[Senate Hearing 106-86]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 106-86


 
   NEW PROPOSALS TO EXPAND IRAQI OIL FOR FOOD: THE END OF SANCTIONS?

=======================================================================

                             JOINT HEARING

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS

                                AND THE

               COMMITTEE ON ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 17, 1999

                               __________

 Printed for the use of the Committees on Foreign Relations and Energy 
                         and Natural Resources


                               


 Available via the World Wide Web: http://www.access.gpo.gov/congress/senate



                      U.S. GOVERNMENT PRINTING OFFICE
 56-857 CC                   WASHINGTON : 1999



                     COMMITTEE ON FOREIGN RELATIONS

                 JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
PAUL COVERDELL, Georgia              PAUL S. SARBANES, Maryland
CHUCK HAGEL, Nebraska                CHRISTOPHER J. DODD, Connecticut
GORDON H. SMITH, Oregon              JOHN F. KERRY, Massachusetts
ROD GRAMS, Minnesota                 RUSSELL D. FEINGOLD, Wisconsin
SAM BROWNBACK, Kansas                PAUL D. WELLSTONE, Minnesota
CRAIG THOMAS, Wyoming                BARBARA BOXER, California
JOHN ASHCROFT, Missouri              ROBERT G. TORRICELLI, New Jersey
BILL FRIST, Tennessee
                     James W. Nance, Staff Director
                 Edwin K. Hall, Minority Staff Director

                                 ------                                

               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  FRANK H. MURKOWSKI, Alaska, Chairman
PETE V. DOMENICI, New Mexico         JEFF BINGAMAN, New Mexico
DON NICKLES, Oklahoma                DANIEL K. AKAKA, Hawaii
LARRY E. CRAIG, Idaho                BYRON L. DORGAN, North Dakota
BEN NIGHTHORSE CAMPBELL, Colorado    BOB GRAHAM, Florida
CRAIG THOMAS, Wyoming                RON WYDEN, Oregon
GORDON SMITH, Oregon                 TIM JOHNSON, South Dakota
JIM BUNNING, Kentucky                MARY L. LANDRIEU, Louisiana
PETER G. FITZGERALD, Illinois        EVAN BAYH, Indiana
SLADE GORTON, Washington             BLANCHE L. LINCOLN, Arkansas
CONRAD BURNS, Montana
                  Andrew D. Lundquist, Staff Director
                      David G. Dye, Chief Counsel
                 James P. Beirne, Deputy Chief Counsel
               Robert M. Simon, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
             Howard Useem, Senior Professional Staff Member
                Shirley Neff, Staff Economist, Minority

                                  (ii)



                            C O N T E N T S

                              ----------                              
                                                                   Page

Biden, Senator Joseph R., Jr., prepared statement of.............    24
Burns, Senator Conrad, prepared statement of.....................    12
Helms, Senator Jesse, prepared statement of......................     3
Pickering, Hon. Thomas R., Under Secretary of State for Political 
  Affairs........................................................    18
    Prepared statement of........................................    22
Richardson, Hon. Bill, Secretary of Energy.......................    14
    Prepared statement of........................................    16

                                Appendix

Response of Secretary Richardson to an additional question 
  submitted by Senator Jeff Bingaman.............................    39

                                 (iii)



   NEW PROPOSALS TO EXPAND IRAQI OIL FOR FOOD: THE END OF SANCTIONS?

                              ----------                              


                       WEDNESDAY, MARCH 17, 1999

                               U.S. Senate,
                    Committee on Foreign Relations,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committees met jointly, pursuant to notice, at 10:17 
a.m., in room SD-419, Dirksen Senate Office Building, Hon. 
Jesse Helms (chairman of the Committee on Foreign Relations) 
and Hon. Frank H. Murkowski (chairman of the Committee on 
Energy and Natural Resources) presiding.
    Chairman Helms. The committee will come to order.
    We have a practice here, Senator Murkowski, that if I am 
late Joe Biden waits for me. If his train is late, as it must 
be this morning, I get permission to go ahead.
    Chairman Murkowski. All right.
    Chairman Helms. Good morning. As a quick preface to the 
opening statement, I think I should mention that this is the 
first time members of the Foreign Relations Committee have 
heard from Secretary Richardson since the revelations of 
Chinese spying at Los Alamos National Laboratory. The Energy 
Committee heard from the Secretary on this matter in hearings 
yesterday.
    However, Senator Murkowski and I have invited Secretary 
Richardson here this morning to talk about Iraq, and that is 
what I intend to do. As always, my colleagues are free to go 
anywhere they wish in statements and questioning. I hope we 
will have an opportunity in the near future to air our concerns 
about Red Chinese espionage in a hearing on that matter. But 
for today, insofar as the chairman is concerned, the subject is 
Iraq and I will try to stay with it.
    Now then, Mr. Secretary or Under Secretary and Mr. 
Secretary, I know that Chairman Murkowski joins me in welcoming 
you. Maybe he has already done that, and if I did not have a 
couple of bum knees I would have been down there shaking your 
hands and welcoming you here this morning.
    A bit of clarification: This hearing is about the ongoing 
military actions in Iraq, not a hearing on anything else. We 
can get to that information in questioning on another day, on 
another occasion.
    In the interest of truth in advertising, it should be made 
clear from the outset that I do not think much of this United 
Nations Oil for Food Program for Iraq, and that is the reason I 
was happy to join Senator Murkowski in this hearing. I did not 
like the U.N. Security Council Resolution 986 which began the 
program in 1995 and I was one of the Senators strongly 
objecting to the successor to Resolution 986, which is U.N. 
Security Council Resolution 1153. From what I have heard from 
the proposed successor to 1153, it is even worse.
    I am not under any illusion that the oil for food program 
funnels money into Saddam Hussein's hands. I have never said 
that. I have never believed that. Nor do I believe that Saddam 
is allowed to use the oil sales proceeds as he wishes. The 
problem is more simple than that: the system. The system does 
not work.
    Iraq began in 1995 selling $4 billion worth of oil a year, 
with the money going into a U.N.-controlled account to buy food 
and medicine. Iraq is now allowed to sell $10.4 billion worth 
of oil each year, to buy not just food and medicine, but much, 
much more. I have a list which I will show you in a minute. If 
you want to tote that around, somebody can get a hernia 
carrying it.
    Let us start with the simplest problem of logistics. They 
have 151 monitors checking on food delivery and distribution. 
There are 54 other monitors checking imports of everything else 
at 4 border crossings--a total of 205 people. If anybody 
believes that 205 people can keep track of a nation of 21 
million people, with thousands of tons of food and medicine and 
agriculture and educational and water supplies and heaven knows 
only what else going in, I think they must be fooling 
themselves.
    But that is just the tip of the iceberg. There is also the 
question of distribution. We continue to hear about the people 
of Iraq suffering and that the United Nations must therefore 
allow Iraq to sell much more oil, which is why the United 
Nations must allow Iraq to import more oil equipment, and which 
is why we must constantly agree to expand the oil for food 
program, and so on and on and on and on.
    However, according to the United Nations itself, apart from 
the food sector, distribution rates are largely under 50 
percent. In other words, plenty of food gets into it, but it 
just sits unused in warehouses. There are at least two 
explanations for this. Either Saddam is holding up distribution 
or the U.N. is not getting the job done, and both seem 
plausible. We may find out today which is which.
    The question is how will more imports remedy the problem. 
That is where I view the single most serious problem with the 
United Nations Oil for Food Program. It is called United 
Nations Security Council Resolution 1051, and I for one am 
prepared to wager that there are not five people in the 
Department of State who even know what this resolution does.
    Under Resolution 1051 Iraq is allowed to import all sorts 
of dual use items. So-called dual use goods include a veritable 
universe of things that could be perfectly innocuous, but may 
be used in chemical or biological weapons programs or for 
nuclear weapons or for missile development. For example, crop 
sprayers, which Iraq has in the past modified and tested for 
the delivery of biological weapons, or live vaccines, which on 
the one hand could be used for medicine, but on the other for 
biological weapons.
    There is a little handy guide, which I have just been 
handed to hold up, explaining all the items allowed and how 
companies should inform the United Nations they are making 
these important exports. Under Resolution 1051 both the 
exporting companies and the Iraq Government are required to 
notify the United Nations Special Commission on Iraq, also 
known as UNSCOM, about each step in the process of imports into 
Iraq.
    Then UNSCOM can either put the kibosh on the particular 
deal or follow the product step by step into Iraq, with 
inspectors ensuring that it is not being diverted to a suspect 
site or for use in weapons of mass destruction.
    Now, I am going to ask that all of my statement be printed 
in the record, and I will wind up by saying this: most 
senseless of all, I am convinced that the cornerstone of the 
new proposal announced by Vice President Gore will be the so-
called streamlining of the contract approval process through 
the United Nations Sanctions Committee. This would, of course, 
be tantamount to lifting the sanctions altogether because, even 
at current levels, the sanctions are already unmonitored and 
unenforceable.
    Mr. Secretary and Mr. Under Secretary, I want you folks to 
have a chance to respond to my observations. I am sure you will 
also want to explain why it is that Saddam Hussein is still 
able to smuggle some $250 million worth of illegal gas and oil 
out of Iraq last year for his own personal coffers.
    Mr. Chairman.
    [The prepared statement of Senator Helms follows:]

