major shortcomings of the program have been widely

documented in recent months. But the Oil-for-Food Program did

succeed in its humanitarian objective of ensuring that the Iraqi

people were adequately fed, thus limiting the impact of sanctions

on them.

Mr. Chairman, the U.S. Government believes that sanctions, appropriately structured and targeted, when accompanied by effective

diplomatic and military pressure, whether they are imposed unilaterally or in concert with other nations, can serve as a valuable tool

to minimize threats to international peace and security. Sanctions

can significantly restrict access to arms, finances and political support by international actors, while raising the personal cost to the

leadership of targeted sanctions.

Sanctions are measures meant to induce a change in the policies

and actions of targeted actors. However, they are not a panacea.

They depend for their full effectiveness on the ability and willingness of Member States to implement them. Sanctions must be part

of a larger strategy to address threats to international peace and

security.

In the wake of the comprehensive sanctions regime previously

imposed upon Iraq, and given the history of the Oil-for-Food Program, we have identified a number of opportunities for improving

the Security Council’s use of multi-lateral sanctions. In particular,

we believe: one, Member States must be held accountable for enforcing agreed-upon sanctions; two, sanctions committees and the

U.N. Secretariat’s proceedings should be more transparent; and

three, there must be more independent and effective oversight of

U.N. operations.

Under the U.N. charter, all Member States are obligated to implement Security Council Chapter VII decisions. However, certain

states, either through lack of capacity or lack of political will, or

both, have in a number of instances failed to fulfill their enforcement obligations. If sanctions are to be more effective, the United

States and its allies need to increase the pressure brought to bear

on those governments that failed to abide by the binding, multi-lateral sanctions adopted under Chapter VII by the Security Council.

Every Member State should be required to report on actions

taken to enforce sanctions, including information on legislation enacted where necessary and administrative policies put in place that

ensure a state is in full compliance with the decisions of the Council. Such certifications should be done on an annual basis. When

states fail to report, and more importantly, fail to comply with the

obligations to implement the measures authorized by the Council,

appropriate follow-on actions should be considered.

That said, certain unusual circumstances may require the Council to consider authorizing possible modification of Member States’

obligations to implement the measures it has imposed. Both the

Jordanian and Turkish barter arrangements with Iraq violated

UNSC sanctions against Iraq. But we recognize that both countries

were acutely vulnerable to a cutoff in their trade with Iraq and

that our strategic interests on balance argued against exposing

them to that risk.

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Accordingly, the President, on an annual basis, waived the prohibition on U.S. Government assistance to violators of the sanctions,

and so notified Congress. These were carefully considered, deliberate decisions. They are in no way comparable the kind of corruption, bribery or kickbacks that this committee or other investigative bodies are now looking at.

Mr. Chairman, a key obstacle currently preventing improved

Member State compliance has been the lack of sufficient capacity.

This is particularly true in the context of border monitoring, where

many states lack sufficient funds, technology and well-trained personnel to prevent the movement across national boundaries of certain individuals and prohibited goods. As in the case of the former

Yugoslavia, we should employ sanctions assistance monitors to support and train national customs authorities and border monitors to

improve their compliance with relevant Council resolutions.

Mr. Chairman, increased transparency in the development and

implementation of sanctions regimes is essential. The U.N. Security Council Sanctions Committee should consider making minutes

of committee meetings and committee reports available to all Member States. There should be increased interaction and dialog between each sanctions committee and Member States, including

through participation of interested members in committee meetings.

The Secretariat also must operate with greater transparency.

More publicly available information concerning the U.N. Secretariat’s operations and decisionmaking processes will help strengthen

program administration and allow Member States to exercise appropriate additional oversight. The U.N.’s Office of Internal Oversight Services, OIOS, is responsible for evaluating the efficiency

and effectiveness of the implementation of U.N. programs and

mandates.

In a U.S-led initiative, the general assembly this past December,

strengthened the regulations for OIOS reporting procedures by requiring OIOS to make original versions of its reports available to

Member States upon request. We believe this represents a significant step forward. OIOS’ current staff and funding levels are, however, inadequate to oversee a program on the scale of the Oil-forFood Program. OIOS should be provided additional funds from proceeds of any similar sanctions regimes to fund expertise in auditing

large-scale commercial operations and complex financial transactions.

Last, Mr. Chairman, you asked for an update on the status of ongoing Department efforts to review and declassify OFF related documents. The Department received numerous congressional requests

to provide documents, as well as requests from the Independent Inquiry Committee into the Oil-for-Food Program, the Volcker Commission, and the Department of Justice. The Freedom of Information Act requests have also been received. In response, the Department initiated a comprehensive search of its files generating thousands of documents.

The Department has reviewed and processed a significant portion of these materials. We have provided copies of specifically requested documents to Congress and are continuing to make additional documents available on an ongoing basis. The Department

22

has also provided the IIC access to documents identified as relevant to its ongoing investigation.

Mr. Chairman, thank you for this opportunity to appear before

the subcommittee. I now stand ready to answer whatever questions

you and your fellow committee members may wish to pose.

[The prepared statement of Mr. Schweich follows:]

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Mr. SHAYS. I thank you very much.

How long have you been at the U.N. in this capacity?

Mr. SCHWEICH. Nine months.

Mr. SHAYS. I’m going to run through a number of questions that

we would like answered. First off, if you would state the reason

why Saddam waited until 1995 to approve the Oil-for-Food Program? In other words, what concessions did we have to make in

order to get him to approve it?

Mr. SCHWEICH. Mr. Chairman, as the subcommittee is aware, an

Oil-for-Food Program was attempted much earlier than 1995 under

Resolutions 706 and 712. And Saddam Hussein claimed that by not

having the authority to approve contracts himself, oil and food contracts, it was an imposition on his sovereignty and he refused to

abide or comply.

So the main concessions that were made to get an Oil-for-Food

Program going was to allow Saddam to pick the people who he

would be selling the oil to and to pick the companies that he would

be buying the food and other goods from.

Mr. SHAYS. Which is basically how the scam occurred, he would

undersell his oil and get a kickback, and he would overpay for commodities and get a kickback. And the key though, was, in order for

him to do that, he had to be able to pick who he sold to and who

he bought from. And you’re saying that the agreement that occurred in 1995 enabled him to do that, is that correct?

Mr. SCHWEICH. That’s correct.

Mr. SHAYS. OK. This may seem like an obvious statement in answer to the question, but let me just put it on the record. To what

extent was Saddam responsible for the humanitarian crisis that affected the Iraqi people in the early 19902?

Mr. SCHWEICH. Well, I think he was totally responsible for it. Because the sanctions would have been lifted had he complied with

the requirements of the cease-fire. The sanctions were retained

after the war was over in order to get him to comply with the various requirements of the cease-fire, including allowing inspectors to

come in and check for weapons of mass destruction. Had he complied, the sanctions would have been lifted.

Mr. SHAYS. And the cease-fire occurred because there was an

agreement he would do the following things, in other words, there

wasn’t a march to Baghdad, we didn’t annihilate as we could have

the Republican Guard, because he agreed to certain conditions

which he then didn’t followup on, is that your——

Mr. SCHWEICH. That’s correct, Mr. Chairman.

Mr. SHAYS. What was the responsibility of the 661 Committee

members to carry out oversight of the Oil-for-Food Program? What

was its responsibility?

Mr. SCHWEICH. Well, the 661 Committee’s primary responsibility

was to review the humanitarian contracts as they came in, to work

with the oil overseers for oil pricing at the beginning of each month

and to try to ensure those were done properly.

Mr. SHAYS. How did specific 661 Committee members respond to

corruption concerns raised by the United States, U.K. and other

governments?

Mr. SCHWEICH. Many of them demanded proof, excessive levels

of proof. Some of them resisted the notion that there was any corVerDate 11-MAY-2000 11:17 Aug 16, 2005 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 D:\DOCS\22686.TXT HGOVREF1 PsN: HGOVREF1
32

ruption going on at all. We had a lot of trouble getting retroactive

pricing which we eventually did to eliminate some of the surcharges on the oil.

Mr. SHAYS. What kind of pricing again?

Mr. SCHWEICH. Retroactive pricing. Yes, once we learned that

there was——

Mr. SHAYS. Just define retroactive pricing.

Mr. SCHWEICH. Retroactive pricing is pricing the oil contracts at

the end of the month instead of the beginning of the month. The

way the program was set up, Mr. Chairman, the oil overseers

would recommend a price at the beginning of the month. Saddam

Hussein would try to get as low of a price as possible so he would

get that kickback you were talking about.

When we realized this was going on in 1998 and 1999, or maybe

a little bit later than that, we withheld our consent to the pricing

until the end of the month when we could see what the actual price

of oil had been over the course of the month. That allowed us to

eliminate the margin he had from about 50 cents a barrel down to

about 5 cents a barrel, made it much harder for him to get his

kickback.

Mr. SHAYS. When did that occur?

Mr. SCHWEICH. That was around the year 2000, early 2001.

Mr. SHAYS. The program began in 1996?

Mr. SCHWEICH. That’s correct.

Mr. SHAYS. So around 1999, you said?

Mr. SCHWEICH. The first charges, some of the oil periodicals,

some of the press started reporting on surcharges in 1999, I think,

yes.

Mr. SHAYS. Which nations were more influenced by national economic objectives than making sanctions work? Can you identify

any?

Mr. SCHWEICH. Mr. Chairman, it’s hard to make generalizations

like that. Certainly Syria would qualify, and then a lot of people

have accused other countries as well. Some have said the French

were interested in national economic objectives as well. That was

less obvious than the Syrians.

Mr. SHAYS. It was pretty clear the Syrians were.

Mr. SCHWEICH. Yes.

Mr. SHAYS. How did Iraq influence the 661 Committee?

Mr. SCHWEICH. Well, they embarked on a campaign of claiming

that the sanctions were killing their people, of course. There was

some truth to that, but I think it was in some respects exaggerated.

The way they tried to influence the 661 Committee is, they recognized, Mr. Chairman, the inherent shortcomings in a committee

that’s just basically reviewing paper in New York. So what they did

is they developed a whole pull-down menu of manipulative mechanisms in order to circumvent that paperwork. I have a list, if I can

read it into the record.

Mr. SHAYS. Sure.

Mr. SCHWEICH. As I was preparing for this hearing, there were

surcharges, topping off, influence peddling, product substitution,

product diversion, phony service contracts, phantom spare parts,

shell corporations, illusory performance bonds, hidden bank acVerDate 11-MAY-2000 11:17 Aug 16, 2005 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 D:\DOCS\22686.TXT HGOVREF1 PsN: HGOVREF1
33

counts and then plain old-fashioned bribery and kickbacks to the

tune of several billion dollars.

Mr. SHAYS. I’m going to ask you to read that over again, one

more time, and read it more slowly. Is this my first 5 minutes or

second? Roll it one more time.

Mr. SCHWEICH. Surcharges, topping off, influence peddling

through the voucher system we all learned about, product substitution, product diversion, phony service contracts, phantom spare

parts, shell corporations, illusory performance bonds, hidden bank

accounts and a whole lot of bribery and kickbacks.

Mr. SHAYS. I’m going to ask you to read it one more time.

Mr. SCHWEICH. Surcharges, topping off, influence peddling, product substitution, product diversion, phony service contracts, phantom spare parts, shell corporations, illusory performance bonds,

hidden bank accounts, bribery and kickbacks.

Mr. SHAYS. Still sounds the same the third time. Thank you.

How did Iraq influence the Secretariat? And define to me the

Secretariat.

Mr. SCHWEICH. The Secretariat is the group of about 8,800 employees who work directly for the Secretary General of the United

Nations, in the big tall building, 38 stories, in New York.

Mr. SHAYS. And can you describe how Iraq would have had influence over them?

Mr. SCHWEICH. Well, Paul Volcker is still investigating that and

I don’t think there are any definitive conclusions. One allegation is

that certain members of the Secretariat actually got the oil vouchers in order to influence them to try to alleviate the sanctions.

Benon Sevan is one of the people that’s been accused of that. So

that would have been one of the principal tactics.

Mr. SHAYS. OK. And describe to me how some of the 661 Committee members, and that’s the permanent members of the Security Council and those that were assigned during—it was basically

the Security Council but they were functioning as the 661 Committee, correct?

Mr. SCHWEICH. That’s correct. It was a subsidiary body of the Security Council, Mr. Chairman, that was represented by each country on the Security Council.

Mr. SHAYS. So it was comprised of the same people. It’s almost

like on the House floor when we go from the Congress to what we

call the committee of Congress, it’s still the same people debating

and articulating.

Mr. SCHWEICH. Well, they had a group of experts that were on

the 661 Committee but they reported to their Ambassadors. So yes,

that would be effectively the same.

Mr. SHAYS. Describe to me, though, how the 661 Committee

members undermined the sanction process? What were some of the

things that they would have done to undermine?

Mr. SCHWEICH. Well, they consistently pointed out the problems

that were being incurred by the Iraqi people, and suggested that

the sanctions regime was outdated. Mainly what they did was inaction. There was a consensus rule, Mr. Chairman, where everybody

had to agree before any action could be taken. And if you look at

the minutes, which I’m sure the committee has done, you see the

same item on the agenda over and over and over again, week after

34

week. They can’t get consensus because the parties just roll it over

to the next meeting.

It was basically complacency and ambivalence, was their principal tactic.

Mr. SHAYS. OK. How did other nations influence the sanctions

regime, outside the Security Council or the 661 Committee?

Mr. SCHWEICH. Mr. Chairman, I don’t have a lot of information

on that, except to say that there were continuous reports from various countries, organizations, non-government organizations affiliated with other countries, pointing out the severe adverse effect

that sanctions were having on the Iraqi people.

Mr. SHAYS. What did the United States do to push the U.N. to

investigate allegations of corruption? And I’m going to say that I

suspect sometimes it was somewhat aggressive and sometimes it

wasn’t. Dissuade me if I’m wrong; I believe that it was pretty much

a mixed bag. Is that an accurate feeling, or were we always aggressive, always pushing, always questioning or did we sometimes back

off?

Mr. SCHWEICH. Well, the problem we had was getting concrete

evidence. That’s what Paul Volcker is having so much difficulty

doing and spending so much time doing. A lot of people, for example, when we were told that there was kickbacks on the humanitarian goods said, where’s the evidence. We tried to produce evidence but it was fairly circumstantial at the time.

Now, we did put holds on $5.4 billion worth of contracts. So we

did try to stop some of the contracts that looked most suspicious

to us, particularly for dual use purposes. But the problem we had

with the 661 Committee was, members would say, we’ve heard allegations, but can you show us any examples. And of course, the

OIOS, which would have been the principal mechanism to do the

auditing of these contracts and the bank accounts and the places

where the kickbacks went did not have the authority to audit the

actual contracts.

So we really were not able to come up with specific evidence of

the kickbacks, only allegations and hearsay, which was not sufficient to convince other 661 Committee members. But I do think,

Mr. Chairman, that the United States and the United Kingdom

were fairly aggressive in placing holds on contracts, the whole retroactive pricing mechanism that I discussed with you, to try to

keep the surcharges from putting extra money in Saddam Hussein’s pockets. We did what we could, I think.

Mr. SHAYS. So if we saw a contract we were suspicious of and

raised questions, if we couldn’t show them the smoking gun, it became more rhetoric as far as the other members were concerned

and then the committee chose not to act, is that your basic point?

Mr. SCHWEICH. That happened frequently, yes, Mr. Chairman.

Mr. SHAYS. Why did the United States accept the trade protocols

signed between Iraq, Jordan and Turkey? Let me back up and say,

this is an area where I have some background, and I need to put

it on the record. When I met before the war with Iraqi officials and

Turkish officials, there was no doubt, excuse me, when I met with

Jordanian officials and Turkish officials, there was no doubt in our

mind, the Government’s mind that, forget the oil sanctions, but

that there was smuggling going on to both countries, and that I

35

had the view that our country was somewhat tolerant of some

smuggling to make up for their loss of trade with these two countries. In other words, these were two important countries whose

support we needed in order to have some capability to contain Saddam.

Am I wrong in believing that the United States was aware that

smuggling was occurring between—so it’s a slightly different question—am I wrong in believing that the United States was aware

that smuggling was occurring between Turkey and Jordan, and

that there was tacit tolerance of some level of smuggling? This is

different from the Oil-for-Food Program issue right now.

Mr. SCHWEICH. Right. Mr. Chairman, I’m glad you brought that

up. If I can take a few minutes to explain the situation, it will take

a little bit of time. When Iraq invaded Kuwait in 1990, a few days

later, Jordan came to the Security Council and said, we have a big

problem here. We do 10 to 20 percent of our business, national economic business, with the Iraqi government. And if we are forced to

comply with the 661 Committee sanctions on Iraq, it will have a

devastating effect on our economy.

They came with a formal request under Article 50 of the U.N.

charter for relief, with a letter. This was not sort of an under the

table deal. They came with sort of hat in hand and said, we’ve got

a huge problem here. They provided an extensive amount of backup

materials supporting that. So it was put on the 661 Committee’s

agenda that Jordan had a serious problem.

It was again, as I said with this problem with the consensus rule,

it was rolled over for month after month after month without anybody doing anything about it. A mission was actually sent to Jordan to investigate the allegations that the Jordanians were making

about the impact of this on their economy.

But nothing was done for many, many months. Finally, after 9

months of repeatedly asking the 661 Committee to do something

about the problems it had, and asking specifically for Article 50 relief under the U.N. charter, again, not a back-room deal, the 661

Committee received a letter from Jordan saying, we are trying to

comply with the sanctions, I have a copy of it here if the subcommittee would like it, we are trying to comply with these sanctions but we can’t do it. So we are notifying you right now that we

are resuming the importing of oil from Iraq to Jordan in order to

prevent an economic catastrophe in our country. We will report to

you regularly on what we’re doing. And we’re sorry, but that’s just

the way it’s going to have to be. Because there’s been no action by

the 661 Committee to address our concerns.

