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U.S. Now In Control Of Iraq Multi-Billion $$ "Oil For Food" Program

by Thalif Deen

U.S. Accused Of Using Food As Weapon In Iraq War (March 2003)
(IPS) UNITED NATIONS -- The U.S.-run Coalition Provisional Authority (CPA) will get control of billions of dollars in Iraqi oil revenues beginning midnight, Friday Nov. 21 when it formally takes over the seven-year-old, UN administered "oil-for-food" program (OFFP).

The United Nations has already transferred three billion dollars from the program to the CPA-managed Iraqi Development Fund (IDF), and will send another $1.6 billion Friday.

The program had been generating $7-10 billion annually in oil revenues, but proceeds from oil sales will now end up in the coffers of the CPA, headed by U.S. envoy Paul Bremer.

The change has left many opponents of the U.S.-led war on Iraq bitter, along with some UN officials who helped build and administer the successful program.

"The CPA has so far not inspired confidence that it can do anything right, much less administer a massive program of food aid to 25 million people," Jim Jennings, president of Conscience International, told IPS Wednesday.

The program, which helped feed over 60 percent of the people in the sanctions-hit, war-ravaged country, was run by a network of some 44,000 Iraqi food agents under UN supervision.

"This is an enormous program with somewhere around 10 billion dollars in cash flow every year," Jim Paul, executive director of the New York-based Global Policy Forum, told IPS on Wednesday.

Paul said published reports have said the CPA has had about five billion dollars in oil revenues at its disposal since it was established more than six months ago but only one billion dollars have been accounted for.

"There are a number of delegations who have been talking about a black hole where the money disappeared," Paul said.

Last month, the London-based charity ActionAid charged that four billion dollars were missing.

Soon after, the CPA began publishing a skeleton budget for the IDF online. It said it had received only one billion dollars from the oil for food program, $1.4 billion from oil revenues since May and 200 million dollars from seized Iraq assets in a U.S. Treasury Department fund.

It added that $1.5 billion from seized assets was put in the CPA's budget before the IDF was created.

"The predictable outcome is that food will be taken out of the mouths of babies, and many of Iraq's impoverished people will be even worse off than before," predicted Jennings, whose organization has been closely monitoring the humanitarian situation in Iraq.

"And that's hardly a formula for winning hearts and minds or even suppressing Iraq's increasingly violent resistance," he added.

The OFFP was established by the UN Security Council in 1995 to relieve the humanitarian crisis that followed the rigid sanctions imposed on Iraq following its 1990 invasion of Kuwait.

Under the program, the United Nations used Iraqi oil revenues to purchase and manage some $46 billion worth of humanitarian assistance, supplies and projects.

These included buying and providing food, medicine, water and electricity to Iraqis, as well as the construction of schools, medical clinics and houses.

In financial terms, the OFFP has been the largest program the United Nations has administered in its 58-year history. "The OFFP has also been one of the most efficient of UN programs operating through nine agencies with a 2.2 percent overhead," the United Nations said in a statement released Wednesday.

A Security Council resolution adopted in May set Friday as the day the agency would terminate the multi-billion-dollar program.

Before the U.S.-led attack on Iraq in March, some 893 international staff and 3,600 Iraqis worked for the OFFP. But since the bombing of the UN compound in Baghdad in August, the United Nations has pulled out virtually its entire international staff for security reasons.

The CPA has said that it will maintain most of the ongoing projects -- with Iraqi staff -- and operations, eventually turning them over to Iraqi authorities.

But Paul was sceptical the CPA has the capacity and the political will to successfully administer the program.

"What is striking and shocking is that until two weeks ago the CPA didn't really make any effort to coordinate with the United Nations and figure out what should go forward," he said.

"The idea that you can take over a program like this with all its enormous complexities and somewhat make a carbon copy of it in two weeks' time is simply ludicrous," Paul added.

Having talked to senior UN officials, he said, he got the impression that no crisis will erupt immediately because most Iraqis have received their food baskets and some of the food is already in the pipeline or in storage.

"But what's frightening is to see what would happen in a couple of months time when we will run into a crack-up," he predicted, pointing to insufficient storage facilities and other logistical problems.

For the last seven years, Paul said, the United Nations virtually ran the Iraqi economy. The agency, he added, was rightly proud of this accomplishment -- and had never faced a charge of corruption.

"There is real bitterness at the United Nations now," Paul said, "particularly if you work hard to help the Iraqis and then you see the whole thing going down the drain."

Paul also said that when the Security Council adopted a resolution handing over the program to the CPA, it did not act in the interest of the Iraqi people.

"The members of the Security Council -- not just the United States and Britain -- were more concerned about ensuring contracts for companies in their own countries," he said. "And that's a tragedy."

Jennings said the important question is what will follow in the wake of the OFFP.

"The unfortunate answer is that the U.S. administration, under Bremer, intends to impose on Iraq the same disastrous 'trickle down' economic theory now being touted for the United States, which lost three million jobs since Bush took office."

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Albion Monitor November 19, 2003 (

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