               Prepared Statement of Senator Jesse Helms

    Mr. Undersecretary, I know that Chairman Murkowski joins in 
welcoming you on the occasion of this important joint hearing.
    A bit of clarification may be in order. This is not a 
hearing about the ongoing military actions in Iraq, nor a 
hearing on U.S. support for removing Saddam Hussein from power. 
Our purpose today is to discuss the United Nations Oil for Food 
Program for Iraq and the administration's proposal to expand 
that program.
    In the interests of truth in advertising, it should be made 
clear from the outset that I don't think much of this program. 
I didn't like U.N. Security Council Resolution 986, which began 
the program in 1995; I strongly objected to the successor to 
Resolution 986 (U.N. Security Council Resolution 1153) and from 
what I have heard of the proposed successor to number 1153, it 
is even worse.
    I am not under any illusion that the oil-for-food program 
funnels money into Saddam's hands, nor do I believe that Saddam 
is allowed to use the oil sales proceeds as he wishes. The 
problem is more simple than that: The system just does not 
work.
    Iraq began in 1995 selling $4 billion worth of oil a year 
with the money going into a U.N.-controlled account to buy food 
and medicine. Iraq is now allowed to sell $10.4 billion worth 
of oil each year to buy not just food and medicine, but much, 
much more. This, for example, is the so-called ``distribution'' 
(or wish list) that Iraq put together for purchases during the 
current six-month phase of the program.
    Let's start with the simplest problem of logistics: There 
are 151 monitors checking on food delivery and distribution. 
There are 54 other monitors checking imports of everything else 
at four border crossings--a total of 205 people. If anyone 
believes that 205 people can keep track of a nation of 21 
million people, with thousands of tons of food, medicine, 
agricultural, educational and water supplies--and heaven only 
knows what else--going in, they are just fooling themselves.
    But that's just the tip of the iceberg. There is also the 
question of distribution. We are continually hearing that the 
people of Iraq are suffering, and that the United Nations must 
therefore allow Iraq to sell more oil, which is why the United 
Nations must allow Iraq to import more oil equipment, and which 
is why we must constantly agree to expand the oil for food 
program.
    However, according to the United Nations itself, apart from 
the food sector, distribution rates are largely under 50 
percent. In other words, plenty of food gets in, it just sits 
in warehouses.
    There are only two explanations for this--either Saddam is 
holding up distribution, or the U.N. isn't getting the job 
done. (Both seem plausible.)
    The question is: How will more imports remedy this problem?
    And then, there is what I view as the single most serious 
problem with the United Nations Oil for Food Program. It is 
called United Nations Security Council Resolution 1051, and I 
am prepared to wager that there aren't five people in the 
Department of State who even know what this resolution does.
    Under Resolution 1051, Iraq is allowed to import all sorts 
of dual-use items. So-called ``dual-use'' goods include a 
veritable universe of things that could be perfectly innocuous, 
but may be used in a chemical or biological weapons program, or 
for nuclear weapons or missile development. For example, crop 
sprayers, which Iraq has in the past modified and tested for 
the delivery of biological weapons. Or live vaccines which on 
the one hand could be used for medicine, but on the other, for 
biological weapons.
    Here's a handy little guide explaining all the items 
allowed and how companies should inform the United Nations they 
are making these important exports.
    Under Resolution 1051, both the exporting companies and the 
Iraqi Government are required to notify the United Nations 
Special Commission on Iraq, (a.k.a. UNSCOM), about each step in 
the process of this import into Iraq. Then UNSCOM can either 
put the kibosh on a particular deal, or follow the product step 
by step into Iraq, with inspectors to ensure that it is not 
being diverted to a suspect site for use in weapons of mass 
destruction.
    But here's the rub: UNSCOM was kicked out of Iraq some 
months ago. But have the dual-use exports to Iraq also stopped? 
The answer is no. Where are these items now going? No one 
knows. There are no experts in the field checking. How are they 
being used and are they being diverted? No answers.
    Now it may be argued that some of these dual-use-exports-
to-Iraq are vital to certain humanitarian needs. Chlorine gas 
for water purification is one example; certain fertilizers or 
pesticides may be another. But as long as there are no weapons 
inspectors in Iraq, there is a real peril that the United 
Nations may well be helping Saddam reconstitute his weapons 
programs.
    When this issue was brought up with the Department of State 
a month or so ago, the Foreign Relations Committee was told 
that stringent monitoring of contracts is taking place through 
the sanctions committee at the United Nations. Given, however, 
that all food and medicine contracts are deemed approved unless 
blocked after 48 hours, and that all other contracts are deemed 
approved within five days unless blocked, it does not seem to 
me that there is sufficient time for any due diligence.
    Indeed, in just the past few days, I have been informed of 
a contract in the oil sector which was given a clean bill of 
health by the experts. Much to their horror, the experts later 
discovered that they had just approved a contract involving 
equipment that had been found by UNSCOM inspectors in nuclear 
and chemical weapons facilities after the Gulf War.
    So here is where we are: We are permitting Iraq to sell 
more than $10 billion dollars worth of oil a year and to import 
the same amount in goods, subject to U.N. approval and 
inspection. The problem, as I said earlier, is that the U.N. 
can't ensure the goods are delivered to the people in Iraq. And 
when goods are delivered, the U.N. has no expert inspectors in 
place to ensure that dual-use isn't being diverted to Iraq's 
chemical, biological or nuclear weapons programs. Yet despite 
all this, the Clinton administration has proposed to expand the 
oil for food program, thereby lifting the cap on Iraqi oil to 
enable Saddam to export billions of dollars more oil.
    Most senseless of all, I am convinced that a cornerstone of 
this new proposal--announced by Vice President Gore--would be 
the so-called ``streamlining'' of the contract approval process 
through the United Nations sanctions committee. This would, of 
course, be tantamount to a lifting of sanctions altogether, 
because even at current levels, the sanctions are already 
unmonitored and unenforceable.
    Mr. Undersecretary, I want you to have a chance to respond 
to some of my observations. I am certain you will also want to 
explain why it is that Saddam is still able to smuggle some 
$250 million worth of illegal gas oil out of Iraq last year for 
his own personal coffers.

