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What Will Happen to Oil for Food Program?

Aired May 4, 2003 - 03:30:00   ET


UNIDENTIFIED MALE: We are told the people of Iraq are saying they receive nothing. It is the biggest (UNINTELLIGIBLE) I've ever heard in my life.

UNIDENTIFIED MALE: I don't see how the United Nations could be sidelined.



MICHAEL OKWU, GUEST HOST: Accusations and anger, conflict and concessions. Iraqis return to the United Nations after the U.N. was sidelined by war. And we are back too after our own war hiatus. Hello and welcome to DIPLOMATIC LICENSE. I'm Michael Okwu, sitting in for Richard Roth.

Is diplomacy also back? Will nations be able to kiss and make up after the big split over Iraq? They would have to get along if they are going to work out the tangle of issues a post-war Iraq bring. Some of the toughest: Iraq's oil and what to do with the humanitarian "Oil for food" program.

The idea was simple: Allow Iraq to sell its oil, and the profits would feed its people. And by many accounts it's worked. Each week, Iraqis received a food basket containing key items, like dried milk, beans, soap. In fact, the program has been feeding 60 percent of Iraq's roughly 26 million people.

The Security Council established the program in 1995. Why? To blunt the effect of sanctions on the Iraqi people. Council members set up rules, procedures for approving contracts with a keen eye towards monitoring items that could be questionable. Billions of dollars were placed in a U.N. escrow account. That figure stands at 3.2 billion today, with roughly 10 billion worth of goods in the pipeline to Iraq.

The program technically expires on June 3. But already diplomatic lines are being drawn.


JOHN NEGROPONTE, U.S. AMB TO U.N.: The Iraqi people should have access to their own resources and dispose of them as they see fit.

SERGEY LAVROV, RUSSIA AMB TO U.N.: The "Oil for Food" program could be further used, and in absence of the government, it should be, we believe, discussed whether to give the authority to the secretary-general.

JEAN-MARC LE LA SABLIERE, FRENCH AMB TO U.N.: So many people are depending on the "Oil for Food" program. So we have to go cautiously.


OKWU: While the council debates the fate of "Oil for Food," a slew of attacks have resurfaced in the American media, accusing the program of being as one U.S. general put it "the oil for palace" program. One journalist called it "an invitation for kickbacks," political back scratching and smuggling.

Pretty strong words about "Oil for Food". We have that writer right here, Claudia Rossett, a freelance journalist and columnist for the opinion journal and Web site for the "Wall Street Journal". But no free ride for Ms. Rossett today. We also have in the studio the man at the held of "Oil for Food", Benon Sevan, executive director of the United Nations Office of the Iraq program.

Let me talk to one of your accusers. Claudia Rossett, you've used some very harsh language about this organization, about this particular program, a program that's provided over $27 billion for goods for Iraqi people. Tell me why.

CLAUDIA ROSSETT, FREELANCE JOURNALIST: Well, let's just quickly say the 27 billion that's been provided came from the oil money of Iraq. It did not come from the U.N.

But let's talk about full transparency for a minute. Because this is information, we are told, is provided to the Security Council members, but it is not provided to the public in any way that you or I can have access to.

And I have a question for Mr. Sevan, which is, somewhere between the beginning of this program with four billion a year envisioned in funding from Iraqi oil money and medicine and food for children, you were right at the point where last December you and the secretary-general were approving things like $20 million for an Olympic sport city, $50 million for the Ministry of Information. We know what that was in Iraq. Air conditioners for the Ministry of Justice. Was there justice in Iraq? And I wonder if you could tell us a little bit about where, in the course of the program, something crossed that line, that you were funding, we have to assume, without any further information, the things like the sports city were in the jurisdiction of Saddam Hussein's son.

BENON SEVAN, EXECUTIVE DIRECTOR, OFFICE OF THE IRAQ PROGRAM: Well, the thing I wish you could have done before you made these accusations, which are totally unfounded, I'm sorry to say, Mr. Rossett, you should have done a little bit of research and read about the program. We have a fantastic Web site, by the way, we just opened. I think it's one of the best Web sites in terms (ph) of the world...

OKWU: What about your accusations?


OKWU: ... focus has shifted?

SEVAN: There is one thing. You talk about Olympics stadium. True, there was, as recommended, but what program (UNINTELLIGLBLE) we received the contract for $40.1 million, by the way, for the Olympic stadium, and not the single cent was approved. You know very well, the Security Council gave the authority to Iraqi government under the organization of the program to select its own contractors, to submit some proposals, but they were all subject to approval by the Security Council committee after full review and clearance by my office, plus UNMOVIC, plus IAEA. Therefore, not a single dollar was (UNINTELLIGIBLE).

OKWU: So where does your responsibility lie?