Shortly thereafter, the 661 Committee sent a letter to the Jordanian Ambassador to the United Nations, a copy of which I also

brought with me if the subcommittee would like to see it. And the

letter said, we take note of the concern you have, and we take note

of the serious economic impact that these sanctions are having on

Jordan and we request that you do report to us on how much

you’re importing.

You can’t really say it was consent, but it was something very

close to that. Should we take note of it, we understand you’re doing

it, please tell us how much you’re doing and don’t do any more

36

than you have to. And this was in writing, again, from the 661

Committee back to the Jordanian Ambassador.

So at that point, the trade was started up at $200 million or $300 million a year. So it wasn’t really secretive.

Then in the United States, of course, we had a law under the

Foreign Operations Appropriations Act, that prohibited assistance

to countries that were violating the 661 sanctions. And Section 531

of that law allowed a waiver to be granted. And in the case, over

three administrations, starting with the first Bush administration,

throughout the entire Clinton administration and then through the

current Bush administration, a waiver was granted by the President and then eventually I think it was delegated to the Secretary

of State and Deputy Secretary of State.

Congress was notified that there was a waiver granted here and

that Jordan would be allowed to import the oil without incurring

any problems with their foreign assistance. And it was published

in the Federal Register. And the reason why I bring it up, a similar

thing happened to Turkey about 5 years later, a similar type process, not exactly the same but analogous.

Mr. SHAYS. How much later?

Mr. SCHWEICH. About 5 years later, this happened in 1996. Turkey requested also similar Article 50 relief——

Mr. SHAYS. Hold on, back up. Jordan was 1996 and then——

Mr. SCHWEICH. Jordan was 1990, 1991 and Turkey in 1996. And

they went through a similar process.

The reason why I’m very glad, Mr. Chairman, that you brought

this up is, if you’ve been reading some of the press article, there

are certain, former Secretary General of the United Nations, there

are other U.N. officials and other countries that are trying to suggest that the U.S. acceptance of the Jordanian-Turkish protocols is

somehow analogous to the things I just read off, the bribery, the

corruption, the kickbacks, the things that were done for self-interest, secretively in an non-transparent manner that are really just

acts of fraud and crime. And they’re trying to suggest that the

United States should just take a look in the mirror, you’re here

using the Oil-for-Food scandal as a pretext for reforming the U.N.

when you were just as guilty by accepting the Jordanian and Turkish protocols.

And we at the State Department, Mr. Chairman, categorically reject that comparison. The Jordanian and Turkish protocols were

done to alleviate economic hardship. It was an exception to the

sanctions regime because of the severe consequences that a failing

Jordanian and Turkish economy might have on the world. It was

done transparently, openly with the knowledge of the entire 661

Committee and the international community and for a valid purpose.

And to allow other countries and individuals to equate that with

the type of corruption that went on could seriously undermine our

efforts to reform the U.N. that are going on now.

Mr. SHAYS. Let me say, Mr. Schweich, I particularly appreciate,

and then I’m going to yield to my colleague for such time as he may

want to consume, given I’ve probably done about, how much extra

over my 10? OK. You’re just very well prepared. And your answers

are succinct. You’re really an excellent witness. I just appreciate

37

the seriousness with which you are treating this hearing and the

preparation you have done for it. I thank you for that.

At this time, Mr. Kucinich, you have the floor. My colleague, Mr.

Duncan—do you have to go?

Mr. KUCINICH. If he has to go, I’ll be glad to yield to him.

Mr. DUNCAN. Thank you. I’ve got less than 5 minutes, probably.

Thank you very much.

Mr. Schweich, we noticed that when you were going through your

testimony, you got to page 6 and you left out the words ‘‘including

subjecting the offending state to a possible loss of U.N. privileges

or possible targeting for new measures.’’ What action is taken or

do you think should be taken against Member States that don’t enforce agreed-upon sanctions?

Mr. SHAYS. Before the gentleman responds, you had two letters

that you had mentioned.

Mr. SCHWEICH. Yes.

Mr. SHAYS. I think, if you don’t mind, we’ll take those letters,

we’ll put them into the record. We’ll reproduce those. So without

objection, we are going to put those letters into the record, and

we’ll describe what those letters are, and we’ll give you back your

copies.

I’m sorry, do you want to repeat your question?

Mr. DUNCAN. Well, I just was curious why you left out those

words, ‘‘including subjecting the offending state to a possible loss

of U.N. privileges or possible targeting for new measures.’’

Mr. SCHWEICH. You’re very observant, Congressman, that was

changed this morning. Because originally, people thought it might

imply that we could revoke the voting capability of other countries,

which we really don’t have the authority to do. But what we do

think could be done is to impose similar types of sanctions, in other

words, failure to abide by sanctions could result in similar sanctions, restricting travel, asset freezes and things like that we would

be willing to consider.

Mr. DUNCAN. Restricting travel and asset freezes and what else?

Mr. SCHWEICH. Well, there’s a wide variety, restricting trade in

certain sectors, like we do in Sierra Leone and other countries.

What we weren’t willing to go so far is to say we would have the

authority to revoke their vote.

Mr. SHAYS. Could the gentleman just suspend a second, because

this is an important question. Mr. Kucinich and I were just saying

something and we missed it. What was changed was you didn’t

read what from your statement which we will now make you read?

When states fail to report, is that it? And it’s because something—

on page 6?

Mr. DUNCAN. Page 6, including—the bottom of the first paragraph, ‘‘including subjecting the offending state to a possible loss

of U.N. privileges or possible targeting for new——’’

Mr. SHAYS. Let me read the whole sentence. It says ‘‘When states

fail to report, and more importantly, fail to comply with the obligation to implement the measures authorized by the Council, appropriate follow-on actions, including subjecting the offending state to

a possible loss of U.N. privileges or possible targeting for new

measures should be considered.’’ And your response to Mr.

Duncan——

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Mr. SCHWEICH. Right. What we changed this morning, I said appropriate follow-on actions should be considered. And I left it more

general. It didn’t preclude anything. But the thought was possible

loss of U.N. privileges might imply that we could revoke their ability to vote like occurs when you’re in areas. We got a legal opinion

that we probably wouldn’t have the authority to do that, so that’s

why we changed it.

Mr. SHAYS. Thank you.

Mr. DUNCAN. Now, a similar type question, except not leaving

out anything out of your testimony, but basically because the important part of that question was, what actions would you recommend. But there is something that is of concern to me. A later

witness, the chairman’s constituent will testify that contrary to

common views, the Oil-for-Food Program did not give Saddam Hussein a free hand to use oil proceeds as he wished without oversight

or monitoring. Rather, the OFF Program had multiple levels of

oversight for both import contracts and oil sales involving scrutiny

by U.N. staff and every member of the Security Council of nearly

every aspect of every transaction. To the extent that there were

kickbacks or other improprieties in the Program, these occurred despite an elaborate system of oversight.

Now, and yet you testified a few minutes ago that the OIOS did

not have authority even to audit the contracts.

Mr. SCHWEICH. That’s correct, yes.

Mr. DUNCAN. It almost sounds like, when I read the testimony

of Professor Gordon, if there was such tremendous oversight, but

then you say the OIOS did not have authority to audit the contracts, and one of the main purposes of this meeting should be to

try to figure out how we can keep something like this from ever

happening again.

Yet she says there is just all this oversight over every aspect of

the program. So is it hopeless? Surely we’re not going to say that,

that we just can’t stop things from happening again. She says there

was elaborate oversight, an elaborate system of oversight.

Mr. SCHWEICH. Congressman, there was oversight. The way it

worked was, with respect to the oil contracts, there were oil overseers that would review the contracts for pricing and approve of

those contracts. With respect to the humanitarian contracts, the

contracts would be signed by Saddam Hussein or his agents and

they would be sent to the Office of Iraq Programs that would review them and send them to the 661 Committee. And the 661 Committee did review 36,000 contracts.

The problem was, when you have somebody that is so determined

to circumvent it and willing to set up the shell corporations and the

phony bank accounts and the things that the 661 Committee did

not have insight into, just looking at the paper isn’t enough to find

the fraud. In fact, DCAA did an audit in 2003 of a bunch of the

food programs. They said basically the same thing, on the surface

of the contract, it’s hard to see the fraud.

So yes, there was oversight, but Saddam Hussein had an aggressive assault on that process that managed to circumvent it.

Mr. DUNCAN. Well, are we giving people the authority now to,

have any changes been made yet?

Mr. SCHWEICH. Yes, Congressman.

39

Mr. DUNCAN. I know some of this investigation is still going on.

But surely some changes have been made.

Mr. SCHWEICH. Yes, Congressman. First of all, I’m not aware of

any situation where a country that was the subject of the sanctions

was allowed to approve and sign and negotiate the contracts. That

was certainly one of the biggest flaws.

Now, as I said earlier, it was almost a necessity, because Saddam

Hussein would have rather seen his own people suffer than not

have that occur. But I don’t think that mistake will be made again.

Mr. DUNCAN. My time is up, but one last question. Let me ask

you this. What action is taken against contractors that have been

involved in this scandal? Has action been taken? Are the contractors that have been involved in this scandal, are they still doing

business with the United Nations, still making money off the U.N.?

Mr. SCHWEICH. My understanding is most of these are large and

small international companies. I know that the Volcker Commission is working with the authorities in the various countries to try

to get some of these people prosecuted.

Now, some of that will come out, I think in the next report. We

know in this country, the U.S. attorney for the southern district of

New York, Mr. Kelly, has already indicted one person who misused an oil voucher he got in the United States. This is an American citizen.

Unfortunately, Mr. Volcker has no prosecutorial authority, so he

has to refer these to the authorities in the various countries. In one

case I know, I think Mr. Samir Vincent already pleaded guilty of

mis-using oil vouchers and agreed to cooperate with others. So I

think there will be people brought to justice.

Mr. DUNCAN. I’m glad that they are prosecuting people, but we

need to make sure that these contractors don’t do business with the

U.N. The United States pays by far the biggest share of U.N. costs

in all kinds of ways. So we need to make sure these contractors

don’t do business with the U.N. in the future, if they’ve ripped us

off in the past like this.

Thank you. Mr. Kucinich, thank you very much. And Mr. Chairman, thank you.

Mr. SHAYS. Thanks for being here.

Mr. Kucinich, you have the floor for give or take 15 minutes.

Mr. KUCINICH. Thank you very much, Mr. Chairman.

At the outset of my remarks I said, and I want to repeat, that

we are all concerned about the alleged abuse of the program, from

the kickbacks and overpricing schemes to the litany that the gentleman laid out. We’re all concerned about that.

Mr. SHAYS. Do you want him to read it again? [Laughter.]

Mr. KUCINICH. No, actually I’m going to go over some of those

elements in my questions. You’ll know that I got it.

Were you at the U.N. a few days ago after the President’s Commission on Intelligence Capabilities released their report?

Mr. SCHWEICH. I was at the United Nations, yes, but I haven’t

read the report.

Mr. KUCINICH. Well, can you say what the reaction was of some

of your colleagues from other Member States to that report?

40

Mr. SCHWEICH. Mr. Chairman, I was at the U.N. with Ambassador Sharin Tahir-Kheli going over our proposals for reform and

I did not cover that with anybody.

Mr. KUCINICH. So do you have any idea whether anyone was

upset about it or——

Mr. SCHWEICH. I don’t know.

Mr. KUCINICH [continuing]. That the United States had misled

them?

Mr. SCHWEICH. I don’t know.

Mr. KUCINICH. You don’t know? Are you worried that the credibility of the State Department may have been undermined by the

report of the Commission on Intelligence Capabilities?

Mr. SCHWEICH. Mr. Chairman, I am not familiar with the report

and don’t really have an opinion on that.

Mr. KUCINICH. Did you read any news stories about the report?

Mr. SCHWEICH. I think I probably did read a little bit about it,

yes.

Mr. KUCINICH. But you haven’t talked to anyone about it at all?

Mr. SCHWEICH. I honestly don’t think I have, no.

Mr. KUCINICH. Does your job at the State Department depend on

the credibility of the U.S. State Department with respect to its

statements and what the present to the world?

Mr. SCHWEICH. It certainly does.

Mr. KUCINICH. Are you concerned that statements may, that

were presented to the world through the State Department were

later on found out not to be true?

Mr. SCHWEICH. Yes, and I’m very hopeful that Ambassador

Negroponte, who I think is going through hearings right now, will

be able to alleviate that problem.

Mr. KUCINICH. Have you ever had any discussion with anyone

about Colin Powell himself being misled?

Mr. SCHWEICH. No. I arrived at the U.N. after all that had occurred, Congressman.

Mr. KUCINICH. Are you aware that Colin Powell feels that he’s

been misled?

Mr. SCHWEICH. I heard the statement that he made this morning, and I read some of those.

Mr. KUCINICH. Is it possible that in your statements today that

you’ve been misled by the administration?

Mr. SCHWEICH. I don’t think so.

Mr. KUCINICH. You don’t think there’s any chance of that, that

any of the information you’re presenting to this subcommittee will

later on come back and prove not to be true?

Mr. SCHWEICH. Congressman, I think most of what I presented

today is somewhere in the public record.

Mr. KUCINICH. Isn’t it in the public record that there were about

60 U.S. officials employed to scrutinize each and every contract?

Mr. SCHWEICH. There was a large number. I wasn’t aware it was

60, but yes.

Mr. KUCINICH. And those individuals had the ability to place a

hold on a contract?

Mr. SCHWEICH. That’s correct, and they did frequently.

Mr. KUCINICH. But they never used their veto power, am I correct, to stop a contract because of pricing concerns?

41

Mr. SCHWEICH. Actually, the vast majority of the holds, Congressman, were for possible dual use. But there were certain contractual irregularities, and I understand also some pricing concerns

that were expressed.

Mr. KUCINICH. But they never vetoed something based on pricing?

Mr. SCHWEICH. Congressman, under the 661 Committee rules, no

one actually had a veto. They could put a hold by withholding consensus, and they did do that.

Mr. KUCINICH. So they had holds based on pricing concerns?

Mr. SCHWEICH. I don’t think it was a lot of them, but I think

there were some, yes.

Mr. KUCINICH. Can you present this committee with information

to support that?

Mr. SCHWEICH. I probably can. I don’t have it right here in front

of me. But I’d be happy to take that under advisement and get

back to you, if you would like.

Mr. KUCINICH. Mr. Chairman.

Mr. SHAYS. That would be great, thank you. And if you could just

submit it to me, we’ll make sure Mr. Kucinich gets it.

Mr. KUCINICH. OK, thanks.

Do you think it’s absolutely improbable that any U.S. official

knew anything about the kickbacks that were going on?

Mr. SCHWEICH. I’m not aware of any U.S. official who knew

about it. I think there were individual Americans, like Mr. Vincent

who got a voucher, who knew something about the process.

Mr. KUCINICH. But the United States was totally surprised that

there were kickbacks in this program, is that correct?

Mr. SCHWEICH. Well, Congressman, we’re not even exactly sure

when the kickbacks began. We don’t think they started at the beginning of the program. They came to light in some press, some oil

industry press in the late 1990’s, and some of the evidence we have

suggests that’s around the time when it started.

Mr. KUCINICH. And do you have any information specifically

about what Saddam Hussein specifically did with the money that

was diverted? What did he do with it? What did he buy? What did

he use the money for?

Mr. SCHWEICH. Well, money is fungible, so we think that the palaces, and there’s a lot of—he could have bought pretty much anything with the money, because it was cash.

Mr. KUCINICH. What about the palaces? Tell me about that.

Mr. SCHWEICH. I don’t know much more than he built very lavish

palaces with money that we don’t know where he got it.

Mr. KUCINICH. OK, let’s get this, Mr. Chairman. We’ve got a person whose nation is under sanctions, there is an Oil-for-Food Program, and we do know that he’s building these elaborate palaces.

Did anyone think to ask where he’s getting the money?

Mr. SCHWEICH. I think that there’s a coincidence of the timing

of when he was using this money for whatever purposes he used

it for and when we first were aware of the kickbacks and things

that were occurring.

Mr. KUCINICH. Well, it seems to me, to the gentleman, it seems

to me that someone somewhere had to know that Saddam Hussein

is building palaces and Iraq’s under sanctions, that he’s getting the

42

money from somewhere. So if there is physical, visible evidence of

Saddam Hussein spending money, you would think that it would

trigger some questions on the part of somebody somewhere about

where the money is coming from, wouldn’t you?

Mr. SCHWEICH. Yes, and I think the United States did raise

those questions in 1999 and 2000 and 2001.

Mr. KUCINICH. And did they raise the questions that it could

have been coming from the Oil-for-Food Program then?

Mr. SCHWEICH. Yes, I think that’s when the surcharges and the

kickbacks came to light and we were very concerned about it.

Mr. KUCINICH. But they never moved to aggressively block the

program?

Mr. SCHWEICH. Well, they tried, but again they had the consensus rule in the committee, which precluded us from acting unilaterally. And they did place holds on contracts and did implement the

retroactive oil pricing, which was something we used sort of our

ability to block, being one of the 15 members, to do that retroactive

pricing. That did really cut down on his extra revenue.

Mr. KUCINICH. So you’re saying that the Security Council, of

which the United States is a member, did or didn’t have the responsibility for the day to day management of the Oil-for-Food Program?

Mr. SCHWEICH. They did have responsibility for the day to day

management, yes, along with the Office of Iraq Programs and others.

Mr. KUCINICH. So do you then agree with Colin Powell when he

says that the United States is partially to blame?

Mr. SCHWEICH. I’m not sure of the context in which Secretary

Powell made that statement.

Mr. KUCINICH. Here’s his quote. He said ‘‘The responsibility does

not rest entirely on Kofi Annan. It also rests on the membership,

and especially on the Security Council, and we are a member of the

Security Council. It was the Security Council that had the responsibility for the day to day management of this program.’’

Mr. SCHWEICH. And Congressman——

Mr. KUCINICH. Do you agree with that statement?