    Chairman Murkowski. Thank you very much, Mr. Chairman. I 
very much appreciate your willingness to accommodate the Energy 
and Natural Resources Committee in holding this joint hearing, 
and I want to thank the collective staff of the Foreign 
Relations Committee as well as the Energy Committee. As you 
know, I was a member of this committee for many, many years.
    Chairman Helms. I sure do. We miss you.
    Chairman Murkowski. And I left with deep regret, and went 
to the Finance Committee. But nevertheless, I want to advise my 
colleagues that this is a partisan hearing. As you will note, 
the group on my right wears green--no, it is partisan--and the 
group on the left over here obviously does not wear green. So 
that is enough to be said for Saint Patrick's Day.
    Senator Brownback. I object to that.
    Chairman Murkowski. You object? All right, objection is 
overheard and overruled, and so forth and so on.
    Let me welcome back Mr. Pickering, the Under Secretary of 
State for Political Affairs. You were here 10 months ago for 
our first hearing. At that time, Mr. Pickering, we highlighted 
concerns. Our concerns at that time were whether we were really 
propping up the regime of Saddam Hussein. Since that time we 
seem to be bombing him every other day and now are debating the 
issue of expanding his oil exports.
    I want to welcome Secretary Richardson, the Secretary of 
Energy, to discuss implications for our national energy 
security. I think we should reflect on, a little time past, on 
the eve of Operation Desert Fox. Our President announced that 
we were delivering a powerful message to Saddam Hussein. I 
wonder what that message is.
    It seems to me that the message is if Saddam Hussein 
refuses to cooperate with inspections, if he refuses to comply 
with U.N. resolutions, if Saddam refuses to stop illegally 
smuggling out oil, Saddam then will be rewarded by the de facto 
ending of economic sanctions. That is not a very good message, 
at least in my opinion.
    The administration has offered to eliminate the ceiling on 
Iraqi oil exports. The administration has offered to streamline 
the approval process for items that the United States might 
suspect as dual use, and I emphasize dual use, and I would 
remind my colleagues, as Senator Helms indicated, that U.N. 
Security Council Resolution 687, passed at the end of the Gulf 
war, requires--and I emphasize, requires--international 
economic sanctions to remain in place until Iraq discloses and 
destroys its weapons of mass destruction program and undertakes 
unconditionally never to resume such activities again.
    Obviously, that has not been met. Iraq has not complied. 
The administration has pulled out the teeth in U.N. Resolution 
687 one by one, by introducing an expansion of the oil for food 
program. The current plan allows Iraq to export up to $5.2 
billion in oil every 6 months, and I might add this is a U.N. 
action with full U.S. support. From December 1998 to February 
1999 Iraq exported 129 million barrels, an average of 2.06 
million barrels per day. Revenue earned in this phase is $1.1 
billion at an average price of $8.47 a barrel.
    Saddam's oil production now is at pre-Desert Storm levels 
of 2.1 million barrels per day.
    Since 1988, down in 1990, and then dropping, 1992, 1994, 
1996, and here we are in 1998 up to where we were at the time 
of the Persian Gulf War or shortly thereafter. So clearly his 
oil production has increased rather dramatically.
    Although humanitarian goals are worthy, Saddam subverts 
programs to his benefit, using increased oil capacity to 
smuggle oil products for hard cash and by freeing up resources 
that he might have been forced to use for food and medicine for 
his own people, and there is an offset there. Moreover, while 
oil for food funds are put into escrow accounts and controlled 
by the United Nations, there may be other ways for Iraq to 
obtain revenues from the process--unfortunately that is 
something we cannot cover in today's open session, but we will 
be pursuing in closed session.
    Increase in illegal oil product sales coincided with 
implementation of the oil for food program. Let's look at the 
smuggling. Part of the smuggling, up to 50,000 barrels per day, 
is moving by truck across the Turkey-Iraq border. Another 
60,000 barrels per day is moving by sea vessel through the 
Persian Gulf. Furthermore, Iraq has been steadily increasing 
illegal exports of oil to Jordan, about 100,000 barrels per day 
of oil and oil products.
    We do have proof of this. The U.S. Navy has seen and has 
stopped illegal transfer of oil and seized oil tankers. We have 
other proof of illegal export of oil over land by truck and 
have other evidence that again is classified.
    Smuggling numbers vary from month to month, but the reason 
has less to do with the Multi Interdiction Force, the MIF 
efforts than with the whims of the Iranians who aid the 
smugglers. There is the estimated illegal movement of gas and 
oil products from Iraq by month, and you can see they vary from 
time to time. The fact is that the Multinational Interdiction 
Force does not have enough resources, ships, to intercept on a 
regular basis.
    Oil is really Saddam's lifeline. It fuels his ability to 
finance his factories of death and rebuild his weapons of mass 
destruction. Revenue from oil exports historically represents 
95 percent of Iraq's foreign exchange earnings. The 
administration's proposal now is to lift the ceiling on the oil 
export that matters to Saddam Hussein, and obviously that is 
his oil.
    In addition, the United States is prepared to relax the 
security of contracts for spare parts, spare parts which can be 
used for other uses on other equipment that might have suspect 
dual use. The question is can we really trust Saddam Hussein? 
Can we trust him not to take advantage of this decreased 
security to increase imports of parts that will be used for his 
weapons programs.
    I am reminded that back in 1989, when Senator Dole, Senator 
McClure, Senator Simpson, Senator Metzenbaum and myself visited 
Saddam Hussein in Musel, at that time the big issue was the 
long-range cannons, there was a gentleman by the name of John 
Bull who was promoting this and selling this technology, and 
the cannons were allegedly on the dock in London.
    We were told by Saddam: Those are not cannon parts; those 
are parts for our refinery expansion. He insisted on that. John 
Bull has since been assassinated for reasons that are 
unexplained, but the question is: Can we trust Saddam Hussein? 
I would suggest to you--I could go on--on the background of 
that story--but to suggest we can trust him today when he was 
selling the same iceboxes to the Eskimos in 1989 is beyond my 
belief. I simply can't understand why this administration would 
succumb to believe Saddam Hussein.
    The national energy security implications of this policy in 
my opinion are obvious. At the time of the Arab oil embargo we 
were 36 percent dependent on foreign oil. Today we are 56 
percent and rising. We are now importing 600,000 barrels per 
day on average of Iraqi crude and at the same time we are 
bombing them every other day.
    Now, they are either our enemy or they are not. But to prop 
up this regime--and this is what I find frustrating in the 
Secretary's statement where he is, concerned in response to, 
well, what is Saddam Hussein's oil production doing to the 
price of oil. The question is are we continuing to prop up the 
regime of a despot? That clearly seems to be the case.
    That Iraq is again part of the foreign oil dependence 
should be considered in evaluating whether oil for food is in 
America's national interest. The administration defends its 
policy saying Saddam does not like the oil for food program and 
therefore the program must be a good thing. But is there one 
official who can tell me that Saddam does not benefit from this 
program?
    What if Saddam suddenly decides to not export any oil and 
effectively eliminates the world oversupply? How about Saddam's 
bargaining power for post-sanctions and oil exploration 
contracts? The program is sold as a humanitarian proposal, but 
the program really is a wolf in the humanitarian clothing, if 
you will, of a sheep.
    Here is where it is going: Petroleum equipment, $300 
million. Now, what does that do for him? Well, it obviously 
increases his capability to produce more petroleum. Electricity 
network, $409 million. Buy trucks, repair the railway system, 
build food warehouses, $120 million. Agricultural equipment, 
including pesticides, $180 million.
    Well, you can wander through that and make all kinds of 
submissions, but the point is it totals $2.7 billion. Now, you 
might say that is just a wish list. That is what he wants. That 
is not what he is getting, but the reason he is not getting it 
is simply because the price of oil has declined. He would have 
gotten that under a higher price.
    When you look at 2.5 billion barrels every 6 months, the 
realization is that when the price of oil drops, to get the 
same dollars he has to produce more oil. Whoever configured 
this deal with the U.N. did not think about the dropping price 
of oil.
    In any event, I would ask, what is the humanitarian goal in 
rebuilding oil refineries so Saddam can increase illegal 
exports of oil products? If we can enforce no-fly zones over 
Iraq, why can we not enforce a simple blockade? What is the 
humanitarian goal in guaranteeing an uninterrupted power supply 
for Saddam's poison gas facilities?
    What is the administration's policy we have toward Saddam 
and Iraq? On the one hand we are enhancing his power by 
allowing him to export his oil, to rebuild his infrastructure, 
to play with world oil prices, and on the other hand he refuses 
to allow us our inspections of his poison gas facilities.
    We put American lives on the line every day in the air. Can 
conditions with Saddam's military regime continue?
    In my opinion, Senator Helms, this is a policy with no 
perspective. I would hope that Secretary Pickering can answer 
the questions, because if not this particular Senator wants to 
look to new ways to end this program.
    Thank you.
    Chairman Helms. Thank you, Mr. Chairman.
    I look at the distinguished array of Senators here this 
morning who do not normally attend and participate in Foreign 
Relations hearings. I welcome you and I hope some day each of 
you will consider being a member of the Foreign Relations 
Committee. A great many of us served with Senator Bayh's 
distinguished father, so we have ties all the way around.
    The two witnesses this morning are personal friends of most 
of us----
    Senator Nickles. Mr. Chairman, I would love to make a 
couple of opening comments before you introduce them.
    Chairman Helms. All right, we would be delighted.
    Senator Nickles. Mr. Chairman, thank you very much.
    Mr. Chairman, one, I want to thank you for having this 
hearing. I requested this hearing, joint hearing with Senator 
Murkowski, some time ago and I very much appreciate your 
lending additional credibility and influence to have this 
because I think this is a very important issue. It is an 
important issue dealing with energy, and we have the Secretary 
of Energy with us, and I appreciate his appearance before us 
today--that was a request of mine as well, so thank you, Mr. 
Secretary, for coming--as well as Under Secretary Tom 
Pickering. I thank you both for coming.
    Mr. Chairman, I wanted this hearing because I think it is 
very, very important, and it is important because it deals with 