SEVAN: My responsibility lies the following: The government of Iraq was given authority to implement the program fully in the 15 governorates (ph) for which it was responsible. We, the United Nations, including nine specialized agencies in the program, were given the authority to implement the program, again, by the Security Council on behalf of the government of Iraq. It is not me who decided that arrangements.

At the same time, all concerns, all members of the Security Council reaffirm the territory integrity and the national sovereignty of the Iraqi. Therefore, I had to work within the confines and the parameters established by the Security Council.

OKWU: You are talking about the confines and parameters. You clearly have issues with the way this entire program is structured. Very briefly, if you can, what are those salient points, what are your problems with the structure?

ROSSETT: May I very quickly just address the point about the sport stadium? What probably cut that off was the war. Because that was approved in December...

SEVAN: It was not approved, Madam, I'm sorry, you are dead wrong.

ROSSETT: It's....

SEVAN: I have the facts here.

ROSSETT: Well...

SEVAN: I know what I'm talking about, but you don't know, unfortunately.

ROSSETT: I have spent a great deal of time on your Web site, which is extensive, but omits information about details and you cannot...

SEVAN: Like what, details like what? Because these are big words you are using, details. Please give me the details, I'm ready to provide you with all the details.

ROSSETT: We'll get to the structure in a minute. But for example, one of the things approved quite recently was the purchase of television equipment from Russia. There are three things that are vital in understanding any business contract and deciding whether or not it is a reasonable deal. The price, who it's being bought from and what precisely and in what quantities is being purchased.

I -- there is no public disclosure, and I had asked your press people and they have told me this is not publicly available. Can you tell us or provide details to the public of what were the names of the Russian companies, what exactly was approved to be shipped, and how much was paid? Because this question applies to every contract under the program, and there is no transparency on the answers.

SEVAN: Are you objecting because the company is Russian?

ROSSETT: I'm asking...

SEVAN: No, no, first I'd like to know, whether you are objecting because the company is a Russian company, or a French company, because unfortunately, you, along with your colleagues, who had been attacking the program on ideological grounds, by the way, I'm sorry to say, purely on ideological grounds, you are making the mistake of judging the genuineness of a contract, the needs for the items ordered, solely based on the nationality of contractors.


OKWU: Let's assume...


OKWU: I do have to cut you off, Mr. Sevan. Let's assume for a moment...

SEVAN: Please.

OKWU: ... that they are United States companies, or that she doesn't have a problem with the fact that they are Russian companies. Are you ready to name those companies and the amount and quantities that were -- that were secured?

SEVAN: All this information is provided to Security Council, (UNINTELLIGIBLE) Security Council established rules and regulations. I report to the secretary-general, to the Security Council, not to Ms. Rossett...

OKWU: That brings us to another question, which is, Ms. Rossett, to what extend is his agency accountable to anyone else beyond the Security Council? The Security Council in essence is his boss. Why should you see his books?

ROSSETT: This is a beautiful lead into the structure of the program. And the answer is, it's a very badly structured program. The incentives here are enormously perverse (ph).


OKWU: Let's go ahead and finish that. Let her finish for a moment.

ROSSETT: Yes. I'm not questioning how well you carried out the mandate here. I'm questioning the actual structure of the program. And let's start with the fact that this is a very, very different from most relief programs, in that it is not funded by donations from U.N. members or individuals or -- it's funded by tapping directly into Iraq's oil funds (ph). And this gives a sort of steady and enormous source of income. We are talking about $64 billion worth of contracts in oil sales vetted by the U.N. That's tremendous clout.

And to be able to approve, reject, know what's going on in there and then buy the goods that come in, the 27 billion worth, or 10 billion (UNINTELLIGIBLE) contracted for. This is huge business. And the idea that the U.N. should simply -- that this program simply operates by taking in 2.2 percent of those oil funds, which has come to more than $1 billion. So....

SEVAN: (UNINTELLIGIBLE), $1 billion. And I'm not ashamed to say to you, and also from that we saved (UNINTELLIGIBLE) which are returned to the program for purchase of additional food -- additional food items and from the remaining (UNINTELLIGIBLE) $800 million. I'd like to challenge Madam to give me a single man since you've been working with "Wall Street Journal," to give you the name of a single American company or a private organization which works for less that 2 percent over its cost. What (UNINTELLIGIBLE) American company which are going down to Iraq total its cost?

ROSSETT: I wish...

SEVAN: Please, don't tell about -- we are talking about implementation of a program of $45 billion, by the way.


OKWU: The fact is, most companies operate with the budget of, say, 15, 20 percent for operating cost. What would you say to that? 2.2 billion - 2.2 percent - that's far less than the status quo.

SEVAN: We should not even use it.

ROSSETT: I was hoping this would come out, because it's a wonderful example...


ROSSETT: ... by the end (ph) of that (UNINTELLIGIBLE) business. You are not in the business of producing oil. This is 2.2 percent of the oil revenues. That's what that should reflect. You are...