Mr. SCHWEICH. I agree with the statement, but I also would

point out the Security has 15 members. And I think the United

States and the United Kingdom acted very honorably in trying

their best to stop the corruption when it came to light.

Mr. KUCINICH. And what specific steps were taken when the corruption came to light?

Mr. SCHWEICH. As I said, the retroactive pricing was extremely

effective, placing holds on goods that might have dual use items.

And then in other cases, we were less successful. We tried, for example, something called smart sanctions, Congressman, where we

were trying to get increased border patrols. We were not able to get

that through because other committee members weren’t interested

in it.

Mr. KUCINICH. Isn’t it true that the United States has veto power

over every substantive decision made by the Secretary General?

Mr. SCHWEICH. No, over every resolution that’s proposed to be

passed by the Security Council.

43

Mr. KUCINICH. And the U.N. Secretariat, including those regarding the Oil-for-Food Program?

Mr. SCHWEICH. I don’t think the United States has any veto

power over decisions made by the Secretariat within the scope of

the authority of the Secretariat.

Mr. KUCINICH. But within the scope of the management of specific programs, we sat and we had 60 people who were scanning all

these documents, and you’re saying we couldn’t do anything about

any of the kickbacks, we were powerless?

Mr. SCHWEICH. We actually did, as I said, with the retroactive

pricing and the holds, we actually did a significant amount to try

to stop it.

Now, I agree with you 100 percent, Congressman, that it was not

a leak-free process. We definitely had problems, and there was definitely money that got through. But I think if you look through the

661 Committee minutes over an extended period of time that the

conduct of the United States and the United Kingdom was honorable and we did our best.

Mr. KUCINICH. Isn’t it true that the Oil-for-Food Program became

the Development Fund for Iraq?

Mr. SCHWEICH. That’s my understanding.

Mr. KUCINICH. And that happened in November 2003?

Mr. SCHWEICH. Right.

Mr. KUCINICH. And that Development Fund for Iraq was then

turned over to the Coalition Provisional Authority?

Mr. SCHWEICH. That’s my understanding, yes.

Mr. KUCINICH. Are you familiar with the report of the Special Inspector General for Iraq relating to the handling of $9 billion in

Iraq reconstruction funds?

Mr. SCHWEICH. Congressman, I don’t want to not answer your

question, but I have only very limited familiarity. Once it went

over to the CPA, it became more of a DOD activity, and I haven’t

paid a whole lot of attention to it, to be honest with you.

Mr. KUCINICH. You’re speaking to a certain fluency that existed

at the State Department with respect to Oil-for-Food. Do you know

if there is any such fluency at the State Department with respect

to the missing $9 billion?

Mr. SCHWEICH. I’m not aware of that.

Mr. KUCINICH. So you really don’t know anything about it?

Mr. SCHWEICH. No, I don’t.

Mr. KUCINICH. Are you interested in it?

Mr. SCHWEICH. Yes, sure.

Mr. KUCINICH. Do you feel that it would undermine the credibility of the United States on one hand to be raising questions about

the accounting of the Oil-for-Food Program in which we discovered

there were bribery kickbacks, and you went over the list, and on

the other hand a program that we had direct responsibility for accounting for that $9 billion is missing? Do you think that raises

questions of our credibility before the United Nations?

Mr. SCHWEICH. Congressman, I just don’t know enough about the

issue to make any statement on that.

Mr. SHAYS. Would the gentleman just suspend 1 second? This

will be on my time. We are going to have a hearing some time in

44

June on this specific issue of the $9 billion. It is an issue of how

was the money accounted for. So it may be ultimately $100 million are missing or $10 million or whatever. It’s not that $9 billion can’t be accounted for. It’s that

there was not proper accounting of the $9 billion.

But the gentleman has raised absolutely the right question about

this issue. And we’ll be bringing in the experts to do that. We think

it may be on June 21st, and we’ve got a sign-off on that hearing

from those that we need to get sign-off on, at the gentleman’s request. I haven’t had a chance to——

Mr. KUCINICH. Well, you know, Mr. Chairman, when there was

money missing at ENRON, we found out later it was stolen. So we

don’t know that any of that money hasn’t been stolen. I’m not

charging that it has been. But what I’m saying is that when you

have money missing and you have a special investigation of it, and

it raises the questions about $9 billion missing, I mean, on one

hand, if we’re concerned about Oil-for-Food, and we ought to be,

then we also ought to look at the handling of successor programs.

Mr. SHAYS. Would the gentleman allow me?

Mr. KUCINICH. Of course.

Mr. SHAYS. It’s like saying that DOD is missing $100 billion, because no part, frankly, very little part of DOD is accountable. In

other words, at one point there was over a trillion dollars of transactions that were not properly being accounted. But that didn’t

mean we didn’t know where a trillion dollars of transactions were.

It’s that they weren’t being properly accounted for.

And the gentleman is right, they are not being properly ac- counted for. There’s not $9 billion missing, it’s just not being accounted for. And when I say just, I mean it’s serious. But this gentleman, nor do you or I really have the expertise yet to do it. But

we will have a hearing, we will have witnesses that you would like

us to get, and we will get an answer as to, of the failure to account

for $9 billion, how much is actually missing, where did it all go.

I thank the gentleman.

Mr. KUCINICH. What I’m getting at here, Mr. Chairman, is this.

And I want to thank you, by the way, for being responsive and

being willing to hold a hearing on that. What we’re looking at here

is a mentality. There was, you know, it’s conceivable, when you

consider that we had so many people who were involved in scrutinizing these contracts, it’s conceivable that we had an anything

goes approach, because it’s Iraq. It’s like a run-up to the signature

line in the movie Chinatown. I mean, it’s just Chinatown. Or

maybe it’s just Iraq.

So if it’s in Iraq, anything goes. Anything goes, and all of a sudden you have this Oil-for-Food and all these kickbacks, it’s Iraq.

Then you have $9 billion that hasn’t been properly accounted for,

it’s Iraq.

Well, you know, that’s not good enough. And you know why, and

it’s particularly not good enough, Mr. Chairman, when now you see

the credibility not only of U.S. intelligence agencies under attack,

but also the credibility of the State Department under attack.

Now, I’m going to, before I conclude, I just want to share this

thought with you. It’s no secret around the world, because we’re

talking about the world here, and I happen to believe there is a leVerDate 11-MAY-2000 11:17 Aug 16, 2005 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 D:\DOCS\22686.TXT HGOVREF1 PsN: HGOVREF1
45

gitimate role for the United Nations. My view is, I look at the

world as one. I see it as being interconnected and interdependent.

That’s why we should be concerned with what’s happening in different nations, as they should be concerned what happens here.

But when you see this whole story about Oil-for-Food here, and

$9 billion that can’t be accounted for there, and you see the charade of the State Department taking the rap for a decision that

was made by the White House to invade Iraq no matter what,

when you see the intelligence community taking a rap for a decision that was made by the White House to attack Iraq no matter

what, it leaves us here in a state where we’re reviewing a farce.

That is tragic.

So the buck has to stop at the administration. Colin Powell is

one of the most honorable men who has served this country and he

was basically put in an impossible position. We have some of the

best people serving America in the State Department, and they

have been put in an impossible position, because the administration made the decision to attack Iraq, notwithstanding the facts.

And the people in our intelligence community, I’m going to just

say this and then let it go, the people in our intelligence community, we have some of the best people in intelligence, the career employees serving this country, and they are getting smeared, because

this administration basically fed intelligence to certain people and

told them this is what they had to say and later on it turned out

not to be true.

Mr. Chairman, so much of what we’re looking at here is not just

a question of the credibility of the State Department or the United

Nations or our intelligence capability. It goes right back to the administration. It’s time for someone to dust off Harry Truman’s old

plate that said ‘‘The buck stops here.’’ Because in this administration, it looks like the buck stops in somebody’s pocket.

Thank you.

Mr. SHAYS. I thank the gentleman.

We’ve been joined by Mr. Ruppersberger and Mr. Lynch. We

thank both of them for being here, they have been very important

members of the subcommittee.

Mr. RUPPERSBERGER. Mr. Chairman, first, I want to thank you

for continuing to focus on this issue. It’s extremely important as we

deal with all of the issues facing us, including the security of our

country and the world, basically.

I have just a quick statement, I want to read a couple paragraphs, and then just a couple basic questions. I’m sure a lot of this

has been repeated.

Mr. SHAYS. The gentleman has 10 minutes.

Mr. RUPPERSBERGER. That’s good, usually we have 5. That’s

good, Mr. Chairman, thank you.

First thing, I was struck last year at one of our Oil-for-Food

hearings when it was first announced that the U.N. had agreed to

an independent inquiry committee and Paul Volcker was appointed

to lead it. I remember members on both sides of this dais commenting on Mr. Volcker, and that if he received the necessary cooperation from the United Nations, we believed the investigation would

be thorough and productive.

46

As we know, the inquiry committee released its interim report on

February 2, 2005. When it was released, Mr. Volcker commended

the U.N. for its cooperation, saying that ‘‘Few institutions have

freely subjected themselves to the intensity of scrutiny entailed in

the committee’s work. I don’t know of any other institution that

has been scrubbed quite as hard as this.’’

Now, like it or not, this is a global world today. Our economies,

cultures and travels are linked with other nations and other parts

of the world. Unfortunately, we have learned a terrible and difficult

lesson: that terrorism is a global problem as well. When we face

an enemy that is stateless, that can move people, money and weapons across borders with ease, peaceful and democratic nations must

come together in some institution to face these global threats. I believe our relationship with our international partners is critical to

our success in the global war on terror.

So when I look at the Oil-for-Food issue, of course I’m concerned

about allegations of corruption. We all should be. And we need to

deal with that. I’m concerned when laws are broken, I believe we

should follow the facts and punish those proven guilty. We need to

hold people accountable, including the leadership at the top, especially the United Nations, and also the Security Council, of which

we are a member.

But beyond the punitive element, I am concerned with how we

move forward and keep our eye on the ball, what we have learned

from this and what constructive recommendations can we take

from Mr. Volcker and others to strengthen the U.N. and move forward.

Now, Mr. Schweich, first thing, do you feel that based on the information that you have, and especially with the issue of Oil-forFood, and other issues that are out there involving the U.N. that

the U.N., can be successfully reformed to do the job that’s needed

to be done, that they need to do to pull our countries together and

especially as it relates to the war against terror?

[The prepared statement of Hon. C.A. Dutch Ruppersberger follows:]

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48

49

50

Mr. SCHWEICH. Congressman, yes, I do believe that the U.N. can

be reformed. But it is a major undertaking, not only because the

problems are so systemic and so deep with the oversight issue, the

transparency issue, some of the things that we’ve discussed and

I’ve alluded to in my statement, but also because you’ve got 191

countries with very differing interests and very different theories

on what really needs to be reformed.

Right now there is a major reform initiative underway. The Secretary General released a report called, ‘‘Enlarge Our Freedom,’’

which we’re studying now, which contains some very good proposals. And things are moving in the right direction, but it’s going to

be fits and starts. Because getting consensus among that large of

a group of people and countries is very, very difficult.

Mr. RUPPERSBERGER. Well, let’s talk about some of the elements

that need to be done. First thing, I think when you look at any

management function, the president, CEO, whatever, it starts at

the top. So in this situation, I believe, from what I know of the

makeup of the United Nations, you have the leader, Kofi Annan,

and then you also have the Security Council, which is the board.

And they have a lot of power.

And really, they set the tone. Now, what would you recommend

to them needs to be done? Do we need to change leadership at the

top? Do we need to put together a plan? Because whether you’re

a government or in the military or whatever, you need to have a

plan.

Now, what should our plan, based on your knowledge, before the

U.N. to get off the bipartisan, the U.N.’s bad, the U.N.’s good, the

U.N. shouldn’t be here, whatever? Bottom line, our citizens want

us to have a functional group, whether you call it the United Nations, but some group in a world economy that can come together,

especially as we now focus on the war against terrorism.

So let’s get more specific. What would you recommend be done?

Mr. SCHWEICH. Well, Congressman, let me start with, the Secretariat has claimed that the Secretary General does not have

CEO-type authority and needs more. Can’t control budgeting, can’t

control hiring and firing, can’t get rid of the deadwood in the organization, certain things like that. I think we concurred with some

of that.

Mr. RUPPERSBERGER. I hope we can learn from that for the new

DNI, too, Director of National Intelligence.

Mr. SCHWEICH. I think we concur with some of that. The problem

is, we are somewhat reluctant to give the Secretary General a lot

more authority unless there is a lot more transparency and oversight. So what we’re trying to do is reformulate our position, and

we’re only in the infancy of formulating those positions, so I really

can’t give you too many specifics.

But I think you will see very specific proposals coming out of the

State Department in the coming weeks. But basically, balancing

the idea of a Secretary that does not have enough ability really to

influence the process, with the understanding that if you give

somebody more authority and more power over hiring and firing

and budget and those types of things, you’re going to have to have

a much more aggressive oversight system. There are whole parts

of the Secretariat’s operations and the U.N.’s operations that are

51

not even subject to OIOS review and audit. There are a lot of

closed meetings we don’t think should be closed. They’re going to

have to open it up.

So as we develop specific proposals, and I think we will, and unfortunately I’m not authorized, because they haven’t been fully vetted yet with what those proposals are, you’ll see our effort to balance the need for a stronger authority with greater oversight and

greater transparency. Those are the objectives.

Mr. RUPPERSBERGER. I don’t think there’s any successful institution or entity that does not have strong leadership at the top. But

what you need is a check and balance to make sure you hold that

leader accountable.

Mr. SCHWEICH. Exactly.

Mr. RUPPERSBERGER. That’s the format that you need.

Let me ask you this. Do you think we can get past the Oil-forFood problem?

Mr. SCHWEICH. Yes, I do. It’s going to take a long time, though,

for several reasons. First of all, we’re waiting on the major report

of the Volcker Commission. They have released two reports, but

they said the big report comes out in July or August. So we’re

going to have to see what that says.

Second of all, there are numerous other investigations going on,

several congressional committees, U.S. Attorney’s Office, other

countries have numerous investigations going on. So we’re going to

have to see how it all falls out, just how bad it was, how much corruption occurred. But I do believe there are already reforms being

implemented that will hopefully prevent something like that from

happening again, like the increased power of the OIOS, like better

sanctions regimes, more targeted sanctions. I think there are lessons being learned from this, and I think there are actions being

taken to improve it.

Mr. RUPPERSBERGER. I respect Volcker, and I think he’s done a

lot for our country, he’s a very intelligent man who has a high degree of integrity. Do you think he’s on the right track, based on

where he is and where his investigation is?

Mr. SCHWEICH. I do interact frequently with the Volcker people,

and they are obviously a very hard-working, conscientious group of

people that have already exposed a lot of problems with the Oilfor-Food Program.

One issue I raised with the chairman earlier was the issue of the

Turkish and Jordanian protocols. And I’m interested to see how

they treat that issue. They rightfully operate principally in secrecy.

So how it’s all going to turn out, I don’t know. But I certainly think

we were impressed with the first two reports.

Mr. SHAYS. If the gentleman wouldn’t mind, just so I understand

they, who is ‘‘they’’ operate?

Mr. SCHWEICH. The Volcker Commission, they don’t give press

conferences or report on exactly what their progress is. So I think

we really have to wait and see what the big report says in July.

Mr. RUPPERSBERGER. But my question is, right now, based on

what you know, do you think they are focused and they are on the

right track? One of the reasons I ask this question is because unfortunately, certain people who respected Volcker now because he

made the comment, the quote that I read, are attacking Volcker.

52

I want to make sure that from your perspective, do you feel that

Volcker and his commission are on the right track in their focus

on investigating the U.N.?

Mr. SCHWEICH. From what I’ve seen of the past, I think they are.

I think we have expressed some concerns about their mandate and

staying within their mandate. As long as they stay within the very

specific mandate the Secretary General gave them, I think they’ve

got a very talented group of people that will do an excellent job.

Mr. RUPPERSBERGER. OK, now, let’s get back to specific recommendations. Because in the end, it’s an end game, it’s resolving

this, it’s working through this and getting where we need to be.

First we have to deal with the corruption issue, and that has to

move forward. But then we have to pull these nations together to,

one of the major issues of concern to me is fighting the war against

terrorism.

You mentioned the authority at the top and I think that’s a very

important issue. But we also have to make sure that person is held

accountable. Second, what do you feel needs to be done with respect to the Council itself, the Security Council? It has a lot of

power.

Mr. SCHWEICH. Yes, and right now again, there are a whole series of proposals for Security Council reform that we are evaluating, from expanding the membership with new permanent members with new non-permanent members to reflect regional interests

more accurately, from changing their working methods, for more

transparency.

And again, I’m in an awkward position here, because I was here

to testify about Oil-for-Food. I will say, Congressman, that we are

very actively considering the exact issue that you discussed and

what proposals we are going to come out in favor of and which ones

will be——

Mr. RUPPERSBERGER. What issue that I discussed?

Mr. SCHWEICH. About Security Council reform, which is a very,

it’s extremely active. The U.S. mission to the United Nations, the

State Department and virtually every Member State is almost preoccupied in New York with Security Council reform and how to

make it a better Security Council.

Mr. RUPPERSBERGER. The credibility of a union of nations, whatever you call it, is extremely important. And again, I’m going to

focus on the war against terror. If we don’t pull it together, the

United States and Great Britain can’t do it alone. We need help.

Thank you.

Mr. SCHWEICH. Thank you.

Mr. SHAYS. I thank the gentleman very much. Appreciate his

being here.

Mr. Lynch, you have the floor for 10 minutes.

Mr. LYNCH. Thank you, Mr. Chairman. I appreciate that.

Mr. Schweich, I want to thank you for coming here to help this

subcommittee with its work. I just returned from Iraq last week,

and I must say that it would be enormously helpful if we had a

competent and reliable U.N. ready at this stage to help this new

Iraqi government with its new responsibilities.