foreign policy issues as well as energy issues. I think we 
needed to highlight what I believe is an utter dismal failure 
in this administration in dealing with Iraq.
    Yesterday members of the Energy Committee and the Armed 
Services Committee had Secretary Richardson before us in a 
closed hearing. I guess part of it was open. I attended the 
closed part. It dealt with China. Secretary Richardson 
inherited a mess in the lab oversight or lack of oversight in 
the labs, so I want to acknowledge that. He may be under the 
gun somewhat, and I notice your picture is in the paper 
everywhere, Secretary Richardson.
    But you inherited that mess, and it is a mess. I also just 
will make public the comment I concluded with yesterday. I 
think it is unconscionable for the administration to find out 
that we had information on the labs, or at least as reported by 
Energy Department officials, in 1995 that there was espionage 
in 1995, but it was not brought to Mr. Berger's attention 
evidently until 1996, and it was not brought to President 
Clinton's attention until 1997, July 1997.
    That is incompetence at best, if not worse. So I made that 
comment yesterday, but I made it in a closed session and not in 
a public session, and I think I wanted to repeat it at least in 
a public session.
    But the purpose of today's hearing is likewise critically 
important because we are talking about an area of the world 
where we have had U.S. forces at risk. In 1990-91 we had 
550,000 U.S. troops putting their lives at risk to stop Saddam 
Hussein, to repel his aggression, and also make sure that he 
did not do it again.
    We passed resolutions in the United Nations saying: We are 
going to have an embargo; you are not going to be able to sell 
your oil because of your invasion into Kuwait and because you 
are building these weapons. We passed that resolution. We 
enforced that resolution, and Saddam Hussein's oil production 
went from about 2.5 million barrels per day to about 500,000 
barrels per day as a result of that U.S.-led U.N. resolution.
    Secretary Richardson, I cannot remember if you were 
Secretary of the U.N. or our representative at that point in 
time, but at some point during this you were. But we enforced 
that resolution. We enforced it in 1991, 1992, 1993, 1994.
    In 1995 the Clinton administration changed that. In 1995 
the Clinton administration supported U.N. Resolution 986. That 
resolution allowed Iraq to sell 4 billion barrels of oil a 
year. That is a big change in policy, a big change in policy.
    Why did they do it? Well, you might remember at the time 
Iraq was getting pretty belligerent again. They had moved a 
bunch of forces, a bunch of troops, about 80,000 troops toward 
Kuwait. War was imminent. We started moving aircraft carriers. 
It looked like we might go to war again.
    Well, that war was put off. We threatened. Things got 
pretty tense. But what did we do? We rewarded their 
aggressiveness by saying: Hey, we will let you sell more oil. 
We rewarded their aggressiveness and their noncompliance and 
their defiance of the embargo and allowed their belligerence 
toward the Kuwaitis and the Kurds. We rewarded them by allowing 
them to sell, not 500,000 barrels per day, which basically is 
mostly internal, but we said, no, you can sell up to $4 billion 
per year in oil.
    That was in April 1995. In March 1996 Iraq blocked the 
inspectors, totally blocked the inspectors. What did the United 
Nations do? Well, we passed a resolution that said: That is 
terrible; let those inspectors do their jobs. We went to war. 
If necessary we will do it again, but you are going to have to 
comply. You are going to have to let those inspectors in.
    They blocked the inspectors in March 1996. In August 1996 
they launched a campaign against the Kurds. Still nothing 
happened. In June 1997 they demanded that UNSCOM leave. In June 
1997 we passed a resolution that demands that they comply--the 
U.N. passed a resolution, demanded that they comply with 
UNSCOM.
    On October 29 Iraq, in 1997, totally blocked the 
inspectors, totally shut them down. So we passed another 
resolution. We will teach them. This was October 23 we passed a 
resolution. We condemned their refusal to allow UNSCOM to have 
inspections.
    In November 1997 we passed another resolution condemning 
their actions. We were getting ready to go to war again. I 
remember having meetings in our private room, S-407, talking 
about going to war and we were debating, hey, will we achieve 
our objectives or not. This was not that long ago. This was in 
October--November 1997.
    Then the administration moved 30,000 troops in January 
1998. Mr. Chairman, it was only a year and a couple months ago, 
14 months ago. We were getting ready to go to war again because 
they were not allowing the arms control inspectors in and we 
insisted on it. They kicked them out. There was a U.N. 
resolution that said we are going to make them comply.
    We are getting tough now. Thirty thousand troops, activated 
some Guard and Reserve units in probably every one of our 
States, getting ready to go to war again. That was in January 
1998.
    In February 1998 things were looking tight, looking tense. 
A lot of meetings, we had a lot of meetings, because there was 
some disagreement: Hey, will we accomplish our objectives by 
military means?
    Then Kofi Annan, we gave--I say ``we gave.'' I guess the 
administration allowed the Secretary General of the United 
Nations to do our diplomacy for us, and he runs over to Iraq 
and peace is at hand again.
    But little did we know that 3 days before that the United 
Nations signed a resolution, Resolution 1153, that allows Iraq 
to double their oil sales, now up to $10.4 billion per year. So 
right before we go to war, Secretary Kofi Annan goes over to 
Saddam Hussein, they agree to a deal that says, hey, we will 
not go to war, you allow the arms control inspectors to proceed 
and, oh yes, you can double your oil sales again.
    So we did that. That happened in February. Well, guess 
what, in August the Iraqis stopped any arms control inspectors 
into new sites, and then in October they announced they will no 
longer cooperate with UNSCOM in any way. So UNSCOM, Mr. Butler 
and all the crew, they left.
    That was in October of last year. Well, that was not 
acceptable. The Clinton administration said, no, we are not 
going to let that happen. We are getting ready to go to war. We 
even had support from a few of our allies. We were getting 
ready to bomb in October of last year. You might remember that.
    Well, it did not happen in October. It did not happen in 
November. It happened in December. Some people called it the 
impeachment bombings. They kicked the arms control inspectors 
out, basically stopped them in August, and kicked them out in 
October. We were close to bombing in October, then in November, 
and then we bombed in December.
    We bombed the Iraqis. We killed Iraqis. This is not an 
insignificant action. We bombed Iraq for 3 or 4 days, depending 
on whose calendar you are talking about, December 18, 19, 20. 
We bombed Iraq for 3 days, some people said it was a very 
significant bombing. It was on CNN. You could see it every 
night.
    Three days later, 3 days later what happened?
    Three days later, reported in the press: ``U.S. offers to 
raise Iraqi crude oil sales cap. The Clinton administration 
offered yesterday to allow Iraq to export more crude oil.'' 
That is dated December 23 in the Washington Post. We stopped 
bombing on December 20. Unbelievable.
    In January, January 14, again the Washington Post, 
headlines: ``Gore signals flexibility on Iraq sanctions. A 
ceiling on how much oil Iraq can provide to its people should 
be lifted and approved, process streamlined, Vice President 
Gore says.''
    Well, what is the net result? The net result is that Iraq 
has defied the international community, they have defied 
UNSCOM. We have no UNSCOM right now in Iraq, we have none. We 
have risked U.S. lives time and time again. We have killed 
Iraqis on occasion, saying you are going to have to comply. The 
net result is Iraq can produce all the oil that they want and 
we have no arms control.
    So this administration's policy has been appeasement. This 
administration's policy has been to reward their noncompliance. 
Now, that is a pretty sad thing to say. That is a very sad 
thing to say.
    This administration inherited a situation in Iraq where you 
had a unified world policy aligned against Iraq for their 
invasion of Kuwait and against their production of these 
weapons of mass destruction. Where are we 6 years later? The 
administration allows them to produce all the oil they want, 
which is 95 percent of the currency derived from exports, 95. 
They can produce all they want and there is no arms control 
inspection whatsoever. That is a total dismal failure for this 
administration, a total dismal failure for the world community, 
for the United Nations, and a real win for Saddam Hussein. He 
can produce all he wants and he has nobody looking over his 
shoulder at his weapons of mass destruction.
    What does it mean for the domestic oil industry?
    Iraq was producing 400,000 barrels--the average production 
in 1995--actually, 1993, 1994, 1995, 1992, production was about 
500,000 barrels per day. What is it today? Today it is 2.5 
million barrels per day. So Iraq is producing 2 million barrels 
per day more than it was when we were enforcing the sanctions 
and when we had arms control. Now you have no arms control 
inspection, they are producing all the oil that they want, they 
are also producing and selling, exporting, 2 million barrels 
per day more than they were 3 years ago.
    Well, there happens to be a glut in the oil industry right 
now. They talk about the administration wants to help steel, 
they want to help hog farmers, they want to help everybody. 
They have not said a word about helping oil. Their policies 
have netted in a result of 2 million barrels more per day going 
onto the market, which has just glutted the market, driven 
prices down to an all-time Depression-era low, and put many, 
many thousands out of work, 40,000 or 50,000 workers across 
this country, and made us much more dependent on unreliable 
sources for the future.
    That is a dismal failure. It has failed in foreign policy, 
it has failed. It has rewarded appeasement, it has rewarded 
noncompliance with arms control. We now have no arms control 
whatsoever in Iraq and Iraq can produce all it wants.
    Mr. Chairman, I am glad that you are having this hearing 
because the fact that we put lives at risk many times in Iraq 
to enforce these sanctions, the fact that we were bombing as 
recently as December 20 last year, 4 months ago, and the fact 
is that there is no arms control whatsoever going on in Iraq 
internally with UNSCOM tells me that this administration's 
policy with Iraq has been a total abject failure and they 
should be held accountable for it.
    I appreciate your having this hearing so at least we could 
air some of these views. Thank you.
    Chairman Helms. Thank you, sir.
    Let me speak to the other chairman. We have a policy 
variance between the committees. On my committee, the Foreign 
Relations Committee, we try to leave enough time for the 
witnesses to be heard. Look, I want you to help me decide. 
Would you like to offer everybody on your committee a time?
    Chairman Murkowski. Gentlemen, any comments over here?
    Senator Burns. I have a statement. I will submit it for the 
record. I would rather hear the witnesses.
    [The prepared statement of Senator Burns follows:]