SEVAN: No, no, no.

ROSSETT: ... in the business of administering...

SEVAN: No, no, no, I'm sorry. I were supposed to be administering the revenues provided by oil experts, which was done by Iraq and Iraqi government, not by the U.N.

ROSSETT: You are speaking as if you were the owner of an oil company.

SEVAN: No, no, no.

ROSSETT: ...which is precisely the problem.


SEVAN: It was the countries on the Security Council which -- they took the decision to (UNINTELLIGIBLE) structures. You ask your own government along other governments who are members of the Security Council. So therefore stop blaming the United Nations, because the problem with you and your kind of people is, whenever it suits you, you need the will (ph) of the United Nations, as an intergovernmental body, whenever it does not suit you, you accuse the (UNINTELLIGIBLE) There is -- there has to be a distinction made as an intergovernmental body, the United Nations, and the secretary.

OKWU: I know you are chomping at the bit, but I have to move this forward, we have very little time here. What is your feeling about what will happen after June 3? That's, of course, when the mandate runs out for this program. Very briefly. Less than 10 seconds.

ROSSETT: I know it will be a big fight. My hope is that the Iraqi people will end up administering their own oil and that this program, which creates huge incentives for the U.N. to keep its hand in this oil pot will be ended.


SEVAN: No, I'm very sorry, I reject totally, Mr. Okwu, this accusation. Clear cut, blunt accusation, which is totally false. We are not looking for jobs, I assure you. And if you think the U.N. is skimming, I'm very sorry. We spend about $800 million, we have over 900 staff numbers inside Iraq, with 3,500 national (ph) staff, crisscrossing the country for observations. We have done more than two million observations, monitoring reports from where supplies arrive under the program, monitoring the oil flow out of U.N. timeline (ph), monitoring also the lifting of oil, and you tell me we are skimming? Skimming what? What proof do you have we skim anything? I'm very sorry to say. This is very easy to talk la-la-la- la, you know.

OKWU: Mr. Sevan, I appreciate your joining us, I am going have to stop it there and get in the last word. Claudia Rossett, I appreciate your time as well.

ROSSETT: Thank you.

OKWU: Clearly, we are not going to reach reconciliation on this one, but the Security Council is going to have to in the future deal with this.

From "Oil for Food" to sanctions and nation building. At a recent meeting of the Security Council, U.N. Secretary-General Kofi Annan called on members to put their divisions behind. The U.S. may want Annan to play some role helping to set up the future government of Iraq. In the council, Annan made it clear who should be in the driver seat on the road ahead in Iraq.


KOFI ANNAN, U.N. SECRETARY-GENERAL: I would urge you to set aside past divisions and ask yourselves what would help the Iraqi people most.




UNIDENTIFIED MALE: The word around the building is that this is essentially your last hurrah.

HANS BLIX, U.N. CHIEF WEAPONS INSPECTOR: Well, last, maybe, but not hurrah.


OKWU: Yes, he is still around. That's Hans Blix, the chief weapons inspector, recently questioned by the head of the U.N. Correspondents Association, Tony Jenkins. Blix stays until June, but his portfolio of weapons of mass destruction will linger a lot longer. While we managed to convince a couple of those United Nations journalists to stick around for our own portfolio of issues, over at the CNN U.N. office.

Joining us from that office, Colum Lynch of the "Washington Post" and Philippe Bolopion of Radio France Internationale.

Colum, let's start with you. We are going to talk about the weapons of mass destruction issue and inspectors, but first, there's been talk about a U.S. resolution dealing with the postwar Iraq situation. It was first reported in your paper this week. Tell us about it. What have you learned?

COLUM LYNCH, WASHINGTON POST: Well, essentially, what's going on is that the Bush administration wants to sort of move onto the second phase of regime change. They've overthrown the government of Saddam Hussein, and now they want to get the Security Council out of the business of managing Iraq's affair, and they want to clear the deck. So basically what's going to happen next week -- they'll introduce a big, sort of sweeping resolution that would take oil, the control of oil revenues out of the hands of Security Council, return it over to some sort of -- either to the U.S. and their immediate future, and then hand it off to some sort of interim Iraqi authority.

So that's likely that happen in the next couple of days or so.

OKWU: Philippe, now, why would they do this, when some people on the council, and others at the U.N. are talking about the fact that the U.N. should be focusing on mending fences?

PHILIPPE BOLOPION, RADIO FRANCE INTERNATIONALE: Well, I think they are doing that because they want to move very fast before it's too late for them. I think they are really trying to win the game, which (UNINTELLIGIBLE) is going to be the first one to present a resolution, and the first one to shoot is going to prevail in the council. I think that they felt threatened by the French proposal, made by last week, which was attempting (ph) to suspend for a while the sanctions while still trying to sort out...




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