Let me followup on what Mr. Ruppersberger asked you. He asked

if we could get through this Oil-for-Food Program. Let me ask you

53

more pointedly, can Kofi Annan survive this Oil-for-Food Program

controversy, in your estimation?

Mr. SCHWEICH. In our estimation, we continue to support the

Secretary General and his work. Obviously as Ambassador Danforth said several months ago, the chips have to fall where they

may, there is more reporting to come. But at this point, we are supportive of the Secretary General, yes.

Mr. LYNCH. OK. I’ve got to tell you, I don’t share your confidence.

I really don’t. I guess we’ll all wait for Mr. Volcker’s report this

summer.

In your earlier testimony you mentioned the Article 50 waiver

that was granted to, I think it was granted to Jordan and Turkey.

Mr. SCHWEICH. Turkey and Jordan requested relief under Article

50. It was not actually formally granted. There was a letter sent

to Jordan basically acknowledging the situation. There was really

no action taken on Turkey. But the waiver was actually granted by

the U.S. Government under the Foreign Operations Appropriations

Act.

Mr. LYNCH. To Jordan?

Mr. SCHWEICH. To Jordan and to Turkey.

Mr. LYNCH. And to Turkey?

Mr. SCHWEICH. Yes.

Mr. LYNCH. OK.

So are there any other countries out there—so they were allowed

to, because they claimed hardship under that article, they were allowed to be outside the sanctions, am I understanding this correctly?

Mr. SCHWEICH. What we did was, under the Foreign Operations

Appropriations Act, we are not allowed to provide foreign aid to

countries that are in violation of the sanctions. And a waiver to

that was granted, recognizing that there was extreme hardship to

their economies in complying.

Mr. LYNCH. OK. And you’ve basically said that affected Jordan

and Turkey. Are there any other countries that requested waiver

in some form or other?

Mr. SCHWEICH. Not on a large scale like that. I think there might

have been some smaller requests. But I’m not even aware that

there were any. I think I did read at one point that other countries

did ask for certain targeted relief.

But no, it was basically Jordan and Turkey.

Mr. LYNCH. OK. You’re saying you heard some smaller requests

from other countries? What other countries?

Mr. SCHWEICH. I’ve read that, and I don’t know much more about

it. If it was, it was minor, and I think it would be fair to say that

it was Turkey and Jordan that requested the relief.

Mr. LYNCH. OK. It goes to the issue of our credibility in terms

of asking for support for the sanctions, and then we have, we’re

granting waivers. I understand. I understand.

But if there are other countries that have been requesting waivers, I need to know that.

Mr. SCHWEICH. Yes, I’m being advised by one of my advisors that

there were numerous other countries that requested relief, but not

on the scale of Turkey and Jordan.

54

Mr. LYNCH. I’m not worried about scale. I’m worried about if it’s

a small hole in the sanction that we’re asking to be placed against

Iraq, it doesn’t matter the size. Let me ask you again, what other

countries asked for even small relief from the sanctions, and what

countries, no matter what size of relief, what other countries got

relief from the sanctions?

Mr. SCHWEICH. I don’t think any of them were actually officially

granted relief. What I’ll do, if it’s OK, Congressman, I’ll take it

under advisement and send you a letter with the exact names of

the countries. It was in 1991, early in the sanctions regime. I recall

reading that a number of countries asked for some kind of relief.

But these were on a very small scale compared to Turkey and Jordan.

I’d be happy to get back to you on that.

Mr. LYNCH. All right, and I understand you’re here for limited

purposes, for the Iraqi Oil-for-Food Program. However, in previous

hearings I’ve asked this question. We had a situation, and this was

several months ago I asked for the information and I understand

we’re just getting some response now. We had some Halliburton

employees who were involved with, I believe it was Kuwaiti businessmen who, there were some sizable bribes involved, and we recently were given names of those Halliburton employees. Am I getting this right? Yes.

Any information that you could provide?

Mr. SCHWEICH. Regretfully no, Congressman. I don’t know about

that.

Mr. LYNCH. I’m sorry?

Mr. SCHWEICH. No, I don’t know about that issue.

Mr. LYNCH. OK. All right, Mr. Chairman, I’m going to yield back.

Thank you.

Mr. SHAYS. I thank the gentleman.

I do want to go through a few more questions and take advantage of your expertise. I mean, you are, no one is questioning your

devotion to the U.N. and your devotion to our country and your responsibility in the U.N. We’re very grateful for your service there,

and we’re grateful that you would take time to come down to help

us understand the system. I don’t want you to leave before we have

gone through some of these questions.

You’ve explained why the United States accepted the trade protocol signed between Iraq and Jordan and Turkey. You’ve made it

clear that basically, Turkey and Jordan were saying that a huge

amount of their gross domestic product was trade with Iraq, and

now, we had these sanctions, and that they were asking the 661

Committee to address that; 661 wasn’t addressing it.

So first Jordan started to just buy oil and use that oil. But they

told the United Nations, that’s correct?

Mr. SCHWEICH. That’s correct.

Mr. SHAYS. And that eventually, the 661 Committee acknowledged that they had received the letter, acknowledged what Jordan

was doing and just said, keep us informed. And we have basically

the letters that you have provided us there. So we’re really, one of

them is Jordan first asking for Article 50 relief. That’s the first

thing they did. Then this is, and then a year later, they notified

that they were going to do that, and we are submitting that for the

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record. And then this is Turkey basically 5 years later notifying the

U.N. that they were engaged in trade with Iraq as well.

Mr. SCHWEICH. They were requesting the same relief, right.

Mr. SHAYS. Requesting the same relief. And in a sense, they received it.

Mr. SCHWEICH. There wasn’t actually a letter sent back, in the

case of Turkey, like there was with Jordan. But effectively, they

notified that it was occurring, yes.

Mr. SHAYS. But without rejection, we will put these letters into

the record, and I appreciate your having those letters.

[The information referred to follows:]

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Mr. SHAYS. Why didn’t the U.S. support similar trade protocols

with Syria?

Mr. SCHWEICH. Well, first of all, Syria never came to the Security

Council, Mr. Chairman, saying, we would like Article 50 relief and

here’s the impact on our economy. The reason they couldn’t do that

is they really didn’t have substantial oil trade with Iraq until they

started the protocol. So they didn’t have the same hardship case.

The second thing was Syria was actually sitting on the Security

Council, Mr. Chairman, and denied that they were even getting the

oil. They were confronted directly with the issue, ‘‘are you importing Iraqi oil,’’ and they said no, and we and other countries said,

we have evidence that pipeline is open and that you’re doing it.

They said, oh, no, no, we’re just testing it.

So contrary to what happened with Turkey and Jordan, where

they came hat in hand, asked for Article 50 relief and really did

it by the book, Syria just engaged in a massive fraud, denying the

entire time they were ever importing any of the oil.

Mr. SHAYS. Why did so many non-end users get passed those

overseeing the program to purchase Iraqi oil? In other words, so

many middlemen, how did that happen?

Mr. SCHWEICH. I think there was some laxness there, Mr. Chairman, in really investigating whether these people were middlemen

or end users. Everyone claimed to be an end user, but it turned out

that was quite wrong. And the oil overseers, I think the answer is,

just weren’t diligent enough in their investigation to make that determination.

Mr. SHAYS. Why didn’t the alleged participation of so many political and religious institutions prompt further investigation into

participants of the Oil-for-Food Program?

Mr. SCHWEICH. I don’t know the answer to that.

Mr. SHAYS. Do you know the answer of why didn’t the United

States or other 661 Committee members put holds on this over 70

contracts the U.N. informed the committee might be overpriced?

Mr. SCHWEICH. I don’t know about specific contracts. I know we

did put holds on some contracts because of pricing. But again, I

think as DCAA pointed out, it’s very, very tough to determine

whether a contract is overpriced just by looking at the paper.

Mr. SHAYS. I think you said you would get back to us on this

issue?

Mr. SCHWEICH. Yes, I will.

Mr. SHAYS. Thank you.

Just quickly going through these, were the internal and external

oversight mechanisms adequate for a program of this scope and duration?

Mr. SCHWEICH. No, there wasn’t, as I mentioned before, the

OIOS didn’t even audit the contracts, which is where most of the

fraud was. You can say the problem was in letting Saddam Hussein pick the contractors or in failing to insert, as you know, in

DOD contracts, they have audit clauses that go well into the private sector contracts down several levels and several tiers. We

think something like that should have been imposed if they were

going to allow Saddam Hussein to negotiate the contracts himself.

Mr. SHAYS. Why do sanctions committees act in secrecy?

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Mr. SCHWEICH. Well, there is some validity in the same way that

a lot of governmental and other organizations like to have candid

and open conversations, so they do want secrecy in some cases. We

do believe, though, I think, which might be the implication of your

question, Mr. Chairman, that there is too much of that with respect

to sanctions committees, and we are requesting that there be much

less of it, that minutes be made available and that more meetings

be open, with the understanding that there will be some circumstances in which candid discussion requires secrecy.

Mr. SHAYS. So in response to this question, should all 661 Committee minutes be made public, you would say most but not necessarily all?

Mr. SCHWEICH. I would say that the presumption should be in

favor of making them public.

Mr. SHAYS. Let me get to this last line of questioning. How

should we measure the effectiveness of the sanctions? In other

words, what benchmarks should we use?

Mr. SCHWEICH. I think the effectiveness of the sanctions should

be, did we get the actor against whom the sanctions were imposed

to comply with our demands. And in the case of the Oil-for-Food

Program, it was a mixed bag. Saddam Hussein did not comply with

weapons inspectors, but we did keep him from getting weapons of

mass destruction.

Mr. SHAYS. Is there any question my colleagues would like to ask

before we go to the next panel?

Again, Mr. Schweich, I want to thank you for being here. I want

to thank you for being prepared to answer the question that we

needed to ask. I want to thank you also for your answering the

questions directly and not giving us more detail than we needed.

I’d like to ask you, is there anything that we should have asked

that we didn’t ask that you need to put on the record?

Mr. SCHWEICH. I can’t think of anything right now, Mr. Chairman, but if I do come up with something, would it be OK to write

a letter to you about that?

Mr. SHAYS. Yes, that would be very helpful.

Mr. SCHWEICH. Thank you.

Mr. SHAYS. So we’re all set?

Mr. KUCINICH. I just want to thank you for your testimony?

Mr. SHAYS. Thank you. Thank you so much.

Our second panel consists of Dr. Paul Conlon, owner of

Transjuris e.K. in Munich, Germany, who was the former Deputy

Secretary of the U.N. Security Counsel Iraq Sanctions Committee;

Mr. Andrew Mack, the director of the Center for Human Security

at the University of British Columbia, who was the former Director

of Strategic Planning, Executive Office of the U.N. Secretary General Annan; and Dr. C. Joy Gordon, associate professor of philosophy, Fairfield University.

I thank all three, if you would remain standing, we’ll swear you

in and we’ll go from there.

[Witnesses sworn.]

Mr. SHAYS. Note for the record our witnesses have responded in

the affirmative. In the many, many years of doing this, we swear

in all our witnesses, and we thank you very much.

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We’ll start with you, Dr. Conlon, and we’ll do the same thing,

we’re going to do the 5-minutes and then roll it over another 5 minutes if you have points that you need to make. We’ll go to you, Mr.

Mack, and then to Dr. Gordon. Thank you all three for being here.

Let me make the point that your statement will be in the record.

If you decide to respond to testimony already given and adjust your

testimony orally, that’s perfectly OK.

Dr. Conlon.

STATEMENTS OF PAUL CONLON, OWNER, TRANSJURIS E.K.,

MUNICH, GERMANY, FORMER DEPUTY SECRETARY, U.N. SECURITY COUNCIL IRAQ SANCTIONS COMMITTEE; ANDREW

MACK, DIRECTOR, CENTER FOR HUMAN SECURITY, UNIVERSITY OF BRITISH COLUMBIA, FORMER DIRECTOR OF STRATEGIC PLANNING, EXECUTIVE OFFICE OF U.N. SECRETARY

GENERAL ANNAN; C. JOY GORDON, ASSOCIATE PROFESSOR

OF PHILOSOPHY, FAIRFIELD UNIVERSITY

STATEMENT OF PAUL CONLON

Dr. CONLON. Thank you, Mr. Chairman.

With the United Nations, we sometimes have a type of dichotomy

between two sets of functions it has, and two mentalities that go

with it. One of those is what we refer to as the humanitarian or

the soft activities that it engages in. These might revolve around

development, environmental protection, fighting against disease,

those are the things that make it akin to a type of huge international welfare department, with soft goals, that it is not easy to

determine if the goals had been obtained or not, and with soft

methods.

Normally the legislative, a lot of the legislative resolutions regarding these things are not binding, they are of an exhortatory

nature, not binding. That occupies about 98 percent of all those

people working for the United Nations.

Alongside of that, we have something else, which is more akin

to what a police department does, and that is this collective security enforcement function that resides with the Security Council. It

has a privilege of actually binding members, and even non-members, to do what it wants under certain circumstances in that regard. It has at its command an awful lot of options of a very unpleasant nature which it can use against recalcitrant governments,

even non-governments nowadays, that are threatening peace and

security or otherwise not complying with obligations of an important nature under the U.N. charter. Now, that employs about 2

percent of the United Nations Secretariat.

Under these circumstances, we have this dichotomy, the good

United Nations, the bad United Nations, and so forth. And what

happened in the case of the sanctions against all of the target

states of that period, not just Iraq, I should stress here, by the way,

that we’re talking about similar things happening in regard to the

sanctions against Yugoslavia, Libya, and Haiti, to some extent also

Angola, or against the rebel movement in Angola.

What it had at that time was a confusion of two things that grew

up basically over time. The original consensus in regard to sanctions against Iraq was extremely high for a very good reason. It

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had done something that was vitally threatening to most of the

members, with the exception of a very few. There was a great deal

of consensus and cooperation, greater than ever before or ever

since.

Now, after April 1991, the main goal of the original U.N. action

against Saddam Hussein’s regime having been achieved, the residual goals that emerged largely from Resolution 687, had much less

acceptance and things began to go awry. In addition, the target

state gradually gathered itself and began to assess its position and

think of ways in which it could respond to the challenge of being

under sanction.

At this point, confusion ensued, in that the committee which

originally had been created almost entirely with enforcement functions began to get involved in humanitarian mitigation functions.

And there is, in this matter, a tradeoff that has to be, in case of

any future sanctions regime as well, be truly looked at. The tougher the enforcements, the more you risk collateral damage to unintended targets, and that could include civilian populations. So

there is a need for some attempts to structure the sanctions so they

don’t have that effect, or to mitigate their functions.

However, the fact that these two things were essentially the domain of two distinct constituencies in the U.N. organization itself,

I’m talking now about the Secretariat to a certain extent, but also

the political constituency of states that are active in the various

bodies, they’re not the same ones. Because these things were mixed

up after about 1991 in this sanctions regime, and most others as

well, you started to have problems with the one activity working

against the other activity and the constituency engaged in the one

activity working against the constituency engaged in the other one.

Now, the sizes, the magnitudes that I initially spoke of being

very disproportionate to say the least, it’s clear that when this happened, enforcement is not going to be very successful, and mitigation, or at least interference with enforcement for humanitarian

mitigation purposes, is going to be very significant.

If one is looking for insights as to what has to be done in the

future under this basis, one of the things I suggested in my book,

to which I can refer almost whatever questions you ask, it is probably answered there already, I suggested that in the future, a

stronger Security Council, if it’s going to be a centerpiece or center

of collective security enforcement, should have greater independence from the general Secretariat of the United Nations, possibly

having its own secretariat and should be as independent as possible from the influence of the Secretary General.

This has gone into a statement I made, which I have given to another subcommittee. Two Secretary Generals, one the predecessor

of Boutros-Ghali, under whom I served most of these years, were

loyal to the Security Council. As from what I understand, Kofi

Annan also has been. But Boutros Boutros-Ghali eventually came

into conflict with the Security Council, and the constituency of

states that were playing a dominant role there at the time, that’s

the P3, and it includes the United States. And he eventually began

to do what he could do to sabotage sanctions enforcement against

Iraq, against Yugoslavia as well, by the way.

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What he could do was, his leeway for doing this is narrow. He

is basically a servant of the Security Council, and can’t do that

very much. But he was able to do something, and he did that. So

we had the problem that you had a U.N. system of outlying agencies which had goals that were more or less at variance with the

goals of the Security Council. They occasionally did what they

could to sabotage, but on other issues they did cooperate with us

as well.

And you had then, at least from about 1993 or so forward, 1993

forward, let us say, a Secretary General that was becoming increasingly uncooperative with sanctions, particularly against Iraq. This

is one of the reasons why things began to go awry.

At the same time, the target states, the original target state,

Iraq and later other target states, particularly central Yugoslavia,

which was, the state of Yugoslavia that was left, adopted certain

tactics using humanitarian mitigation arguments and mechanisms

to strengthen their position under sanctions. These have not been

entirely analyzed afterwards, and are not entirely known.

But they did involve what the representative from the State Department has referred to as swamping the committee that began

very early, began in our case around, I would say, by the end of

1991, swamping the committee with requests for humanitarian

mitigation which in my book I refer to as waiver actions or waiver

clearance actions. Most of these were not used. In the case of my

committee, it was 10 percent that were used, and in the case of the

Yugoslavia committee it was 2 percent.

So you had a body which operates in many ways in a manner

similar to a regulatory agency or regulatory body in a national government, granting humanitarian waiver clearances 90 to 98 percent of which were never utilized. It was also unclear where the

money was coming from or should have been coming from to finance all of this pseudo-trade that the clearances referred to.

This, it assumed after the fact that much of this had to do with

unfreezing frozen assets. In the case of Iraq, I in later years also

suspect that the family of the dictator, which at that time was one

of the world’s richest families, had the problem that its assets had

to be kept relatively hidden and that moving assets out of the hidden sphere into the open market was a dangerous act, because that

could tip off, Iraq’s claimants were numerous by this time, as to

where the rest was hidden, and that some of this activity may have

been related to money laundering in that sense, ways of getting the

money out of the hidden sources into the open market.