               Prepared Statement of Senator Conrad Burns

    I would like to thank both the Chairmen for the opportunity 
to address the joint committees this morning. Recent proposals 
to expand the Iraqi Oil-for-Food program have brought enough 
attention to the topic that a hearing is a necessity. However, 
I believe that an expansion of the Oil-for-Food program would 
only be another miscue in our ongoing mishandling of Iraqi/
American relations.
    Consistently Saddam Hussein has mocked the United States 
and twisted all of our humanitarian attempts to aid the 
citizens of his country. The United States has tried many times 
to address the hardships being felt by those residing under 
Saddam's tyrannical rule. Time and time again, Saddam has 
manipulated these policies to aid his regime and his 
dictatorship, rather than allowing our well intentioned aid to 
help the men, women and children under his control.
    Rather than directing our aid to his people, Saddam has 
used our help to pad his own wallet and fuel his thirst for 
military power and the creation of an infrastructure to support 
future terrorist based activities. We are simply subsidizing a 
threat to our own national security. The help we are providing, 
while well intentioned, is only helping a tyrant retain control 
of a citizenry desperate for food and supplies.
    Rather than expanding a current program that is not only 
plagued with distribution problems, but is also harming 
American producers, I suggest a new plan. Currently, everyone 
recognizes that we are not getting the food and supplies to 
those that need them most. In fact, we have seen time and time 
again that Saddam takes control of our supplies and uses them 
for his own good, not for the good of his people. We need to 
stop this, and the administration needs to tackle the core of 
the problem. No effort will ever work if we are not ensuring 
that the aid is getting to those that need it. We need to stand 
up to Saddam and demand that the supplies are used by 
civilians. Until that happens, we are only hurting ourselves in 
our efforts to help others.
    The current policy is also harming both our agriculture and 
domestic oil producers. The last year has been filled with 
hearings to address the current problems pushing our producers 
into poverty. Here we have a way to address this problem two 
ways. First, let's send American wheat and other food products 
to Iraq under a new and improved distribution network. We have 
more than we know what to do with, yet we insist on letting it 
sit in storage and drive our own market prices down. We are the 
bread basket of the world, but we don't seem to want to open 
the pantry door.
    Second, the glut of oil on the world market has driven 
prices to an all time low. The result is that our domestic oil 
market is being rode into the dirt. We are seeing thousands 
upon thousands of jobs lost and marginal wells shut down. The 
end result is that we are increasing our dependence on foreign 
oil and ruining our rural economy. Saddam has got to be sitting 
back and laughing at us. We are giving him the resources to 
rebuild his military and terrorist complex while increasing our 
dependence upon his nation.
    Let's rethink what we are doing here. We need to change 
course and look at our real objectives. We must recognize the 
current policy is not working, and we have an opportunity to do 
much more for our producers and the Iraqi people. This is not 
an example of where we have the tiger by the tail. We still 
have the ability to rethink our course of action before it is 
too late. I challenge my colleagues to look at the other 
options available to us.

