Just Another Scandal?
We must be growing inured to scandals. After revelations concerning Enron, WorldCom, Parmalat, and even staid companies like Shell, where does the scandal concerning the corruption of the UN's Iraq Oil for Food office fit? As William Safire notes in today's New York Times, a number of high profile individuals are implicated, including several very close to Secretary General Kofi Annan. At the same time, President Putin of Russia seems intent on hamstringing the proposed independent investigation. This suggests that Putin sees more potential for damage in what such an examination might uncover than in the appearance of guilt created by his stonewalling.

Pressing Russia and other foot-draggers will risk international relationships that are only starting to recover from their pre-Iraq War. And what will we learn? That some unscrupulous people lined their pockets at the expense of poor people in Iraq? That sort of thing happens every day, right?

I believe there are compelling reasons for exposing the full extent of malfeasance in administering the Oil for Food fund, and the most important concerns the future, rather than the past. Politicians and talking heads across the spectrum are calling for the US to turn over responsibility for civil administration in Iraq to the UN. If the UN takes on this role, we must aggressively manage the risks this will entail, and one of the largest of these is for corruption on a vast scale.

The Oil for Food program, which marketed Iraq's oil exports under sanctions, must have created tremendous temptations. After all, it involved billions of dollars of oil, relief supplies, and authorized replacement parts flowing through a system cluttered with bureaucrats and middlemen. But if that program had inherent incentives to cheat, just imagine the opportunities for corruption involved in running the entire country and administering not only oil, but contracts for reconstruction, education and infrastructure development, to name a few.

Before taking on such a task, the UN must empty its closet of all the baggage associated with Oil for Food. Anyone who took part in corrupting that program must be either dismissed or banned from future participation in Iraq. The UN leadership must signal strongly that such behavior will not be tolerated, and this must be clear not only inside the UN but also to every organization with which it would have dealings. Doing this will require new rules on transactions.

When you look at the kind of deals in which the Oil for Food program engaged, it is easy see how things went astray. While the international oil markets include many pure traders, along with producers and true end-users, the number of Oil for Food contracts in the hands of middlemen is a red flag. Among these middlemen were companies facing indictments in the US for past misdeeds. From this standpoint, Oil for Food seemed better structured to administer "baksheesh" than relief aid. Any UN Iraq mandate must be founded on transparency and a bias for dealing directly with suppliers and end-users, eliminating entirely any "brother-in-law" deals.

Finally I think it is important to remember the larger cost of the subversion of the Oil for Food program. It was set up to alleviate the impact on Iraq's population of the UN sanctions that enforced the ban on Iraq's post-Gulf War rearmament. Not only did corruption take food from the mouths of Iraqis, but it also gave Saddam Hussein the funds to invest in arms, palaces, and the personal largesse that kept him in power. In short, this corruption seriously undermined the effect of the sanctions and weakened the best alternative to war. Anyone doubting this should look at the recent, muich more positive outcome in Libya.

If the international community wishes the UN to be the vehicle for stabilizing Iraq, then it must be willing to purge the UN bureaucracy of those responsible for the Oil for Food debacle, as a prerequisite to assuming responsibility for nation-building and reconstruction in that country. Failing to do so will reduce the UN's credibility and guarantee a less effective, and likely unsuccessful effort. None of us can afford that.