But that explanation would not be that valid for Yugoslavia,

which was doing the same thing to an even greater extent as far

as volume was concerned.

These things, by the way, were all vastly enhanced by the lack

of transparency with which the committee operated. That was also

one of the points on which I directed a good deal of criticism and

analysis in internal memoranda, I think many of which have now

been photocopied out of the archive at the University of Iowa and

been given to the subcommittee.

So a lack of transparency was responsible for this and was responsible for many of the other problems we had, some of which

had to do with the fact that even our own internal recording, regVerDate 11-MAY-2000 11:17 Aug 16, 2005 Jkt 000000 PO 00000 Frm 00080 Fmt 6633 Sfmt 6633 D:\DOCS\22686.TXT HGOVREF1 PsN: HGOVREF1
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istration of what we were doing was very primitive and lacking, because we had no obligations of accountability to the outside.

Since we didn’t have to explain to anyone what we were doing,

we ultimately did not bother to keep very good track of it ourselves.

The book gives examples of all sorts of things that happened as a

result of this poor management, which is, by the way, management

of the committee with its decisionmakers who were not staff members but delegates of their countries.

[The prepared statement of Dr. Conlon follows:]

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Mr. SHAYS. Thank you very much.

Mr. Mack.

STATEMENT OF ANDREW MACK

Mr. MACK. Thank you very much, Mr. Chairman and members

of the subcommittee, for this opportunity.

I should say that I’m coming here today not as an expert in any

sense on Oil-for-Food. I was the Secretary General’s director of

strategic planning for 3 years, and if anybody spent much time in

and around the United Nations, you know that strategic planning

is in some sense an oxymoron in the U.N. It’s very, very difficult

to have strategic planning when you have a board of directors

which is the General Assembly with 190 plus members.

Mr. SHAYS. So is your board of directors the entire Assembly or

is it the Security Council?

Mr. MACK. The General Assembly deals with budgets, and that

is absolutely critical in the U.N. The General Assembly doesn’t

have the same sorts of powers that the Council does. But that particular power is an incredibly important one, when it comes to U.N.

reform. If you ask the question, why is it the U.N. has nearly twice

as many people dealing with public information as is the case, as

working in the Department of Political Affairs and peacekeeping

operations, in a sense the Defense Ministry and the Foreign Ministry, the answer is the General Assembly, the fifth committee.

That’s why it’s so difficult, as somebody said before, for the Secretary General to in fact implement reforms in the U.N. You have

to be able to persuade this large, factious body that something is

in their interests as well as the interests of the Secretariat.

Mr. SHAYS. Very interesting, thank you.

Mr. MACK. So Mr. Chairman, I simply want to say that I’m here

really speaking as an academic and somebody who has an interest

both in the U.N. and in sanctions regimes in their general efficacy.

I think I’m going to speak to the second part of the agenda today,

which is one of the implications of Iraq sanctions for the future.

First of all, it seems to me that it is quite clearly the case that we

are never, ever going to have another sanctions regime like that

imposed on Iraq. Comprehensive sanctions are out as far as the

U.N. is concerned.

And there are several reasons for this. First, you are never going

to persuade the French, the Russians and the Chinese to go along

with another resolution like 661. Second, the humanitarian side of

the house would be up in arms, and I think that the point made

earlier, that there is a fundamental tension in the institution between the humanitarian side of the house and the security side of

the house is a very important one. That tension runs right throughout the Secretariat. It’s not just a case that it’s for the Secretariat

versus the Council.

So what we’re going to see, I think, in future, is that the U.N.

is only going to be imposing so-called smart or targeted sanctions,

and the idea behind smart and targeted sanctions, they focus on

leaders and not on peoples.

The second question I think we need to ask, if you look into the

future, is how successful have sanctions been in the past and what

is it we need to do to make them more successful in the future. If

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you ask the question, how successful have sanctions been in the

past, the answer is not very. The classic study was done by the

International Institute of Economics some years ago, with a followup study. They found that about 25 percent of sanctions regimes

were ‘‘partially successful.’’ What that in fact means is, what success means is something which varies according to whom you

speak.

A more recent Canadian study found only 14 percent of sanctions

regimes have been successful, and that 85 percent of those were directed against democracies. What that suggests is that the probability of economic sanctions regimes being successful against nondemocracies is in fact extremely low.

Now, in a sense, many of those sanctions regimes that have been

studied were unilateral sanctions regimes. And in principle, multilateral sanctions regimes ought to be more successful. And studies

by George Lopez and David Cortright have written I think now

three books on U.N. sanctions. They figured about a third of U.N.

sanctions regimes succeed.

Now, this isn’t very good, but it’s actually quite a bit better than

the track record for coercive diplomacy more generally. A recent

study by the U.S. Institute of Peace found only 25 percent of exercises of coercive diplomacy have been successful.

So why is it that two-thirds of U.N. sanctions regimes fail? First

I think they fail because trying to impose sanctions regimes on authoritarian states fails because there’s a fundamental flaw in sanctions theory. What sanctions theory says essentially is that if you

impose economic pain on a population, the population will bring

pressure to bear on their leaders to change the policies that led to

the institution of the pain in the first place.

Now, the problem with that, as far as an authoritarian regime

is concerned, is that the people that feel the pain have no power,

and the people that have the power feel no pain. Plus, and this has

been very well documented in the case of Iraq, but also in the case

of Haiti and other places, once you impose comprehensive sanctions, one of the very first things that begins to happen economically in the targeted country is that you create a black market. And

in Iraq and elsewhere, it’s been the regime that has controlled the

black markets, so you have an extraordinary situation where members of the regime whose behavior you’re trying to change through

sanctions actually have a perverse interest in the continuation of

sanctions.

And third, comprehensive sanctions cannot only enrich regime

members, they can actually enhance the control that the regime

has over its own population. We saw that very, very clearly in the

case of Oil-for-Food, where the regime to a large degree controlled

the flow of food and medicines to various sectors of the Iraqi community, and that gave it of course political leverage.

But we should also point out that many U.N. sanctions have

failed, not because of anything that’s in any inherent flaw in sanctions per se, but because the Security Council made little or no attempt to enforce them. If you’re looking at the sanctions that were

placed on Africa, for example, the sanctions committee rarely met

and they accomplished very little when they did meet, and the

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United States, by the way, was just as complicit in doing nothing

there as anyone else.

Many of these sanctions regimes were imposed because the

Council wanted to be seen as doing something, but didn’t want, for

example, to get into the business of military intervention. And ironically, the Iraq sanctions were monitored far more closely than any

other sanctions regime in the U.N.’s history.

But I think it’s fair to say that the overriding concern of both the

United States and the United Kingdom here was strategic; that is

to say, it was about controlling the potential dual use items and

not so much checking for scans. Plus the fact that you have within

the Secretariat, there was no professional expertise available to

help the sanctions committees do their job more effectively. Numerous reports have called for greater expertise on behalf of the Secretariat there, and no cases of funding being available to provide

that expertise.

You see that very, very occasionally, as you saw for example, in

the case of Angola. You had the expert panels that were set up,

and there for the very first time you actually had people with real

expertise. And the reports that came out of sanctions busting in

Angola and Sierra Leone, the whole blood diamonds issue there,

there for the first time you could see what a huge difference it

makes if you can have people with really good expertise.

But the funding for that was provided independently by Member

States who did not come from the General Assembly. And of course

part of the problem with the Assembly now is that the Assembly

has been so, there is so much animus in the Assembly because of

perceived humanitarian costs of sanctions. There is a great deal of

unwillingness to do anything that is going to help implement sanctions more effectively.

But I think it’s quite important, and I think this was one of the

points made by the State Department representative, the sanctions

do more, they’re about more than simply bringing countries into

compliance with U.N. resolutions. Sanctions are also about stigmatizing a country. This is an important function. Sanctions are

most importantly about containment.

And I think it’s reasonable to say that as far as the U.N. sanctions on Iraq were concerned, notwithstanding the fact there was

a large amount of leakage. They prevented Saddam from rearming.

Had there not been a sanctions regime in place, Saddam could

have replaced $40 billion, $50 billion, $60 billion, $80 billion worth

of material. He could have brought in modern tanks, he could have

brought in modern strike aircraft and so forth. He did not. He

didn’t do that and couldn’t do that.

And third, sanctions can be used to build support for the use of

force by showing that all military alternatives have been exhausted, have been tried and failed.

And finally, and I think this is one of the reasons why sanctions

have been imposed so frequently, they can respond to the political

imperative that the Council feels to be seen to be doing something

when they don’t want to do anything more than sanctions.

So finally, I just want to say a few words about smart sanctions.

Smart sanctions, like smart weapons, are supposed to be precision

targeted. They are intended to reduce collateral damage. They are

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designed to coerce regimes, without imposing major harm on citizens. As we have heard this morning, that can include a whole

range of things, freezing of overseas financial assets, specific trade

embargoes on arms, on luxury goods, flight and travel bans, political sanctions designed to stigmatize the target regime, denial of

travel and so on and so forth.

The point I think about smart sanctions, this is the way forward

for the United Nations, they are morally appropriate when directed

against authoritarian states. It’s the regime that feels whatever

pain there is, not the people. They minimize humanitarian costs,

which isn’t only desirable in itself, but it prevents the regime, as

Iraq did very effectively, from using the pain inflicted on its citizens as a way of generating support, even though it was Saddam

Hussein that was fundamentally responsible for the pain in the

first place.

And minimizing, they also reduce incentives for sanction busting,

which means that Article 50 doesn’t have to be invoked, although

when it is invoked, nothing normally happens, so you wouldn’t

have to have the same exclusions that you needed to have for Jordan and Turkey. And they reduce opportunities for regimes of profit from black marketeering.

But I think we should be very, very clear that smart sanctions

are not a very powerful weapon. They should be seen as one tool

and one tool only in the tool kit that policymakers have. They are

something I think nearly everybody who studied sanctions, everybody who knows the U.N. says sanctions are an important tool,

they are something that lie between simply verbal condemnation,

exhortation on the one hand and military intervention on the other.

What is very, very clear is that the sanctions regimes are in need

of major reform, of much more resources. But it would be very foolish to throw out the baby with the bathwater.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Mack follows:]

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Mr. SHAYS. Thank you, Mr. Mack.

Dr. Gordon, I was just questioning your invitation, given that my

counsel graduated from Fairfield University. But he did point out

that you have written ‘‘A Peaceful, Silent Deadly Remedy: The Ethics of Economic Sanctions,’’ and that’s why you were invited. I

thought it might be because of your graduating from Brandeis, Boston University, Yale University and then getting a doctorate from

Yale University.

Welcome.

STATEMENT OF C. JOY GORDON

Dr. GORDON. It’s a pleasure to be here. I do want to say that regretfully I am actually not one of your constituents, Congressman.

Mr. SHAYS. Oh, you’re not?

Dr. GORDON. My university is, but I live in New Haven. So my

representative is Rosa DeLauro. I hope that despite that, you won’t

actually retract my invitation.

Mr. SHAYS. No, no. It’s nice to have you here.

Dr. GORDON. My field is political philosophy and law. I have been

doing research on economic sanctions for about 7 years. Over the

last 5 years, I have published articles on the economic sanctions in

a variety of venues: The Yale Journal of Human Rights Law; Ethics and International Affairs; Mideast Report; Limone

Diplomatique; Harper’s Magazine. I am currently completing a

book on the topic for Harvard University Press.

I’d like to address the things that I think specifically have not

gotten explored by the series of congressional hearings that have

happened to date. I am excluding today, because I think today’s

hearings really is going into issues that we are just starting to see

the significance of. I think it’s an important contribution of this

subcommittee to be doing that.

I’d like to look at issues of transparency and oversight in a somewhat different way than they have been framed to date, and the

U.S. role in a somewhat different way. Then, because the consensus decisionmaking rules come up a number of times, I’d like to

look at that specifically.

In terms of transparency and oversight, Dr. Conlon has described

how the 661 Committee operated. That was true throughout its

history, the meetings were closed and the minutes were restricted.

I think it’s important to understand that the OIP and Oil-for-Food

Program did not operate in the same way. That was an entirely

separate system. The 661 Committee was granting waivers under

a different system to Iraq. And the Oil-for-Food Program, once it

started, had an entirely different system with an entirely different

structure of oversight.

So what’s true of the Oil-for-Food Program that was not true of

the 661 in its waiver system is the following, so that there were,

by my count, seven levels of oversight and monitoring with Oil-forFood not found in the waiver system. I’ll just go through them

briefly.

One is the distribution plan. Before Iraq could begin to negotiate

any contract, it had to submit a distribution plan identifying literally every single item, how it would be used, where it would be

used. All the U.N. agencies went over those and determined if they

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were appropriate humanitarian goods. Sometimes they required it

to be modified before that would be approved.

So that was certainly not true of the 661 process. And in terms

of transparency, the distribution plans are and have always been

posted on the Web site. They are enormous, anyone can read them,

you can see the rationale and so forth.

Second level is the OIP review, the OIP staff then look at the

contract, see if it conforms to a distribution plan, and essentially

is the information collecting body, the processing body. They don’t

make policy. The Oil-for-Food staff do not make policy. The 661

Committee and the Security Council make policy.

So what information had to be provided, for example, or whether

a contract should be approved, that was never in the hands of OIP.

Everyone is familiar with OIP, it is the agency within the U.N.

that was created to house Oil-for-Food plus the U.N.’s other Iraq

programs. But what OIP then did do was to confirm that every contract conformed with the distribution list.

Then we have a review by UNSCOM and then later UNMOVIC

to see if there were things that were on the 1051 list or were objectionable for some other reason. The 661 Committee then reviewed

or had access to every single contract. Every member had access

to every single contract. There was a point part-way through, I

think it was Security Council resolution 1409, that created a green

list, and that certain items were uncontroversial, then bypassed the

committee. Although even then, there was a way that if there were

improprieties, they arrived at the committee.

But keep in mind that it’s been mentioned that the United States

had 60 staff, and that’s from a prior hearing, examining every aspect of every contract. It’s true that other than the United States

and the U.K., other countries gave a fairly cursory review. The

United States and U.K. gave very thorough ones, and on the basis

of that, the United States in particular, had a very, very free hand

in blocking contracts. And that’s important to understand.

There was not a consensus that was needed to block contracts.

The consensus cuts the other direction. The way the consensus rule

works is, if everyone doesn’t agree to the contract, it’s blocked. So

that was how it was that the United States unilaterally, using the

consensus rule, was able to block massive, massive quantities of

goods that increased over the course of time. It was $150 million

worth of contracts that were on hold in November 1998. By July

2002, it was $5 billion on hold by the United States and the United

States alone. The U.K. sometimes blocked things. Typically 3 to 5

percent of the holds were the U.K. All the rest were the United

States and the United States alone.

So it’s simply not correct to say the United States was prevented

from exercising its will or exercising its oversight in preventing

problematic contracts from getting through. There was no such

structure that prevented it. The process absolutely cut in the opposite direction.

The next level of oversight is that all the funds in the program

by the structure went through the escrow account. No funds by the

structure of the program were ever in the hands of the Iraqi government. All proceeds from oil——

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Mr. SHAYS. Can I just ask a question here? I apologize to my colleague, but this is kind of like basic. If I don’t get beyond this

point, whatever you say afterwards I’ll still be wrestling with.

I thought the testimony before this subcommittee was that one

member didn’t have veto power. You’re saying with the Oil-for-Food

Program that it was unanimous consent and if one country objected

it didn’t move forward?

Dr. GORDON. That’s correct. Every member had veto power.

Every member had veto power over everything. Over any procedural decision, over who would be invited to speak to the committee, over whether a letter would be written, over every single contract. Every member had veto power.

Mr. SHAYS. Do you both agree with that, Mr. Mack or Dr.

Conlon?

Dr. CONLON. That is one way of explaining it. In the Council

itself, there are five members that have a veto. In the subsidiary

organs of this type, the committees, there are all members, 15

members, that have similar——

Mr. SHAYS. So the difference, I said earlier that in effect the 661

Committee was the same committee as the Security Council. But

just like in our House, when we go from the full House in the

chamber to the committee of the whole, we play by different rules.

And the different rules with the 661 Committee was that now everybody had veto power, in effect.

Dr. GORDON. What may be confusing you is that Mr. Schweich

framed it somewhat differently. He said, I think he said it wasn’t

a veto power, it was the withholding of consent or something like

that.

Mr. SHAYS. I didn’t pick up the subtlety. I appreciate that.

Dr. GORDON. I don’t see a distinction in practice at all.

Mr. SHAYS. No, there isn’t. And I mean, in essence it’s unanimous consent. It’s if one member objects on a bill that we bring

under suspension to say, not having a unanimous consent that

passes, one member stands out, then we’re going to have a vote.

Dr. GORDON. That’s right.

Mr. SHAYS. I thank the gentleman.

Dr. GORDON. So then there was the escrow account, so by the

structure, by the design of the program, in fact, no money ever

went into the hands of the Iraqi government. And that was true

even though the Iraqi government, to run the country, in fact needed a certain amount of cash simply to run the country, because

there was no generation of cash. Huge fights over the issue of a

cash component, and that never took place. So Iraq was allowed to

sell oil to buy goods, but not, for example, to hire consultants or

to hire labor.

But in any case, that was a very, very strict position, no cash

under the program, even with high supervision, was ever formally

permitted to go into the hands of the Iraqi government.

The next level were the onsite inspectors. You’ve heard about

Cotecna and Lloyd’s Register. Their job was to be at the ports and

as the goods arrived, to confirm that these were the goods and confirm that they conformed to the quantity of the contract. It was

only an inspection for purposes of releasing payment to the contractor.

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Then the last level was the entire U.N. humanitarian staff. So

there were the nine agencies, I think it was the nine agencies in

the south center. They made thousands, thousands of site visits

and spot checks of food distribution points, of health supplies, were

the health supplies being distributed in the rural communities. So

their job was to ensure, the criteria were equity, efficiency and adequacy of the program.