    Senator Bingaman. Mr. Chairman, I would like to make just a 
brief statement in light of the dialog we just heard.
    Chairman Murkowski. Go ahead.
    Senator Bingaman. First I would like to----
    Chairman Helms. Mr. Bingaman is recognized.
    Senator Bingaman. First I would like to welcome Secretary 
Pickering and Ambassador/Secretary Richardson. Both of them are 
distinguished public servants. I am glad they are here today to 
describe the situation.
    As I understand the hearing, Mr. Chairman, we are going to 
try to focus on the oil for food program and the impact that 
that oil for food program may or may not be having on the price 
of oil and also on domestic oil production. That is the issue 
that I, at least, am particularly concerned about, and I think 
it is a legitimate issue to be concerned about, given the 
depressed state of our oil and gas industry in my State and 
throughout the country.
    So I think that is a legitimate issue. I think a lot of the 
rest of it is pretty far afield, at least from what I came here 
to try to focus on.
    I do believe, and again I would just raise this so that the 
witnesses can respond to it, but I believe that the chart that 
you had up here, that my colleague from Oklahoma had up here 
called ``The Failed Iraq Policy'' left a few things off. It 
left off the fact that in 1991 the Bush administration was the 
first to push through the Security Council a resolution that 
would have allowed Iraq to export oil for humanitarian reasons, 
with a third of the revenues generated going to pay reparations 
for war damages and the costs of removing Iraq's strategic 
weapons.
    Iraq rejected that U.N. resolution at the time, and that 
managed oil sales until 1996, when the problem with the Iraqi 
people's condition became such a serious public relations 
problem for Iraq.
    So I am only making the point that the policy--and I am no 
defender of our Iraqi policy, needs rethinking. Although it has 
been arrived at on a bipartisan basis and pursued on a 
bipartisan basis, clearly there are problems with that policy 
today, and I do not question that. But this administration 
inherited much of that policy, and this administration has been 
pursuing an effort to implement it.
    Let me just conclude by saying I hope we do get to the 
issue of what the effect of this oil for food has been on our 
own domestic production. I do believe in testimony that I have 
heard so far that there was very little consideration given to 
our domestic oil and gas industry or the impacts on our 
domestic oil and gas industry when this policy was formulated 
and supported by us in the United Nations. That gives me 
concern.
    I think clearly we need to have an integrated policy. We 
need to think about what the impacts are going to be on our 
domestic industry, and I think that is what we ought to 
concentrate on in this hearing.
    Thank you, Mr. Chairman, for allowing me to participate and 
make that statement.
    Chairman Helms. We appreciate your coming.
    Senator Craig.
    Senator Craig. Mr. Chairman, thank you. I am also here to 
hear both of our witnesses. They are, at least in the broad 
sense, a great deal more knowledgeable on this issue than I.
    But Secretary Richardson and Secretary Pickering, 3 weeks 
ago I, along with Chairman Dick Lugar of the Agriculture 
Committee and Byron Dorgan met with Sandy Berger. We were at 
that time trying to convince the State Department and Sandy's 
shop to go along with the releasing of, the formation of, a 
trading company to do business with Iran. It was in the 
aftermath of a significant election in that country that showed 
it moving toward center ground politically. We thought it was 
time that we reward them and that some of our foodstuffs be 
allowed to flow into that country.
    Why? Not necessarily for humanitarian reasons, but 
primarily for agricultural commodity price reasons in this 
country, and I think that is the approach.
    During that meeting we also discussed an aggressive effort 
to eliminate in almost all situations the idea that food and 
medicine should be used for sanction purposes. It should not 
be. It should not be, from a humanitarian standpoint.
    Now that I have said that, let me say this about Iraq. The 
men and women who are flying the aircraft over Iraq today are 
some of my friends. They are from Mountain Home Air Force Base. 
I know them. They are marvelous, talented young Americans who 
are in harm's way, with Saddam Hussein locking onto them with 
his missiles and pushing the button and their having to 
respond.
    At any moment at any hour in the next 24, one of those 
young men and women could die. When we are engaged at war, a 
shooting war, we should in no way reward the enemy.
    Thank you, Mr. Chairman.
    Chairman Helms. Very well.
    Chairman Murkowski. Mr. Chairman, if I may, in order to 
accommodate Senators' full statements, I would invite you to 
join with Senator Nickles and I on a proposed special order to 
discuss this and debate it fully on the floor. At a time when 
we can get a special order, we will advise all members.
    Senator Craig. Thank you.
    Chairman Murkowski. Thank you.
    Chairman Helms. I thoroughly agree and I thank you for the 
suggestion.
    Now, Mr. Pickering has to leave for a luncheon, at 11:30 is 
it?
    Ambassador Pickering. I can extend the stay in light of the 
progress in the hearing, Senator. I do want a chance to be 
heard and obviously to try to respond to your questions.
    Chairman Helms. Very well. Now, what time do you have to 
leave?
    Ambassador Pickering. Some time after 12.
    Chairman Helms. All right.
    Now, Mr. Secretary, we have known each other for a long 
time. I want to say publicly that I admired your forthrightness 
the other day when you called me. You had a bad situation that 
you had to comment on and you did it well, and I appreciate you 
calling me.
    We will hear from you first and then Mr. Pickering.

     STATEMENT OF HON. BILL RICHARDSON, SECRETARY OF ENERGY

    Secretary Richardson. Thank you, Chairman Helms, Chairman 
Murkowski, other members of the Committees on Foreign Relations 
and Energy and Natural Resources, for this opportunity to 
testify today on our Iraq policy. I am too pleased to have 
Under Secretary Pickering, also a former Ambassador to the 
United Nations, to discuss with you the oil for food program 
and its role within our Iraq policy.
    I want to make a few opening remarks, very brief, and then 
ask the Under Secretary to amplify the foreign policy context 
and explain the changes that have taken place during the life 
of the program and those that are being considered.
    I know a key concern of the committees' is whether we 
should raise or lower the amount of oil Iraq is allowed to 
export. As Secretary of Energy, I share the concerns raised in 
this country over the impacts of low oil prices on domestic oil 
production, as Senator Nickles and Senator Bingaman stated. I 
recognize there are those who do not want us to increase the 
amount of oil Iraq is allowed to produce because of concern 
that it will further depress prices.
    However, I do not believe that raising the ceiling will 
have a significant impact on prices. In addition, I have sought 
to address the concerns of our domestic industry through a 
package of initiatives, the latest being discussed yesterday at 
a meeting at the White House with the Secretary of the 
Treasury, the head of the Domestic Council, the White House 
Chief of Staff, and other representatives from the oil and gas 
industry. I would be happy to describe these in more detail 
here if it would be helpful.
    Let me explain why raising the ceiling will not cause a 
significant impact on prices. First I will briefly give context 
for the effect the re-introduction of Iraqi oil has had on 
worldwide oil price. The Energy Information Administration, 
which is an independent office within the Department of Energy, 
has identified four key factors that have influenced prices 
over the last 2 years. The return of Iraqi oil exports to the 
world market is one factor. The three others are: No. 1, 
reduced oil demand as a result of the economic crisis in many 
countries in Asia; No. 2, dramatically warmer than normal 
winters since 1996; and No. 3, increased production from some 
of the countries belonging to OPEC, particularly in 1997.
    Because these factors interact in the world oil market, it 
is difficult to state precisely how much of an impact each 
factor contributed. However, you should be aware that Iraq is 
currently producing at its full capacity. Right now Iraq is 
producing around 2.5 million barrels per day. That allows it to 
export approximately $3 billion worth of oil every 6 months, 
well below the current $5.2 billion ceiling that has been set 
by the United Nations Security Council.
    Iraq's ability to increase its production is limited and it 
is not expected to go up measurably this year. As a result, the 
Energy Information Office believes that whatever effect Iraqi 
production has had on prices has already occurred, because Iraq 
cannot increase oil production much more over the next year or 
two. The Energy Information Administration believes that 
increases in this ceiling under current circumstances will not 
have any additional significant price effect.
    So why should we have the oil for food program at all? 
Because our oil for food program is a key component of the 
administration's Iraq strategy. It helps us in three ways:
    First and most important, the program addresses the 
humanitarian needs of the Iraqi people. Although the 
importation of food and medicine was always allowed under the 
sanctions imposed on Iraq after the Gulf war, Iraq was 
unwilling to take advantage, full advantage, of this program. 
This allowed Iraq to starve its own people and blame the 
sanctions for their suffering.
    Under the oil for food program, we have taken this excuse 
away from Saddam, instead using the proceeds of Iraqi oil sales 
to feed, clothe, and otherwise aid the Iraqi people. Iraq has 
imported under U.N. supervision $2.75 billion worth of food, 
over $500 million worth of medicine, and $400 million worth of 
supplies for water, sanitation, electricity, and education. As 
a result, the average daily food ration for the Iraqi 
population has risen from 1275 calories per day in 1996 to 2100 
calories today.
    Second, our support for the oil for food program has helped 
us maintain sanctions imposed on Iraq by the United Nations. 
Under Secretary Pickering will expand on this point, but let me 
say that we would have a harder time keeping U.N. sanctions in 
place and in force without this program, and multilateral 
sanctions are central to our efforts to contain Saddam.
    Third, our concern for meeting the needs of the Iraqi 
people has been crucial in getting Iraq's neighbors to support 
the actions we have had to take against Saddam. The United 
States has always said sanctions are aimed at the current Iraqi 
regime and not at its people. The oil for food program has been 
and remains evidence that we take Saddam's responsibility to 
feed his population seriously, even when he does not.
    In conclusion, let me repeat that the oil for food program 
is a key component of the administration's Iraq policy and is 
therefore key to our national security. I understand some of 
the concerns some of you have about the possible impacts this 
program has on domestic production. I share your concerns about 
our domestic oil industry. We have to, however, balance foreign 
policy objectives against domestic concerns.
    But the best way to help the domestic industry is to 
increase demand by helping to rebuild the Asian economy and to 
lower production costs at home. As Secretary of Energy I am 
determined to do whatever I can to alleviate the economic harm 
that low oil prices have caused to our domestic oil production.
    But I also believe that it is important that Iraq's oil 
revenues be used to relieve the suffering of the Iraqi people, 
rather than by Saddam Hussein for his own criminal purposes. We 
ensure this result from the combination of sanctions and the 
oil for food program.
    I look forward to working and consulting closely with 
members of both of these committees on these important energy 
and national security goals.
    Mr. Chairman, thank you for your attention. I thank you for 
your graciousness. I look forward to your questions.
    [The prepared statement of Secretary Richardson follows:]
    Prepared Statement of Hon. Bill Richardson, Secretary of Energy
    Thank you, Chairman Helms, Chairman Murkowski and other members of 
the Foreign Relations and Energy and Natural Resources Committees for 
this opportunity to testify on our Iraq policy. I am pleased to be here 
today with Undersecretary Pickering to discuss with you the ``oil-for-
food'' program and its role within our Iraq policy. I want to make a 
few brief opening remarks and then ask Undersecretary Pickering to 
amplify the foreign policy context and explain the changes that have 
taken place during the life of the program and those that are being 
considered.
    I know a key concern for the Committees is whether we should raise 
or lower the amount of oil Iraq is allowed to export. As Secretary of 
Energy, I share the concerns raised in this country over the impacts of 
low oil prices on domestic oil production. I recognize there are those 
who do not want us to increase the amount of oil Iraq is allowed to 
produce because of concern that it will further depress prices. 
However, I do not believe that raising the ceiling will have a 
significant impact on prices. In addition, I have sought to address the 
concerns of our domestic industry through a package of initiatives. I 
would be happy to describe these in more detail here if it would be 
helpful.
    Let me explain why raising the ceiling will not cause a significant 
impact on prices. First, I will briefly give context for the effect the 
re-introduction of Iraqi oil has had on world wide oil prices. The 
Energy Information Administration--an independent office within the 
Department of Energy--has identified four key factors that have 
influenced prices over the past two years. The return of Iraqi oil 
exports to the world is one factor. The others are:
          (1) reduced oil demand as a result of the economic crisis in 
        many countries in Asia,
          (2) dramatically warmer than normal winters since 1996, and
          (3) increased production from some of the countries belonging 
        to OPEC, particularly in 1997.
    Because these factors interact in the world oil market, it is 
difficult to state precisely how much of an impact each factor 
contributed.
    However, you should be aware that Iraq is currently producing at 
its full capacity. Right now, Iraq is producing around 2.5 million 
barrels per day. That allows it to export approximately $3 billion 
dollars worth of oil every six months, well below the current $5.2 
billion dollar ceiling that has been set by the UN Security Council. 
Iraq's ability to increase its production is limited and is not 
expected to go up measurably this year. As a result, EIA believes that 
whatever effect Iraqi production has had on prices has already 
occurred, because Iraq cannot increase oil production much more over 
the next year or two. EIA believes that increases in this ceiling, 
under current circumstances, will not have any additional significant 
price effect.
    Why should we have the oil-for-food program at all? Because our 
oil-for-food program is a key component of the Administration's Iraq 
strategy. It helps us in three ways:
    First, and most important, the program addresses the humanitarian 
needs of the Iraqi people. Although the importation of food and 
medicine was always allowed under the sanctions imposed on Iraq after 
the Gulf war, Iraq was unwilling to take full advantage of the program. 
This allowed Iraq to starve its own people and blame the sanctions for 
their suffering. Under the oil-for-food program, we have taken this 
excuse away from Saddam--instead using the proceeds of Iraqi oil sales 
to feed, clothe and otherwise aid the Iraqi people. Iraq has imported--
under UN supervision--$2.75 billion dollars worth of food, over $500 
million dollars worth of medicine and $400 million dollars worth of 
supplies for water, sanitation, electricity and education. As a result, 
the average daily food ration for the Iraqi population has risen from 
1275 calories a day in 1996 to 2100 calories today.
    Second, our support for the oil-for-food program has helped us 
maintain sanctions imposed on Iraq by the United Nations. 
Undersecretary Pickering will expand on this point, but let me say that 
we would have a harder time keeping UN sanctions in place and enforced 
without this program, and multilateral sanctions are central to our 
efforts to contain Saddam.
    Third, our concern for meeting the needs of the Iraqi people has 
been crucial in getting Iraq's neighbors to support the actions we have 
had to take against Saddam. The United States has always said sanctions 
are aimed at the current Iraqi regime, not its people. The oil-for-food 
program has been--and remains--evidence that we take Saddam's 
responsibility to feed his population seriously, even when he does not.
    In conclusion, let me repeat that the oil-for-food program is a key 
component of the Administration's Iraq policy, and is, therefore, key 
to our national security. I understand the concerns some of you have 
about the possible impacts this program has on domestic production. I 
share your concerns about our domestic oil industry. We must balance 
foreign policy objectives against domestic concerns. But, the best way 
to help the domestic industry is to increase demand by helping to re-
build the Asian economy and to lower production costs at home. As 
Secretary of Energy, I am determined to do whatever I can to alleviate 
the economic harm that low oil prices have caused to our domestic oil 
production. But I also believe it is important that Iraq's oil revenues 
be used to relieve the suffering of the Iraqi people rather than by 
Saddam Hussein for his own criminal purposes. We ensure this result 
through the combination of sanctions and the oil-for-food program. I 
look forward to working and consulting closely with the members of 
these committees on both of these important energy and national 
security goals.
    Thank you for your attention and I look forward to your questions.