So that entire structure was not present in, I think it’s correct

to say, any form, I’d have to check, but I believe any form with the

661 process. And by the way, under the Coalition Provisional Authority, under Security Council resolution 1483, all of these measures that were in place to try to ensure that the human needs were

served, that the money was handled properly, every one of these

is eliminated under the Coalition Authority. The oil overseers are

eliminated, the humanitarian monitors are pulled, just one by one,

all gone.

I think we can’t be too surprised that if you are concerned about

how much corruption happened when there were seven levels of

oversight, you can’t be too surprised to see what would happen

when those levels are absent.

Let me mention in terms of transparency what kinds of things

were not only available to every member of the Security Council

and every member of the United Nations, but everyone in the

world with access to the Internet. And that was every page of every

distribution plan. Actually I think they only currently post distribution plans 5 through 13. So you would be limited and not be

able to see distribution plans 1 through 4.

The 90 day reports, very detailed reports on every sector of the

Iraqi economy, all the problems, all the successes with every category of goods that were being imported, all the problems, all the

successes in terms of the oil liftings. Weekly updates then, a certain batch of liftings were stopped or a certain batch of goods were

on hold, then the weekly updates provide that. There were charts

showing the status by category of the processing of every contract

in every sector.

I can tell you that reading all of these documents is probably

more than most human beings want to do. When I hear these references to how little transparency and how secretive and mysterious it was, I can tell you I would have spent a lot fewer hours reading things if it were a little more secretive and mysterious. But as

it is, I spent a lot of hours on this.

Mr. SHAYS. We will definitely want to pursue that issue. Can you

kind of close up?

Dr. GORDON. OK. In terms of the U.S. role, I think it’s common

to hear now this notion that the United States was stymied as it

tried to achieve compliance, and particularly that France and Russia were blocking these attempts. Again, the consensus rule cuts

the other direction, that the United States was not stymied in ever

exercising its decision to block goods.

Mr. SHAYS. You could say no, but you couldn’t get a yes.

Dr. GORDON. Say it again, please?

Mr. SHAYS. You could say no and have power, but you could

never get a yes.

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Dr. GORDON. That’s right. Anyone could deny a contract. It required everyone’s agreement to approve a contract.

If on every occasion, when the United States had any suspicion

about a contract, it did not need to get the approval of any other

members to investigate that. It could have simply said no. Simply

said no for any reason or no reason, as it did on depending on

which point in time you’re talking about, but at $1.5 billion of contracts on hold.

I was interested to hear Mr. Schweich say he thinks there are

some instances where contracts were blocked by the United States

for reasons of improprieties and not for security. I would be most

interested in hearing what those are. Everyone I have talked to, no

one can recall a single instance where that was done.

By contrast, there were more than 70 occasions on which OIP

staff went to the committee and said, here’s a contract where there

is a clear pricing irregularity that’s suspicious, do you want to

block it for that reason. And on none of those occasions did any

member, including the United States, choose to block it.

So I think the reality is, the United States was singularly preoccupied with security concerns. There was little interest in stopping illicit funds. And on the occasions where the United States

had the opportunity to do so, it did not. I do think that the U.N.

staff did a good job. Their job was to provide the information to the

members, and it was the job of the members to block or to approve

a contract. They provided the information, where there were signs

of kickbacks. They provided the information where there were oil

surcharges.

And I think I would actually like to, if I could, raise one issue

that Mr. Schweich said that you were interested in, Congressman,

where he was talking about how Turkey came to the committee

and asked for Article 50 relief and that it was blocked because of

the consensus rule. I’m somewhat familiar with that because of the

number of people I have interviewed and the documents I have

read. My recollection is that on all of those occasions, it was the

United States that blocked Turkey’s appeal for Article 50 relief. So

that might be something you might care to look into.

[The prepared statement of Dr. Gordon follows:]

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Mr. SHAYS. Thank you very much.

You all are wonderful witnesses. This is a little more academic,

it’s not the kind of thing where we’re making news here, but I’m

learning a lot and I appreciate it tremendously.

Mr. Lynch, you have the floor.

Mr. LYNCH. Thank you.

Dr. Conlon, you described a situation where you felt that in some

cases, with most sanctions, if that humanitarian aspect of the situation is not addressed that there is a wearing away or a gradual

deterioration of the sanction itself through various other channels.

It doesn’t appear, based on what I’ve heard, that the Iraq situation

fits that mold. This doesn’t seem like a gradual deterioration or a

wearing away or an undermining of the sanctions. This in my opinion appears to be a total and sudden collapse, almost a looting that

occurred.

And I’m wondering, in your opinion, was it a situation where this

was bigger than anything that the U.N. had been asked to do previously in terms of the complexity of this and the staff that would

have been required or as it was there, just a total disconnect as Dr.

Gordon has suggested, between what the 661 Committee is doing

and what the Oil-for-Food staff and the folks at the U.N. there are

doing.

Dr. CONLON. I’m not sure what timeframe your question refers

to. I was there until a point in 1995, which is before the Oil-forFood Program went into effect. And I’m not quite sure what I said,

whether you understood it, what was being eroded was sympathy

support and willingness to cooperate with sanctions over the years

as time went on. That refers to what governments and delegates

in the United Nations were willing to do to accept or to promote.

Mr. LYNCH. But looking at this situation——

Dr. CONLON. With the Oil-for-Food?

Mr. LYNCH. Yes.

Dr. CONLON. I was not involved in that, so I don’t want to be too

authoritative. But even at that point in time, the ultimate authority rested with the 661 Committee as a subsidiary organ of the

Council or with the Council. With the passage of time, and because

there were introduced a number of improvements in regard to

transparency. But the committee itself was at no time, even up to

the end, transparent in its practices.

Mr. LYNCH. I realize the difficulty in what I am trying to get you

to answer. Perhaps I should wait for Mr. Volcker’s report in July.

I’m just trying to get some help on that.

Dr. Gordon, your testimony is troubling in the sense that it

seems that organizationally, at least what you’ve described that

there are people doing what they are supposed to be doing, and

there is transparency, and there seems to be some order, and yet

we have these massive problems. Is it the disconnect between, and

you sort of imply that there’s a whole framework set up, and seven

levels of oversight in one framework and one organization and then

there seems to be a disconnect between what the 661 Committee

is doing?

Dr. GORDON. Well, when you talk about massive problems, the

ones that we know of is really the smuggling. The smuggling has

nothing to do with the Oil-for-Food Program. Smuggling happened

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in the beginning of the 1990’s, with Jordan starting in 1990. It

happened prior to Oil-for-Food, it happened outside Oil-for-Food. It

was just a separate thing. Oil-for-Food was then involved in smuggling interdiction. The two sources of smuggling, overland and maritime, we’ve heard a lot about the overland smuggling, Turkey-Jordan, Syria-Egypt.

If you want to know who was responsible for the maritime smuggling, there was something called a multinational interception

force. It was created by, I think, Security Council Resolution 665.

It essentially invited Member States, if they had naval forces in the

area, to interdict smuggling if they chose to. That gave rise to the

MIF.

So we have this notion that the U.N. let all of these vessels illegally smuggle oil in and out, right? The MIF consisted almost in

its entirety, at every point in time, of the U.S. Fifth Fleet. The

United States is under command, at every point in time, of someone from the Fifth Fleet. The British generally provided the deputy

commander, they provided a relatively small number of ships. So

as of 2000, I think the United States had 90 vessels, the British

had 4. A handful of other countries contributed one or two vessels

for a couple of months.

But essentially, one of the things we see that we’re blaming ‘‘the

U.N.’’ for is these massive problems, and you’re right to say it, this

is our view, there are these massive problems and the U.N. did

nothing. But if in fact, we look at who allowed what to happen, the

smuggling was not under the auspices of the Oil-for-Food Program.

It was subject to enforcement only by Member States at their will,

and it turns out to have been the U.S. Navy.

I’m not saying the U.S. Navy did a poor job, there’s no sign of

that. But if you want to say on whose watch did the maritime

smuggling take place, the answer is the U.S. Fifth Fleet.

Mr. LYNCH. If I accept your testimony as true, what you are telling me today and what I’ve heard everything you say, there is no

blame with the United Nations, this is the U.S. Navy’s problem?

Dr. GORDON. For the MIF?

Mr. LYNCH. For basically everything. If the U.N. folks did nothing wrong, did nothing wrong, did everything they were supposed

to do, and that’s basically what your testimony is here this morning, they did nothing wrong, they did nothing wrong, they did exactly what they were supposed to do, and all this corruption and

everything else, there’s just no blame there for anybody within the

U.N. I find that hard to believe, I’ve got to tell you. I find that really hard to believe, based on all the other testimony we’ve heard

from other people, including people within Iraq that are very upset

about how resources that should have been reserved for that population are now gone and unaccounted for.

Dr. GORDON. With all due respect, sir, I did not say that no one

in the U.N. or the Secretariat did nothing wrong.

Mr. LYNCH. I must have missed it, because I didn’t hear it at all.

Dr. GORDON. What I did say, and what I want to reiterate is, it

is not accurate to say that there was no oversight or monitoring.

There were multiple levels of oversight and monitoring.

Second, the fundamental flaws in the program, having to do with

the basic decisions for how it was structured, the decisions were

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made at the level of the Security Council. Implementation happened at the level of the Secretariat. The crucial decision to allow

Iraq to choose its trading partners was not a failure of the part of

Secretariat staff, it was a decision made by the Security Council,

of which we are a member. We supported that decision.

Mr. LYNCH. Why did Russia and France go along with the 661

Committee structure in the first place? Can you answer that?

Dr. GORDON. What do you mean, go along with the structure?

Mr. LYNCH. Well, there was a vote to basically endorse this

whole framework.

Dr. GORDON. The Oil-for-Food Program?

Mr. LYNCH. Yes.

Dr. GORDON. So you’re saying why did France and Russia support Security Council Resolution 986? Is that your question?

Mr. LYNCH. Well, there was a framework that the Security Council approved regarding Oil-for-Food and the way this would be handled. And yet the implication here is that somehow there was a disconnect during all of this that while the U.N. did nothing wrong,

there seemed to be abuses and you can call it smuggling or whatever characteristic you want to place upon it, there seems to be an

unwillingness of some who had the power not to use it.

Dr. GORDON. I’m afraid I am completely confused. Can you tell

me concretely if there is an instance where you’re saying—what are

you asking exactly? Why France and Russia did not use their

power? Why they objected to the United States using it?

Mr. LYNCH. Well, it just seems that if it was a failing on our part

because we were so obsessed with the security situation, from the

U.S. standpoint, if that was part of our failing, why then, why then

would that affect France and Russia, who had no concern with the

security situation? What was their reason for not paying attention?

Does that explain it better?

Dr. GORDON. I think I’m starting to understand it. There was a

fundamental tension, which I’m sure you’re completely familiar

with, between the United States and U.K. on the one hand and

France and Russia explicitly on the other, and China somewhat

more quietly. The basic way the tension played out over the course

of the sanctions regime was partly about security issues but heavily about humanitarian issues.

So in fact, the issue that was most controversial, that there were

the most vigorous fights about, were how to limit the humanitarian

goods and what the circumstances for that would be. And there

were tremendous opposition on those from the very beginning, everything from, well, in the first resolution, the only thing that Iraq

was allowed to import was medicine and food ‘‘in humanitarian circumstances.’’ Dr. Conlon writes about this in his book.

Then the next thing that happens, of course, is a dispute: what

does ‘‘in humanitarian circumstances’’ mean. When does this mean

Iraq is permitted to import food? So you have a country that is very

heavily import-dependent on its food prior to the war, whatever agricultural capacity it has has really been compromised by the Persian Gulf war. When will it be allowed to start importing food, is

the question. Huge fight over that.

The U.S. position, correct me if I’m wrong, Dr. Conlon, was in

humanitarian circumstances means essentially once something

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close to famine sets in will be the point at which Iraq will be permitted to start importing food. The position of, I think it was

Yemen and Cuba, was if a single child at night goes to bed hungry,

that is when Iraq will be allowed to import food.

That’s the kind of issue you see a thousand times. As well as on

security issues, real concerns about the tenuousness of the U.S.

claims.

So in the early days, there was a point where the United States

blocked, I think it was glue for textbooks. You see other countries

saying, what is your reason for blocking the glue for textbooks. And

the United States doesn’t give one and the issue is raised again

and again. And finally, as I recall, the U.S. delegate says, it’s because we care about the horses, a reference to the old adage about

horses going to the glue factory, something which doesn’t seem like

a plausible justification.

An analyst from DOD, I was told, came to a 661 Committee

meeting——

Mr. LYNCH. If you don’t mind me saying it, we’ve run far afield

from the question that I originally asked. Far afield.

Let me just ask, and I’ll leave it at this, there are media allegations that France, Russia and China aided in a way Saddam’s evasion of sanctions in order to gain advantage on lucrative contracts

for Iraqi crude oil. That’s the perception that’s been put out there

in the press. Do you agree with that perception?

Dr. GORDON. That France and Russia aided Iraq’s evasion? I

don’t know what was going on in secret. I do know in terms of the

Oil-for-Food structure, it’s certainly the case that France and Russia opposed the United States on what kinds of goods were allowed

into Iraq. Typically the United States would be, and sometimes the

U.K., but the United States would be opposed or would define dualuse goods that it would block as anything relating to infrastructure. France and Russia generally opposed that on the grounds

that infrastructure was necessary for the functioning of the economy.

If you also want to say that the goods that finally arrived in Iraq

supported the regime, I think if there are absolutely nothing that

came to the—the question is, as Mr. Mack was saying, do you want

to take the position that, if the situation is horrendous enough,

people out of sheer desperation will overthrow the regime, then I

guess you could say indirectly, the program, the whole Oil-for-Food

Program and the goods arriving made it possible for the regime to

stay in power. I’m not sure of that, but I don’t really know how to

answer that.

Mr. LYNCH. OK, thank you.

Mr. SHAYS. I’d like to ask some general questions first, and I

thank the gentleman. I’d like to be clear, because at the end it was

mostly Dr. Gordon responding to questions. All three of you have

written about the Oil-for-Food Program, is that correct, on the

sanctions?

Mr. MACK. No. Sanctions I’ve written on, but not Oil-for-Food

Program.

Mr. SHAYS. Oh, you’ve written about sanctions in general, and

you have written about——

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Dr. CONLON. I wrote about the management of sanctions up

through 1995, which was prior to the Oil-for-Food Program.

Mr. SHAYS. OK. But all of you are truly experts on the issue of

sanctions. I’d like to just be clear where the lines of demarcation

are, whether there is agreement here. You’ve heard the previous

panelists, you’ve heard your fellow panelists here make statements.

I’d like to know, Dr. Conlon, where you if at all disagree that anything that has been said from that desk today by another panelist.

I’m not looking for this debate as much as understanding your perspectives of where you’re coming from. So are there things that

have been said today by other panelists that you disagree with?

Dr. CONLON. Yes, and that also include the representative of the

State Department and his description——

Mr. SHAYS. Yes, right, the previous panelists also.

Dr. CONLON. His description of the decision taken in 1991 to

allow or at least acquiesce in Jordanian imports of oil. I don’t agree

that smart sanctions will, first of all, this is a very undeveloped

field, but I don’t agree that it will bring any change, because in

many ways the Oil-for-Food Program was an exercise in smart

sanctions. It was supposed to affect the regime, keep the regime

under pressure of sanctions but allow the civilian population to get

what it needed in the area of vital goods. And in that sense, it

failed.

Also in our other sanctions endeavors up to 1995, as long as I

was there, control of financial flows was the big weakness in what

we were doing. We were able to control and inhibit flows of goods

to some extent. We had no control whatsoever over financial flows.

That is essentially what one of the main points behind smart sanctions is supposed to control the elite’s finances.

So in that sense, I don’t expect anything from smart sanctions.

But I do agree with my neighbor here to the extent that there will

be no more major sanctions exercises in the Security Council in the

area of the Security Council’s responsibility against major targets

or serious targets.

Mr. SHAYS. These are significant, if true, this is quite significant.

Because I mean, if you’re right, I know you’re speaking what you

believe to be true. But if you’re right, I view sanctions as a step

that enables you not to go to war. And if you’re saying that instrument is not, and Mr. Mack, you started it by saying, the era of

comprehensive sanctions has ended.

My recollection of our sanctions against South Africa were that

they ultimately achieved their objective. I think it was not only

what came in and came out, but South Africans weren’t able to

travel. They couldn’t come to the United States, they couldn’t go to

some places in Europe. They began to realize their lifestyle was

going to be significantly impacted and their capability to grow their

GNP and so on. I view that as a huge success. I think Nelson

Mandela was let out of prison because of ultimate sanctions.

So it seemed to me our alternative to sanctions on Iraq was just

to end the regime in 1991. And if you’re saying now that what this

may prove to us is one, sanctions can’t work and two, even if they

could work, there’s not the will on the part of the body to vote for

them, it’s a huge conclusion that we’re arriving at today. Maybe

you could speak to that, and I’ll have others.

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But at any rate, you disagree, Dr. Conlon, you are making a

point, you think, like Mr. Mack, that comprehensive sanctions are

not going to be an option of the U.N. And I don’t mean option, are

not going to be, it’s unlikely the U.N. will ratify and endorse comprehensive sanctions.

Dr. CONLON. No, I think it has shown that these cannot succeed

within a reasonable degree of, not succeed with a reasonable degree

of effectiveness.

Mr. SHAYS. You don’t think they can be effective?

Dr. CONLON. Effectiveness, so that to a certain extent the events

of April 2003 is where the future will be, if we have any at all, that

the Security Council will be bypassed. This happened in 1991,

sanctions which did begin to have some effect on what Iraq was

doing, and also had positive effects in other respects in regard to

Kuwait and its assets, which were saved from Saddam Hussein’s

grasp at that time, thanks to the same sanctions regime and same

legal construction. It did not bring about the evacuation from Kuwait, which had to be done with military means. Ultimately, the

sanctions regime against Iraq ended when the regime was defeated

militarily. The same thing happened largely in Yugoslavia.

Of course, in all of these cases, those regimes were weakened by

the effects of sanctions. And that contributed to their downfall, but

it certainly was not decisive.

Mr. SHAYS. So even poorly, sanctions had an impact, but sanctions are not going to be airtight, not even close to airtight and so

on?

Dr. CONLON. No. Therefore, there will be resort to military

means in very serious cases, particularly in case of major adversaries that have to be dealt with, such as Iraq in 1991.

Mr. SHAYS. Thank you.

Mr. Mack, we haven’t heard much from you in the response to

questions. But you were the most provocative to me in the beginning by just simply saying, sanctions are, I interpret what you are

saying is, at least as it comes to the United Nations, sanctions are

a thing of the past with the U.N. Excuse me, comprehensive sanctions.

Mr. MACK. Comprehensive sanctions. I think that’s going to be

the case. In fact, you don’t even hear the U.N. talking about comprehensive sanctions any more. Look at Darfour at the moment,

the talk there is a gain on targeted sanctions, it’s a focusing on the

regime.

Then we come back into that question of real politic cynicism, the

economic interests, why the Chinese and the Russians are opposed

to sanctions on Saddam. Well, in part, they can say, we’ve always

been opposed on a matter of principle to something that causes humanitarian harm. But the sanctions that are being talked about

won’t cause a lot of humanitarian harm, they’re directed at the regime. And the real reason of course is the Chinese have really important oil interests there and the Russians want to sell arms.

I think that to come back to the point that Mr. Lynch raised previously, it is very, very—I’m not at all sure the Russians and the

French acted in such a way as to positively undermine the sanctions, but they were very, very clear, right way through, about

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their adamant opposition to them. And of course, one of the other

reasons——

Mr. SHAYS. Even during the cease-fire?

Mr. MACK. Which cease-fire? Not back in—remember that sanctions, most people thought, I totally supported sanctions back at

the end of the first Gulf war. Nearly everybody I knew supported

them. This was a better alternative than marching on Baghdad.

Now, the reality was, everybody thought that this was going to

be over with in a year. It took 10 years. And that’s when as the

humanitarian costs began to mount, and the humanitarian costs

mounted primarily of course because Saddam Hussein refused to

agree to any version of Oil-for-Food before it was formally called

that. But once they were in place, then within the humanitarian

community in and around the U.N. and elsewhere, people were

saying, well, wait a minute. We know that Saddam Hussein is ultimately responsible for this, because if he was in compliance, the

sanctions would cease to exist.

But once it’s the case that the Council knows that you have a regime which is so ruthless it doesn’t care about its kids starving to

death, then the Council itself has to bear some responsibility.

That’s where that tension between the security side of the house

and the humanitarian side of the House comes in.

Mr. SHAYS. Saddam learned how to beat the sanctions from previous experiences of others. And if he was willing to see his people

starve, there was no way ultimately we were going to see the sanctions discontinue without some way, I mean, that’s pretty clear.

Mr. MACK. It was bound to break down, and if not just Saddam,

the countries that were around there. It’s one thing for a set of

countries to say, we’re going to impose sanctions, they’re going to

be there for a year, and these are your major trading partners. But

when everybody is under sanctions for such a long period of time,

and yes, of course, there was some leakage to Turkey and there

was some leakage to Jordan, but they didn’t have anything like the

full trade relationships they had previously. And this was a regime

whose GDP was only a fraction of what it was previously.

So for a whole variety of reasons, things were beginning to break

down. And the great irony, in a sense, is the humanitarian outcry

against sanctions was actually highest when the situation was getting better. Because remember, Oil-for-Food didn’t come in until—

they started stuff going in 1996. That’s why you began to see an

improvement.

And this is why I would take slight issue with your point, the

sanctions being a non-violent alternative to war. Because if you

look at the research that was done in Columbia, at least 240,000,

the most conservative estimate, under 5 year olds died, who

wouldn’t have died had there not been a war and the sanctions——

Mr. SHAYS. In Iraq or Colombia?

Dr. GORDON. Columbia University.

Mr. MACK. Columbia University.

Mr. SHAYS. That’s what I was wondering, what sanctions we had

in Colombia. [Laughter.]

Mr. MACK. No, no, Columbia University study. If you compare

that with the numbers of people that were killed in the war, it is

much, much greater. And remember, when the first Gulf war took

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place, it was mostly competents that were killed. The 240,000 minimum kids that died were innocent by any measure. That’s why

there has been so much opposition, I think, in the humanitarian

community. It’s the cost of these types of sanctions to the innocent.

And the fact that the regime, of course, used this brilliantly politically to try and gain sympathy. It was Saddam’s responsibility, but

somehow or other he managed to use it——

Mr. SHAYS. It’s an interesting concept, of using it brilliantly. You

literally had a leader who was willing to see a quarter of a million

of his kids die. When all that was being asked of him was to——

Mr. MACK. Come into compliance.

Mr. SHAYS. Yes. And his complaint about loss of sovereignty was,

guess what, you could have been annihilated. And the military

force of the world stepped back.

Mr. MACK. It seems to me the true irony of this whole situation

of why Saddam Hussein was ultimately so stupid was, if it really

was the case that he didn’t have weapons of mass destruction, as

now appears to be the case, then why on Earth didn’t he say, come

in, search my palaces, go anywhere you’d like, knowing that once

they had a clean bill of health, then it would have been incredibly

difficult for the international community to maintain any serious

level of monitoring and he could have started all over again.

Mr. SHAYS. I went with one of my staff to Stockholm to ask that

specific question of Hans Blix, why did Saddam want us to think

he had weapons of mass destruction. Because he wanted us to believe he had them. It was an interesting 2-hour discussion.

Before we go to you, Dr. Gordon, because you’ve really made this

point—well, you didn’t say what you disagreed with about other

panelists. Mr. Mack, any comment that you would make?

Mr. MACK. It’s just a small point with the statement from the

representative from the State Department. By and large, I think an

excellent presentation. But somehow or other, this notion that here

was the United States, who was standing firm on sanctions, doing

the right thing all the time, if you look at all of this, I think 16

sanctions regimes being imposed by the United Nations, the United

States was basically utterly uninterested in most of those. It was

interested in Libya, it was interested in the Balkans, it was obviously deeply concerned about Iraq.

But as far as the rest of them are concerned, the United States

was just as bad as other countries.

Mr. SHAYS. Give me an example of one where we might have

been better.

Mr. MACK. Liberia.

Mr. SHAYS. OK.

Mr. MACK. Angola initially. And Liberia, of course, you have another example where the cynicism of the great powers, where for

a long time, one of the things we knew was that Charles Taylor

was being bankrolled by the, literally bankrolled by logs. And the

French were absolutely opposed to any sort of sanctions on log experts, because most of their——

Mr. SHAYS. What exports?

Mr. MACK. Log exports, exports of timber.

Mr. SHAYS. Right.

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Mr. MACK. Because most of those go into France. Eventually,

even the French were persuaded, and that actually made a difference. It was one of those things where denying access to funds

helped bring down that regime.

Mr. SHAYS. I’m just going to go to you, Dr. Gordon, then I’m

going to come back. I would like us both maybe to jointly pursue

this issue of transparency. But anything you disagree—I think one

thing you’ve already stated, you disagree with the concept that

there, I view there was no transparency, I’ve never had anyone say

there was, you’re saying there was a significant transparency, a lot

of information available.

But beside that, let’s put that aside, anything that was said that

you want to highlight disagreement with, either Dr. Conlon or Mr.

Mack or the State Department?

Dr. GORDON. First of all, I agree and have enormous respect not

only for what both of them have said today but at least their, or

at least Dr. Conlon’s publications, which I think I read and memorized his entire book.

Mr. SHAYS. And did not plagiarize? [Laughter.]

Dr. GORDON. No, just memorized it, that’s all.

I think Mr. Schweich is in a difficult position. I think the State

Department is clearly embarrassed about acknowledging the extent

of the U.S. role. The extent of the U.S.’ indifference to the amount

of cash going into the Saddam Hussein regime. So we’re looking at

some backpedaling, we’re looking at some spinning.

So when he says, the United States tried to get other countries,

other members to do something about the contracts where there

were kickbacks, but they demanded excessive levels of evidence,

again, if the United States had any evidence, it simply had the possibility of blocking that contract. It did not need to persuade anybody else to do that. When he says other countries resisted——

Mr. SHAYS. And neither of you disagree with that point, there

was unanimous consent, therefore they had veto power? Dr.

Conlon, Mr. Mack, you agree that they could stop? You’re nodding

your head, Mr. Mack, for the record, and Dr. Conlon? Did they

have the ability to stop a contract?

Dr. CONLON. Yes, but it’s very difficult to be the one blocker, the

one veto exerciser time and again, meeting after meeting. Pressure

mounts.

Mr. SHAYS. OK. That’s kind of like the Senate deciding not to

have a vote on Schiavo because the one member who would have

blocked unanimous consent in sending to the House would have

forced all the Senators to come back to Washington. I’m just trying

to relate it to something I can identify with.

Dr. GORDON. Yes. Although with all due respect, in fact on the

holds, I don’t know about in every single committee meeting, but

on the holds, the United States was the sole blocker. The U.K. had

a much more limited role, and no one else for years and years

blocked any goods.

Mr. SHAYS. You know, a difference of having two or three more

people helping you would have been significant.

Anything else on that? I want to get to transparency, and I want

to go back to Mr. Lynch if he has something.

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Dr. GORDON. I think just generally the notion, he said, we did

what we could, if we couldn’t show a smoking gun the committee

chose not to act. Again, I think that simply misrepresents the basic

procedure of how choices were made, how decisions were made,

who had what authority. In general, I want to say that the literature on sanctions is exactly as my colleagues have said, overwhelming says sanctions tend to be ineffectual, sanctions tend to

result in greater legitimacy for the state. South Africa is an anomaly, it’s not at all typical.

Mr. SHAYS. You’re telling me what you agree with. Right now I

just want to know disagreements. I’d like to come back at the end,

before we go, but I want to give Mr. Lynch some more time.

Dr. GORDON. Actually if I could say, Mr. Mack says it was Saddam Hussein’s fault and you echoed this language, that he decided

to allow the kids to starve. It was more complicated than that.

There was a minimum level that the Saddam Hussein needed to

maintain for its political legitimacy. On the issue of starvation, it

was Iraq, it was weeks, it was in early September, it was about 4

weeks after sanctions were imposed that a ration system was created by Saddam Hussein’s government.

I think you will see any, Red Cross, any NGO’s over the course

of the 1990’s saying, it was the governmental rationing system that

was the reason that there was not widespread famine. If you look

at effective attempts by the Iraqi government to get services back

up within weeks after the Persian Gulf war, you see literally what

I’ve heard is, every engineer up to nuclear physicist was sent out

to build bridges. Every electrical generator that could be up and

running was. Every water and sewage treatment plant, through

cannibalized parts that could be up and running was.

Mr. SHAYS. That’s a little bit different, what you’re talking about

there. We’re talking about the idea of kids starving. That’s ultimately what forced a change in policy in the United Nations, to

allow more flexibility and more oversight, to give Saddam the ability to make some key decisions that we didn’t want him to make.

But you did kind of surprise me about this issue of transparency.

This is my view, and tell me if I’m wrong. I believe that Benon

Sevan never thought that people knew that he was a player with

the vouchers. And he never thought he would be known because

the U.N. wouldn’t tell and Iraq wouldn’t tell. So it was an easy way

to pick up literally hundreds of thousands, if not a million plus dollars. And I believe other people thought the same thing.

The only reason this became a discussion was, you had, and I

love it, because people don’t realize that Iraq and the Iraqis are

learning things that are very basic in a democracy in general, a

government leak and a free press. A government official leaked information about Benon Sevan and others to an Iraqi free press, it

was published in a newspaper and eventually the western media

picked it up and the rest is history.

So tell me how, we’re not getting the minutes of the 661 Committee, we’re not getting those minutes. We didn’t get the list from

them of who was getting vouchers. How is that transparency?

Dr. GORDON. Well, OK.

Mr. SHAYS. I want the short answer, not the long answer.

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Dr. GORDON. The vouchers, as I understand it, OK, so under 986

and under the memorandum of understanding, which is the basic

document——

Mr. SHAYS. Before you answer, think for a second what you’re

going to say. I just want to know, Dr. Conlon and Mr. Mack, do

you believe there is transparency at the U.N.? Do you believe that

information is made available upon demand by the Member States

and the institutions of those Member States, like Congress, for instance, in the United States?

Dr. CONLON. No. There is a very low level of transparency in the

terms of the normal world outside.

Mr. MACK. I agree with that. It’s not a very transparent institution. I think the Secretary General, Kofi Annan, has been trying

to make it a more transparent institution. But it is a big bureaucracy, and like all big bureaucracies, people keep control over information as a way of having power.

Mr. SHAYS. OK. Now, that’s kind of my view. I’m wondering if

you are trying to give us a difference without a distinction here.

What I think I’m hearing you say, Dr. Gordon, is that there is information available, if you’re willing to work at it, you can find it.

So there is some information that you’ve found, I mean, the information that we found from Dr. Conlon was, you left some of the

minutes of the 661 at Iowa University, which is a story that I’d like

you to write a book about. And then they become public.

But at any rate, sort this out. I don’t get your point about transparency.

Dr. GORDON. OK. I’m not making a generalization about transparency at the United Nations.

Mr. SHAYS. OK.

Dr. GORDON. I don’t know enough about how the other functions

of the U.N. work to say with any kind of competence, in general

here’s where you see greater or lesser transparency throughout the

U.N. system.

But what I do know a lot about is this program. You’re saying

you may be able to find some after some effort, and I’m not saying

that at all. I am saying, it’s on the Web, it’s on Google. You don’t

have to go to the University of Iowa, you don’t have to go to Dresden. You go to Google, you type in Iraq distribution plan. You see

every item that Iraq was approved to buy.

Mr. SHAYS. You’re saying the distribution plan was public.

Dr. GORDON. Yes.

Mr. SHAYS. OK, so that’s public.

Dr. GORDON. Every 90 days, detailed report on the impact of the

program, the problems with the program. Charts, I think they were

the current chart for each phase. I don’t think you would find prior

charts from prior phases, because it was a spreadsheet of the current status. So it would say, for the electricity sector, how many

contracts were on hold, how many were approved but in transit,

how many had been delivered, weekly updates as well on particular

issues that were controversial. These holds on these items have

been lifted, there have been this number of liftings of oil, these

spare parts have arrived.

It’s an enormous amount of information.

Mr. SHAYS. But is it the information that we needed?

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Dr. GORDON. I’ll tell you what obviously wasn’t there, the auditing of the contracts between Iraq and its suppliers. There is controversy, well, the Volcker report is highly critical. We know what

the reasoning is regarding that. First, the——

Mr. SHAYS. I don’t need to get into that part now.

Dr. GORDON. Well, let me tell you this much, which is, Security

Council resolution 986 was the one that said, here’s what the auditing structure should be, external audit for those, not internal

audit. I don’t want to be framed as saying I’m defending the sloppiness of the Secretariat, but you have to say, it was the Security

Council that chose these parameters.

Mr. SHAYS. Well, I’m going to tell you what I’m taking from what

you say. There is a lot more information out there than people realize. And I accept that. To say the U.N. is transparent, to me is

something that I don’t even come close to believing, from our experience and the information we’ve tried to get.

Dr. GORDON. What is correct is that this program was in many,

many regards transparent. This program in many, many regards

had multiple levels of oversight by interested parties, by disinterested parties, by persons with expertise at every level.

Mr. SHAYS. OK, let me go to Mr. Lynch.

Mr. LYNCH. OK, thank you, Mr. Chairman.

Mr. Mack, we talked a little earlier about a reason why Saddam

Hussein, if he didn’t have the weapons of mass destruction, why

didn’t he just invite people in. And it would have cut the legs out

from under a lot of people who wanted to take military action

there.

And we surmised about possible reasons that he might not do

that. But he wanted to make the United States believe that he had

those weapons.

Might I suggest, and I just want to get your opinion on this,

given the fact that he had used chemical weapons against the

Kurds in the north, he had used chemical weapons in his war

against Iran, and at the very root of his power was his ruthlessness

and his ability to strike fear into the people of Iraq, and that’s

based on my own observations. I was among the first congressional

delegation into Iraq after the invasion on March 19, 2003, into

there about 60 days later.

Isn’t that a plausible reason that he would want to maintain his

own right? I remember Tariq Aziz responding that, this was in the

run-up to the invasion, that just like every other country, Iraq

maintained its right to possess weapons of mass destruction. Is

that a plausible explanation?

Put on that as well the fact of these mass graves that our folks

dug up in the weeks and months after the invasion in 2003. So he

wasn’t just going around building bridges and feeding kids.

Mr. MACK. I think that on that issue, two things. First, in the

first Gulf war, he had chemical weapons, he didn’t use them. It’s

one thing to use chemical weapons against civilians, it’s another

thing to use chemical weapons against the Iranians. Using chemical weapons or biological weapons against the United States is a

huge risk for someone like that.

Saddam Hussein has done a lot of stupid things, but when it

came to confronting the United Nations, it seems more that he was

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stupid than reckless. If it was the case that he really believed, really believed that the Americans thought that he had enough weapons of mass destruction, which, I mean, the Americans were really

only talking about chemical weapons and perhaps some biological

weapons at that time, then if he thought that was going to deter

the Americans from striking, then he was fundamentally foolish.

If had he managed to persuade the Americans that he had nuclear weapons, that would have been very different. The United

States has made it very, very clear that the solution to the problem

with North Korea is a diplomatic one. I think the primary reason

for that is a very sensible one, is that the United States believes,

almost certainly correctly, the North Koreans have now admitted

they actually have nuclear weapons capability. They can’t deliver

it against the United States, but they could almost certainly deliver

it against South Korea.