    Chairman Helms. Thank you, Mr. Secretary.
    The Under Secretary of State for Political Affairs, Tom 
Pickering, whom all of us have known for a long time. We 
welcome you, sir.

STATEMENT OF HON. THOMAS R. PICKERING, UNDER SECRETARY OF STATE 
                     FOR POLITICAL AFFAIRS

    Ambassador Pickering. Thank you very much, Chairman Helms 
and Chairman Murkowski. It is a pleasure to be back. I met with 
you almost a year ago to discuss U.S. policy toward Iraq and 
the role of the oil for food program and its position in that 
policy. I am pleased to be here today, particularly with 
Secretary Richardson, a distinguished public servant whose work 
I have long admired, and I would like to take his invitation 
and yours to update you on these issues.
    The administration's policy is to contain Saddam Hussein 
until he can be removed from power. We will contain Iraq by 
maintain sanctions on Iraq, enforcing the no-fly zones in the 
north and south, and by maintaining a robust military presence 
in the region and readiness to use force if Iraq reconstitutes 
its prohibited weapons programs, threatens its neighbors, or 
moves against the Kurds in the north.
    In addition to these elements of containment, we are also 
working at the United Nations to build consensus in the 
Security Council in support of an effective disarmament and 
monitoring presence in Iraq. Over the long term, however, the 
only way to ensure that Saddam no longer threatens either his 
people or his neighbors is to work for a new government in 
Iraq, one that will maintain the territorial integrity and 
unity of Iraq, respect the rights of Iraq's people and Iraq's 
neighbors, and fulfil Iraq's international obligations.
    We are committed to helping Iraqis achieve this regime 
change or transition. There are many tools we can use to help 
them, including both the $8 million in economic support funds 
which the Congress has appropriated for this purpose and the 
Iraq Liberation Act. In the final analysis, change has to come 
from the Iraqi people themselves. We cannot impose ideas or 
initiatives upon them.
    In the meantime, United Nations sanctions on Iraq are 
critical to our efforts to contain Saddam. The sanctions 
deprive Saddam of the revenue he would otherwise use to 
reconstitute weapons of mass destruction. That is why Saddam 
has set the lifting of sanctions among his highest priorities. 
He actually declared publicly that 1998 would be the year 
sanctions were lifted.
    I am pleased to report to you in 1999 that he did not 
achieve his goal, nor will he short of unconditional compliance 
with all his Security Council obligations.
    It is also essential that we address the humanitarian needs 
of the Iraqi people. Doing so is right in itself and crucial to 
maintaining Security Council and regional support for sanctions 
while we continue our efforts for regime change. It is also 
consistent with our message to the Iraqi people that the United 
States is not against the people of Iraq, only the regime that 
is responsible for their plight.
    By meeting Iraq's genuine humanitarian needs, oil for food 
allows us to maintain a tough sanctions regime against Iraq. 
Sanctions have never prohibited the import of food or medicine 
to Iraq. However, the regime in Baghdad has been unwilling to 
take full advantage of this exemption, and therefore in 1991 we 
first proposed an oil for food program to meet the humanitarian 
needs of the Iraqi people. Iraq, as you know, rejected the 
program.
    In 1995 the Security Council, with full U.S. leadership and 
support, adopted a revised oil for food program, which Iraq, 
after 2 years of negotiation, finally accepted. The first food 
shipments under this program arrived in Iraq in March 1997.
    In February 1998, based on the Secretary General's 
recommendations that additional funds were needed to meet the 
needs of the Iraqi people, the Security Council adopted an 
expanded oil for food program with our support. That program 
was renewed again in November.
    The current oil for food program permits Iraq to sell up to 
$5.2 billion worth of oil every 6 months, two-thirds of which 
goes toward the purchase of food, medicine, and other 
humanitarian goods such as water and sanitation infrastructure 
supplies. The remaining one-third goes to pay claims arising 
from Iraq's occupation of Kuwait and to pay U.N. administrative 
costs and the costs for the United Nations Special Commission 
inspection regime.
    All revenues from Iraq's oil sales are deposited in a 
United Nations escrow account, to which Baghdad has no--I 
repeat, no--access. All contracts are reviewed by the United 
Nations Sanctions Committee and the funds are only distributed 
after the contracts have been approved and the items received 
in Iraq. As a member of the sanctions committee, the United 
States scrutinizes all contracts. Because the committee 
operates by consensus, we can hold or block any contract that 
is inappropriate or ill-advised.
    Oil for food, the largest humanitarian program in United 
Nations history, requires that Saddam spend his own money on 
the thing he cares the least about, his own people.
    As noted, the U.N. Sanctions Committee approves the sale of 
all goods. The United Nations monitors on Iraq's borders and 
inside Iraq oversee their import and distribution. In northern 
Iraq the distribution is carried out directly by United Nations 
personnel.
    Oil for food is not a step toward lifting sanctions, nor 
does it reward Iraq or accrue to Iraq--to Saddam, I am sorry--
or accrue to Saddam's benefit. This is a basic and important 
statement. If this statement were wrong, much of what we have 
heard from other speakers this morning would be correct. The 
fact, of course, is that this particular statement is correct 
and therefore what we have heard from other speakers this 
morning needs to be challenged on the basis of this fact.
    In fact, this particular statement makes sanctions, 
Saddam's worst enemy, sustainable. Without an oil for food 
program, history has shown that Saddam Hussein would starve his 
own people to force the international community in an attempt 
to lift sanctions. Although we could use our veto at the United 
Nations Security Council to prevent the lifting of sanctions, 
the pressure of a sympathetic international community absent 
oil for food could also well lead to the de facto breakdown of 
the sanctions regime by other states freely breaking the 
constraints of that regime. That is not now happening.
    The oil for food program has had a tremendous positive 
impact on conditions for the average Iraqi. Since the beginning 
of the program, $2.75 billion worth of food, over $500 million 
in medicine, and $400 million worth of supplies for such issues 
as water, sanitation, electricity, and education projects has 
been delivered to Iraq. The daily food ration, as Secretary 
Richardson has just noticed, increased from 1275 calories per 
day in 1996 to 2100 per day now in 1999.
    However, problems remain. Although malnutrition rates have 
declined, they are still too high. Significant work on the 
sanitation and water, electrical, education, agricultural, and 
other sectors is also required. The United States will continue 
to work to improve the oil for food program and to ensure that 
it serves its intended purpose.
    In February the Secretary General reported that there are 
$275 million worth of medicine sitting in Iraqi warehouses 
undistributed, something that you, Chairman Helms, referred to. 
This is unacceptable and we will work to change it. We will 
continue to scrutinize every contract for goods under the oil 
for food program and, as you know, we can veto any contract 
that we judge to be inappropriate or ill-advised. Given the 
absence of the Special Commission and IAEA inside Iraq, which 
have a role in monitoring dual use goods, we have tightened our 
standards for contract approval.
    In January the Security Council formed three panels to 
examine disarmament, humanitarian, and Kuwait-related issues. 
In the latter category are missing Kuwaiti prisoners and funds 
and articles taken from Kuwait during the war. We expect that 
the humanitarian panel's report, due in mid-April, will suggest 
additional changes that may enhance the program's 
effectiveness.
    We also have proposed that the Security Council consider 
lifting the ceiling on oil sales permitted under the oil for 
food program. In the short run, Iraq would be unable to expand 
oil exports, as Secretary Richardson has explained. To increase 
oil exports, Iraq first would have to repair its energy 
infrastructure, which will take many, many months.
    Over time, however, allowing increased Iraqi oil exports 
would address concerns regarding the shortfall in revenues 
needed for humanitarian purposes. Saddam, as I noted earlier, 
would not benefit from these increased oil export revenues. The 
revenues would be put in an escrow account and released only 
for the purchase of humanitarian goods.
    Lifting the ceiling would also serve to counter growing 
calls from Arab states and Security Council members to lift 
sanctions outright. By removing the root cause of these calls 
for lifting sanctions, we free our allies in the Arab world and 
elsewhere to support our broader Iraq policy objectives. We 
also draw Security Council support away from some of the more 
radical French and Russian proposals to lift sanctions 
altogether and immediately.
    All contracts would continue to be reviewed by the 
sanctions committee. The United States, through its 
participation in that committee, would continue to scrutinize 
all contracts and the United States could hold or block any 
contracts we determine were inappropriate or ill-advised.
    We also understand the concerns raised about the current 
oil market situation. Secretary Richardson noted Iraq is only 
one among several factors which has adversely impacted oil 
prices over the last year. Our Iraq sanctions policy, however, 
has not been linked to the price of oil on world markets, as he 
pointed out. This was true in the early 1990's when Iraqi oil 
was completely off the world market, putting upward pressure on 
oil prices, and it remains the case today.
    Allowing oil price considerations to set our sanctions 
decisions or seeking to use sanctions to target oil prices 
would undermine our ability to provide for the humanitarian 
needs of the Iraqi people as well as to maintain an 
international consensus aimed at containing Saddam Hussein. 
Were international support for an effective U.N. sanctions 
regime to erode away, Saddam would be a much greater threat to 
the world community. He would quickly regain the free use of 
$10 to $15 billion per year to put his weapons of mass 
destruction programs back in place. Even if his revenue were 
monitored, having unrestricted access to such enormous revenues 
would allow him to evade monitoring easily.
    Moreover, the prospect of Iraq without U.N. sanctions would 
also have a much greater negative impact on oil prices.
    We remain concerned about the illegal traffic of oil and 
petroleum products out of Iraq, which was referred to here 
today, through Turkey, Jordan, Syria, and the Persian Gulf. 
Each of these avenues presents its own unique problems and we 
are addressing each of them differently, but with the same 
degree of attention.
    We continue, for example, to work with Turkey to develop a 
way to bring illicit trade over the Turkish border within the 
framework of the oil for food program as a way to reduce and 
eliminate any revenues that might flow back into Iraq. We 
believe a similar approach should also be taken regarding Syria 
and we are approaching that issue.
    With respect to the smuggling of Iraqi gas oil through 
Iranian territorial waters, we have had considerable success 
over the past year in combining efforts to bring third country 
pressure to bear on Tehran to end the trade with more direct 
military actions on our part. This effort has also included the 
bombing of a section of the Basra refinery devoted to producing 
products for this trade during Desert Fox and the conduct of 
surge operations by the Multinational Maritime Interception 
Force, or MIF, in areas of the northern Gulf known to be used 
by the Iraqis and others as routes for moving smuggled cargos.
    As for Jordan, although the United Nations has taken note 
of Jordan's trade of bartering humanitarian goods in exchange 
for oil set at concessionary prices, we continue to work to 
reduce Jordan's dependence on Iraqi oil.
    Although the oil for food program is not perfect, it is 
essential to our policy of containing Saddam until there is a 
new government in Baghdad. Without it, sanctions would be much 
more difficult to sustain, Saddam Hussein would once again have 
control over tens of billions of dollars a year to spend on 
weapons of mass destruction.
    Thank you, and I welcome any questions that you might have.
    [The prepared statement of Ambassador Pickering follows:]

  Prepared Statement of Hon. Thomas R. Pickering, Under Secretary of 
                      State for Political Affairs