So I’ve also heard, we talked to Hans Blix, he was over in our

institute recently, he said that part of the answer may be this was

Saddam trying to persuade his generals. That didn’t seem to be

very particularly persuasive, either.

I have to say, I come out of this thinking that basically this is

a guy who wasn’t terribly bright when it came to major strategic

thinking. Had he given up, had he opened the place up, go wherever you like, it would have been politically impossible for the

United States to have maintained a sanctions regime. Search, go

into the toilets of any one of my palaces, do whatever you like, open

the place up, don’t try to obstruct them as they did with UNSCOM.

It would have been something which I would have thought politically obvious, brilliant. He never even thought about it.

Mr. LYNCH. I just have one last question. And that is this. I

know this is close to home. You were actually director for Kofi

Annan, is that correct?

Mr. MACK. I ran Kofi Annan’s strategic planning unit, which was

essentially a small think tank for the Secretary General. He would

worry about a particular question. One of the things, when we first

came to the United Nations, that I asked was, do we know if our

sanctions regimes work? What is the success rate of our peacebuilding operations? Nobody knew, because there are certainly not

the resources inside. General Assembly has rejected the idea of trying to have any sort of internal analytic unit in the U.N. that can

answer these sorts of questions.

Mr. LYNCH. I just wanted to get a sense of your association with

Kofi Annan. Based on the size of his problem, and let’s forget about

the smuggling, he has a $2 billion to $4 billion problem within Oilfor-Food. And I know there might be numbers on the Web site, but

we’re looking for between $2 billion and $4 billion that went missing in that program. That’s the size of his problem.

Do you have, within the United Nations, do you have a sense on

whether or not he had enough support to survive this and should

we be looking to him as someone who might be part of the solution

here as opposed to a major part of the problem?

Mr. MACK. I think this is a Secretary General who has demonstrated more than any other Secretary General in recent history

a real commitment to the idea of reform in the U.N. But remember,

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tions, you have to have the General Assembly on your side. Because if you don’t have the General Assembly on side, it’s the General Assembly that controls budgets.

Mr. LYNCH. Yes.

Mr. MACK. The United States is the dominant player in the

Council. The United States is not a dominant player in the General

Assembly. Part of the difficulty in getting support for reform in the

U.N. is that may countries in the General Assembly quite incorrectly believe that the U.S. support for reform is actually support

of bringing the institution down, for weakening the institution.

So if there is a commitment to reforming the United Nations,

then the United States has to be seen as a country which is committed to the U.N. as an institution. And I think that is going to

be a fundamental problem.

The Secretary General has enormous difficulties in trying to

push forward. One of the things he’s called for in a high level panel

report, and his subsequent report based on the high level panel report, is to be able to get rid of deadwood in the institution. Everybody knows that, any big bureaucracy has them. But it’s incredibly

difficult to do that. Politically incredibly difficult to do that.

Mr. LYNCH. Right. As a new Member and a Democratic Member

of the Congress, I can relate to his difficulties.

That means a lot, that you would take that position with respect

to Kofi Annan. So thank you.

Mr. SHAYS. I just have to say, I’m really learning a lot. I’m surprised by some things that I didn’t know and some things that I

assumed. I have more sympathy for Kofi Annan by this one statistic that the budget is controlled by the Member States and that he

does not have any real, I’m leaving believing that he has no real

control over the budget. That’s what I’m being told.

Mr. MACK. He has the ability to persuade.

Mr. SHAYS. Does he submit a budget? It’s his budget that he submits.

Mr. MACK. Yes, but the decisions on what goes through is essentially the fifth committee, that’s the critical committee, it’s the

budget committee of the U.N. That’s essentially controlled by, it’s

a General Assembly committee. And the voice of the south is a very

strong one there.

Mr. SHAYS. Let me see if counsel has any particular question

that he would like to ask that we need to put on the record.

Mr. HALLORAN. Thank you. Let me ask each of you, based on

your experience and writings in the field, was it or should it have

been known that the Oil-for-Food Program would be vulnerable to

the many abuses we heard before, that the sanctions program, the

661 Committee and its progeny, Oil-for-Food, was vulnerable to

those abuses based on the experience of the 661 Committee from

its inception until the OFF was started? How knowable was that

by those inside or outside?

Dr. CONLON. It was completely knowable, because it comes out

in my book, we had all of the background conditions for things like

this happening. The people who actually negotiated for years with

Iraq about Oil-for-Food, the first program and then even the later

ones, the bulk of that expertise was found in the legal department

which was privy to all of the things that we know about, or that

141

I knew about, and was also privy to all of the things that went on

in the committee. They were on the mailing list, they could come

to the meetings, they occasionally did, and they got copies of all the

memos that I wrote.

So they knew that many of these sanctions busting mechanisms

and tactics were being used very successfully in the course of many

years. They knew essentially how the adversary had been manipulating humanitarian waiver actions to perform certain functions

clearly of a financial nature, never entirely clarified exactly how.

And I also think that at that point in time, when the decisionmakers outside of the Secretariat, such as the U.S. Government,

the other powerful voices in the Security Council, that they agreed

to a new Oil-for-Food Program, on better terms, more on Saddam

Hussein’s terms, that they knew that they were going to have problems.

Mr. HALLORAN. Mr. Mack.

Mr. MACK. I think it was the point made this morning by the

State Department that it was very, very difficult for the international community not to agree to an Oil-for-Food Program because concern about the humanitarian costs were growing so intense.

Mr. HALLORAN. Let me stop you there. By their terms, U.N. sanctions don’t include food and medicine ever, by any terms, is that

correct?

Mr. MACK. It depends. This was an across-the-board trade embargo. So it included everything, until you brought in the exceptions.

Dr. CONLON. That’s not quite true. Medicines in the very narrowest sense cannot be included in sanctions measures because of provisions in the protocol to the fourth Geneva Convention. So in the

very strict sense, medicine may never be prohibited. It however is

legitimate to control its sale or transport in the sense of requiring

notification. That is a weak form of control.

Food was much less clear. In 1990, that was the first and only

time that a sanctions program of such comprehensive nature was

agreed as to include food stuffs. Even at that time, there were serious difficulties with this, particularly in the west, but also in the

Islamic countries, because it had been argued that Christianity and

Islam do not allow deprivation of food as an acceptable form of coercion.

The food embargo was lifted in 1991 and turned into a requirement for notification. But it could no longer be prohibited. And I

think there was a general agreement at that time that it would

never be tried again because of the very serious implications it

might have. So in that sense, food is out.

Other than that, one has the distinction between a comprehensive sanctions program, such as in the case of Iraq and Yugoslavia,

from which exceptions can be made, from a more selective approach

in the case of Libya, where trade was regarded as legitimate, as

such, except for certain categories of items which were then

banned. One is called all-inclusive or comprehensive, the other is

referred to as a selective, I think, sanctions regime.

Mr. MACK. I’m sorry, to go back to the major point, and I think

that Saddam Hussein had quite a powerful card when he was negoVerDate 11-MAY-2000 11:17 Aug 16, 2005 Jkt 000000 PO 00000 Frm 00145 Fmt 6633 Sfmt 6633 D:\DOCS\22686.TXT HGOVREF1 PsN: HGOVREF1
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tiating over Oil-for-Food. That was the huge amount of concern in

the international community about humanitarian costs of sanctions. And they were very high.

So he said, Iraqi sovereignty, and that was his bargaining. And

that’s what enabled him to get the deal which subsequently created

all of the problems, and that is that he gets to choose the buyers

and sellers. I think that is absolutely crucial.

I think the other thing is that if you actually look back right at

the very beginning when sanctions were imposed, nobody had any

idea that it was going to last as long as it did. Therefore, there

weren’t the sort of concerns that came up later, because people

thought, in a year he’s bound to give in. This was 90 percent of all

of Iraq’s exports. It was an enormous amount of leverage. No sanctions regime in history has ever had that sort of leverage. It reduced Iraqi GDP by some accounts to about a third of what it was

previously.

If anything, if economic sanctions could ever have worked, they

should have worked there. But they didn’t.

Dr. GORDON. I agree. I think what was unknown is what would

happen if you actually had globally comprehensive sanctions. Remember, it had been politically impossible for this to occur at any

time in history before. Since World War II, sanctions were imposed

by one block against the other. Whoever was being sanctioned by

the United States or by the Soviet block could trade with the other.

This is literally the first time in human history that there is the

possibility of every nation in the world participating in the blocking

off of goods for a country that has one source of revenue and one

source of goods. I’m overstating it, but overwhelmingly dependent

on exports for cash, overwhelmingly dependent on imports for

goods. So it was comprehensive in every possible regard. And it

was an experiment that way.

All the literature of that time made it look as though this was

the ideal circumstance for sanctions to succeed. The literature said,

if sanctions were comprehensive, if they were immediate, if they

were multi-lateral, those were the circumstances most likely to

bring about regime change or whatever the target was. So I think

the expectation was they would work and they would work quickly.

And there really, I think was not thought about what would happen once the long term erosion of different sorts happened. And I

also think that no one cared about the smuggling. That no one

cared. The issue was always the tension between security interests

and humanitarian interests, back and forth and back and forth between those two. The leakage around the edges, $2 billion to $4 billion sounds like a lot of money to us. The numbers I have on Iraq’s

GDP is that the GDP dropped from $60 billion to $13 billion. So $2 billion to $4 billion over any period of time is really an insignificant change in Iraq’s economy. I don’t want to be on the

record as saying I don’t think $4 billion is a lot of money. But no

one cared about that. The economy was done. The infrastructure

was done, it was shot. Iraq would not be able to rebuild a significant military capacity with no functioning industrial capacity.

The specific issue of the trade partners I think is where we see

the most clear instance that everyone knew what was going on

with this. Not necessarily that this would allow the kickbacks to

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happen, but it clearly gave Iraq political leverage through the use

of contracting. Everyone saw that, it was completely on the table.

Mr. HALLORAN. All right. In previous testimony at previous hearings, we had the U.N. contractors, inspectors for the oil and commodities and the banking house that did the letters of credit. They

testified that they lacked capacity, the power to really see the extent of the transactions that they thought they should to be able

to provide any assurance that the Oil-for-Food Program was

achieving what it was meant to achieve and not more or less for

the regime.

We also had testimony that the distribution plans were not regularly followed, that they would overlap and you would lose track of

what was filled and what wasn’t over time as things kind of

slopped over from phase to phase. So there were some weaknesses

in these, which the Volcker Commission has pointed out as well,

in the safeguards that you, and the oversight mechanisms that you

listed, that differentiated the sanctions program from Oil-for-Food.

So I guess my question is, what are the implications of that in

terms of sanctions regimes that if a program on which all these

layers of oversight and safeguards were put in place, and yet it still

appears the program leaked badly or was manipulated by the target regime to its benefit, what does that say about future sanctions

regimes?

Dr. GORDON. Well, to me comprehensive sanctions don’t make

sense for all of the reasons that everyone has said today. Politically

they don’t make sense, from a basic position of international humanitarian law, they don’t make sense. So the leakage is really

about that. If you say we want to blockade, we want to choke off

the entire economy, and then you say, well, there’s leakage, I can’t

imagine a circumstance where there will be the political tolerance

to do something similar to that.

I think the only avenue is smart sanctions. That’s the only thing

that makes sense to me.

Mr. SHAYS. Is what? I’m sorry.

Dr. GORDON. Smart sanctions.

Mr. SHAYS. Define smart sanctions again, quickly.

Dr. GORDON. I think you suspect that academics are incapable of

speaking briefly.

It just means targeted. So normally, the kinds of sanctions we

generally talk about, they are on the economy or on a sector of the

economy as a whole. Smart sanctions typically include things that

affect the particular leaders or goods, such as arms embargoes.

Mr. SHAYS. I get it.

Dr. GORDON. That’s the only thing that makes sense to me in

terms of efficiency, in terms of moral legitimacy. To me it just

makes no sense at all, if you look at the entire history of sanctions,

the more you harm a civilian population of another state, the more

that state consolidates power, the more resistance there is to the

outside pressure, the outside coercion from the civilian population,

the less they are inclined to do what you see is your goal, which

is their putting pressure on their state and so on.

Mr. SHAYS. Let me wrap up here. Just to complete the comment

on what was Saddam thinking, when I was meeting with Hans

Blix, he was pretty convinced that Saddam never thought we would

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come in. So it was almost irrelevant whether he wanted to convince

us he had it or not. He could have us think he had it, but he still

didn’t think we would come in. The reason why that was verified

was that Tariq Aziz told us that when the attack began, Saddam

didn’t believe it and wanted it verified, that he was pretty shocked

about it.

The other information that we learned from Tariq Aziz through

Duelfer was that in the Duelfer Report, people point out that

Duelfer said no weapons of mass destruction. They don’t focus on

the other parts in which he said it was the purpose of Saddam to

reward particular nations under the Oil-for-Food Program who had

veto power in the Security Council, particularly France, Russia and

China. So he was pretty convinced that if those three countries

didn’t accept our coming in, we wouldn’t come in. He just didn’t understand how willing the President, President Bush was to do that

in spite of that, in other words, go in in spite of the opposition of

three key Security Council members.

I think that we’ve covered a lot. I’d like to know, is there anything, Dr. Conlon or Mr. Mack or Dr. Gordon, that we should have

asked you that we didn’t? Is there anything that you would have

liked to have commented about that we didn’t ask you about? Any

closing comment, in other words?

Dr. CONLON. First of all, the description given by the State Department about this oil exemption for Jordan has been dealt with

by myself in an article which was published in, among other places,

the Florida State University Journal of Transnational Law some

time in the late 1990’s. That goes into some detail about the legal

ramifications and circumstances.

The second one is that the idea presented by my two co-panelists

today about how sanctions are supposed to work by imposing burdens and discomfort on the civilian population to such an extent

that they then get their government to stop doing what it’s doing

is actually not the way sanctions are thought of. This objection is

equally applicable to military action as it is to sanctions, the same

thing applies. You can say that military action does not bother the

elite, it bothers the common people who have to suffer.

So the purpose of sanctions is to apply pressure on the system,

just as the purpose of military action is that. They have functions,

the function of trying to get the economy to slow down or to fail

in some of its vital functions. This is irrespective of whether the

people suffering from that have the ability to openly try to influence the government or not, if the effects of these disruptive activities are such that the system cannot function, it doesn’t matter

that the vast majority of the population has no voice as such in decisionmaking.

Mr. SHAYS. Let me just say, I think that it’s important, it’s helpful for me to have you make this final point. I was thinking in essence you were saying sanctions don’t work. When you were saying

comprehensive sanctions, I was thinking of comprehensive in the

context that everyone around the world is on board. You’re talking

about the comprehensive sanctions of food, etc., in other words,

comprehensive in terms of nothing gets into the country.

And I’m reminded of a conversation in one of my travels to the

Middle East with a member of King Hussein’s family. He said to

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me, you Americans don’t get it, this was around 1994. He said, in

your country, when times are bad your people turn against your

leaders. He said, in the Middle East, when times are bad, we turn

to our leaders, which is kind of reinforcing, Mr. Mack, your comment that we made Saddam’s people turn to him to get anything

they needed and wanted. We made him in a sense almost more important and valuable to his country. And if this leader was right,

they weren’t turning against him, as we would think intuitively in

our own society.

Any closing comment you’d like to make?

Mr. MACK. Just one very quick one. We’re just finishing something called the Human Security Report, which is analogous to,

modeled on the U.N.’s Human Development Report. One of the

things that we find out of this, particularly when you’re talking

about the U.N. and your whole concern here, I think, is not just

this particular issue, but the future of U.N. reform generally, is

that when you look at the evidence, there has been a huge explosion of international activism following the end of the cold war. The

U.N. certainly liberated to do all sorts of things it couldn’t do previously, massive increase in the number of peace operations, disarmament, demobilization, post-conflict reconstruction and sanctions,

they all go up 400, 500, 600 percent.

In the same period, the number of armed conflicts declined by 40

percent. And we argue that even though all of these U.N. exercises

aren’t individually particularly successful, a 30 percent to 45 percent success rate seems to be about the norm, which isn’t very

good. About 30 to 45 percent when prior to 1990 there was nothing

at all. And that appears to have made a major difference. Not just

for the United Nations, it’s the United Nations, the Bank, the

major donor states and all the rest of it. That’s all.

Mr. SHAYS. Thank you.

Mr. MACK. But sanctions is part of a much broader package and

should be seen in that sense.

Mr. SHAYS. Thank you.

Dr. GORDON. Actually, I just want to say how impressive I think

it is that this subcommittee has taken something that really

threatened to become something like a feeding frenzy over the last

year, and it’s really very complicated. The United States is not always on the right on this issue, and the Secretariat and the U.N.

as a whole are not always in the wrong on this issue.

I just think it’s so important to the work of this subcommittee

in figuring out at a very detailed level, maybe more detailed than

you want to hear, but how it’s worked and who has done what,

rather than I think the much more pat responses we’ve seen for

months now that really are just accusations that are choosing to

not see the reality of the complexities of how this is really operated.

Mr. SHAYS. I thank you for that comment. It is interesting to me

that in the total amount of dollars that we were looking at smuggling and the Oil-for-Food Program, we were at one time thinking

the Oil-for-Food Program, that the amount of dollars that Saddam

was getting was closer to $4 billion. We now think that number is

closer to $1.7 billion, and that the smuggling, which we thought

was around $5 billion, is closer to $10 billion.

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That takes us out of the news when we say that. But it gets us

to understand really the reality of what is truthful about what’s

going on. So thank you all very much. Appreciate your being here.

It was a very interesting hearing. We will now adjourn the hearing.

We do thank our transcriber and I do thank my staff that has

worked so hard on this issue. They even went to Iowa. [Laughter.]

[Whereupon, at 2:25 p.m., the subcommittee was adjourned.]

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