    Mr. Chairmen: I met with you almost a year ago to discuss 
U.S. policy towards Iraq and the role the ``oil for food'' 
program plays within it. I am pleased to be here today to 
update you on these issues
    The administration's policy is to contain Saddam Hussein 
until he can be removed from power. We will contain Iraq by 
maintaining sanctions on Iraq, enforcing the no-fly zones in 
the North and South, and by maintaining a robust military 
presence in the region and a readiness to use force if Iraq 
reconstitutes its prohibited weapons programs, threatens its 
neighbors, or moves against the Kurds in the north.
    In addition to these elements of containment, we are also 
working at the United Nations to build, consensus in the 
Security Council in support of an effective disarament and 
monitoring presence in Iraq.
    Over the long-term, however, the only way to ensure that 
Saddam no longer threatens either his people or his neighbors 
is to work for a new government in Iraq--one that will maintain 
the territorial integrity and unity of Iraq, respect the rights 
of Iraq's people and Iraq's neighbors, and fulfill Iraq's 
international obligations. We are committed to helping Iraqis 
achieve this regime change or transition. There are many tools 
we can use to help them, including both the $8 million in 
Economic Support Funds Congress has appropriated for this 
purpose, and the Iraq Liberation Act. In the final analysis, 
change has to come from the Iraqi people themselves. We cannot 
impose ideas or initiatives on them.
    In the meantime, U.N. sanctions on Iraq are critical to our 
efforts to contain Saddam. The sanctions deprive Saddam of the 
revenue he would otherwise use to reconstitute weapons of mass 
destruction. That is why Saddam has set the lifting of 
sanctions among his highest priorities. He actually declared 
publicly that 1998 would be the year sanctions were lifted. I'm 
pleased to report to you in March 1999 that he did not achieve 
his goal, nor will he short of unconditional compliance with 
all his Security Council obligations.
    It is also essential that we address the humanitarian needs 
of the Iraqi people. Doing so is right in itself, and crucial 
to maintaining Security Council and regional support for 
sanctions while we continue our efforts for regime change. It 
is also consistent with our message to the Iraqi people that 
the United States is not against the people of Iraq--only the 
regime that is responsible for their plight. By meeting Iraq's 
genuine humanitarian needs, oil-for-food allows us to maintain 
a tough sanctions regime against Iraq.
    Sanctions have never prohibited the import of food or 
medicine to Iraq. However, the regime in Baghdad has been 
unwilling to take full advantage of this exemption, and, 
therefore, in 1991, we first proposed an oil-for-food program 
to meet the humanitarian needs of the Iraqi people. Iraq 
rejected the program. In 1995, the Security Council, with full 
U.S. leadership and support, adopted a revised oil-for-food 
program, which Iraq finally accepted at the end of 1996. The 
first food shipments under this program arrived in Iraq in 
March 1997. In February 1998, based on the Secretary General's 
recommendations that additional funds were needed to meet the 
needs of the Iraqi people, the Security Council adopted an 
expanded oil-for-food program. That program was renewed again 
in November.
    The current oil-for-food program permits Iraq to sell up to 
$5.2 billion worth of oil every six months, two-thirds of which 
goes towards the purchase of food, medicine and other 
humanitarian goods such as water and sanitation infrastructure 
supplies. The remaining one-third goes to pay claims arising 
from Iraqs occupation of Kuwait, and to pay U.N. administrative 
and UNSCOM costs. All revenues from Iraq's oil sales are 
deposited in a U.N. escrow account to which Baghdad has no 
access. All contracts are reviewed by the U.N. Sanctions 
Committee, and funds are only distributed after the contracts 
have been approved, and the items received in Iraq. As a member 
of the Sanctions Committee, the U.S. scrutinizes all contracts. 
Because the Committee operates by consensus, we can hold or 
block any contract that is inappropriate or ill-advised. Oil-
for-food, the largest humanitarian program in the U.N.'s 
history, requires that Saddam spend his own money on the thing 
he cares least about--his own people.
    As noted, the U.N. Sanctions Committee approves the sale of 
all goods; U.N. monitors on Iraq's borders and inside Iraq 
oversee their import and distribution. In northern Iraq, the 
distribution is carried out directly by U.N. personnel.
    Oil-for-food is not a step towards lifting sanctions, nor 
does it reward Saddam. In fact, it makes sanctions--his worst 
enemy--sustainable. Without an oil-for-food program, history 
has shown that Saddam Hussein would starve his own people to 
force the international community to lift sanctions. Although 
we could use our veto at the U.N. to prevent the lifting of 
sanctions, the pressure of a sympathetic international 
community--absent oil-for-food--could well lead to the de facto 
breakdown of the sanctions regime.
    The oil-for-food program has had a tremendous positive 
impact on conditions for the average Iraqi. Since the beginning 
of the program, $2.75 billion worth of food, over $500 million 
of medicine and $400 million worth of supplies for such things 
as water, sanitation, electricity and education projects, has 
been delivered to Iraq. The average daily food ration has 
increased from 1275 calories per day in l996 to 2100 calories 
per day now. However, problems remain. Although malnutrition 
rates have declined, they are still too high. Significant work 
on the sanitation and water, electrical, education, agriculture 
and other sectors is still required.
    The U.S. will continue to work to improve the oil-for-food 
program, and to ensure that it serves its intended purpose. In 
February, the U.N Secretary General reported that there are 
$275 million worth of medicine sitting in Iraqi warehouses 
undistributed. This is unacceptable, and we will work to change 
it. We will continue to scrutinize every contract for goods 
under the oil-for-food program and can veto any contract that 
we judge to be inappropriate or ill-advised. Given the absence 
of UNSCOM and IAEA, which have a role in monitoring dual-use 
goods, we have tightened our standards for contract approval. 
In January, the Security Council formed three panels to examine 
disarmament, humanitarian and Kuwait-related issues. We expect 
that the humanitarian panel's report, due in mid-April, will 
suggest additional changes that may enhance the program's 
effectiveness.
    We also have proposed that the Security Council consider 
lifting the ceiling on oil sales permitted under the oil-for-
food program. In the short run Iraq would be unable to expand 
oil exports. To increase oil exports, Iraq first would have to 
repair its energy infrastructure, which will take many months. 
But, over time, allowing increased Iraqi oil exports would 
address concerns regarding the shortfall in revenues needed for 
humanitarian purchases. Saddam would not benefit from these 
increased oil export revenues. The revenues would be put in an 
escrow account and released only for the purchase of 
humanitarian goods.
    Lifting the ceiling also would serve to counter growing 
calls from Arab states and Security Council members to lift 
sanctions outright. By removing the root cause of calls for 
lifting sanctions, we free our allies in the Arab world and 
elsewhere to support our broader Iraq policy objectives. We 
also draw Security Council support away from more radical 
French and Russian proposals to lift sanctions altogether. All 
contracts would continue to be reviewed by the Sanctions 
Committee. The U.S., through its participation in the Sanctions 
Committee, would continue to scrutinize all contracts, and 
could hold or block any contracts we determine to be 
inappropriate or ill-advised.
    We also understand the concerns raised about the current 
oil market situation. As Secretary Richardson noted, Iraq is 
only one among several factors which has adversely impacted oil 
prices over the last year. Our Iraq sanctions policy, however, 
has never been linked to the price of oil on world markets. 
This was true in the early 1990s when Iraqi oil was completely 
off the world market, putting upward pressure on oil prices, 
and it remains the case today. Allowing oil price 
considerations to drive our sanctions decisions, or seeking to 
use sanctions to target oil prices, would undermine our abilily 
to provide for the humanitarian needs of the Iraqi people as 
well as to maintain an international consensus aimed at 
containing Saddam Hussein.
    Were international support for effective U.N. sanctions 
regimes to erode, Saddam Hussein would be a much greater threat 
to the world community. He would quickly regain the free use of 
ten to fifteen billion dollars per year to put into his WND 
programs. Even if his revenue were monitored, having 
unrestricted access to such enormous revenues would allow him 
to evade monitoring easily. Moreover, the prospect of Iraq 
without U.N. sanctions would also have a much greater negative 
impact on oil prices.
    We remain concerned about the illegal traffic of oil and 
petroleum products out of Iraq--to Turkey, Jordan, Syria and 
the Persian Gulf. Each of these avenues presents unique 
problems, and we are addressing each of them differently. We 
continue to work with Turkey to find a way to bring illicit 
trade over the Turkish border within the framework of the oil-
for-food program. We believe a similar approach should also be 
taken regarding Syria. With respect to the smuggling of Iraqi 
gasoil through Iranian territorial waters, we have had 
considerable success over the past year in combining efforts to 
bring third-country pressure to bear on Tehran to end the trade 
with more direct military actions. This has included bombing of 
the section of the Basra refinery devoted to this trade during 
Desert Fox, and the conduct of ``surge operations'' by the 
multi-national Maritime Interception Force or ``MIF,'' in areas 
of the northern Gulf known to be used by the Iraqis and others 
as routes for smuggled cargoes. As for Jordan, although the 
U.N. has taken note of Jordan's trade of bartered humanitarian 
goods in exchange for Iraqi oil at concessionary prices, we 
continue to work to reduce Jordan's dependence on Iraqi oil.
    Although the oil-for-food program is not perfect, it is 
essential to our policy of containing Saddam until there is a 
new government in Baghdad. Without it, sanctions would be much 
more difficult to sustain. Saddam Hussein would once again have 
control over tens of billions of dollars a year to spend on 
weapons of mass destruction.
    Thank you, and I welcome any questions you may have.

    Chairman Helms. Thank you, Mr. Pickering.
    I note the arrival of the distinguished Democratic ranking 
member and we recognize you for any statement you may wish to 
make.
    Senator Biden. Well, thank you. I know better than to 
trespass on the time of this committee, especially a joint 
committee like this. So I will enter my statement in the record 
if I may, Mr. Chairman, and thank you for your courtesy and 
wish you a happy Saint Patrick's Day.
    [The prepared statement of Senator Biden follows:]

           Prepared Statement of Senator Joseph R. Biden, Jr.

    Mr. Chairman, thank you for calling this hearing. I welcome 
our witnesses--Ambassador Pickering and Secretary Richardson.
    Both of you have had the distinction of having served as 
U.S. Permanent Representative to the United Nations.
    Given all of the tough battles you have fought, I am sure 
that you are well-versed in matters relating to Iraq.
    As you know, for 8 years over 3 Administrations, we have 
sought to contain the threat Saddam Hussein poses to our 
interests in the Persian Gulf.
    Since last November, we have added to the policy of 
containment the goal of removing Saddam Hussein from power. I 
support this change in policy.
    We have argued vociferously that our policy, which includes 
the toughest sanctions in history, is directed not at the Iraqi 
people, but at their despicable leadership.
    But many of our allies in the Middle East, whose support is 
critical for our policy to succeed, blame sanctions for the 
suffering of the Iraqi people. Others such as Russia, China, 
and France cynically propose easing sanctions in hopes of 
reaping commercial rewards.
    In 1991, the United Nations, with our support, offered Iraq 
a deal--it could sell oil and use the proceeds under 
supervision to meet the humanitarian needs of its people. 
Saddam Hussein demonstrated his callous disregard for the Iraqi 
people by rejecting this program until 1996.
    Since then, the amount of oil that Iraq is authorized to 
export under the oil-for-food program has gradually been 
increased for two reasons. First, to more adequately address 
the humanitarian needs of the Iraqi people. Second, to deflect 
international pressure to lift sanctions. I would submit that 
it has largely achieved both of these objectives.
    Recently, however, a legitimate domestic issue has been 
injected into an already complex foreign policy calculation. 
Many of our domestic oil producers are hurting because of the 
low price of oil. Increases in Iraqi oil production have come 
at the wrong time by exacerbating the oversupply in the oil 
market and adding to downward pressure on prices.
    I don't claim to be an expert on domestic energy policy--I 
leave that to my able colleagues from the Energy Committee. But 
I do know that in foreign policy, we often do not have the 
luxury of only choosing from good options. Sometimes we have to 
pick the least bad option that serves our national interests.
    That is what we are doing in Iraq.
    Is the oil-for-food program perfect? Of course not. There 
are serious defects that will be brought to light today and 
need to be corrected.But oil-for-food is meeting our 
fundamental objective of keeping sanctions on Saddam Hussein 
while forcing him to do something he does not like to do--and 
that is to spend oil revenues under U.N. supervision to benefit 
the Iraqi people.
    Without oil-for-food, sanctions would long ago have 
vanished, and Saddam would have faced no constraints whatsoever 
in rebuilding his military arsenal.
    As far as our domestic oil producers are concerned, I do 
not in any way wish to downplay the tough times they face.
    My colleagues on the Energy Committee are in a better 
position to address this issue.
    But I hope that we can all agree upon our national security 
objective of containing, weakening, and eventually removing 
Saddam Hussein.
    I look forward to your testimony.

    Chairman Helms. Thank you, sir.
    I am going to yield my time and put myself at the end of 
the line, and the next ranking Republican is Chuck Hagel, 
Senator from Nebraska. You are recognized.
    By the way, we will limit ourselves to 5 minutes.
    Chairman Murkowski. 5 minutes on our side on questions, 
fair enough?
    Chairman Helms. Exactly.
    Senator Hagel. Mr. Chairman, thank you. I too wish to 
express my appreciation to our witnesses for their time this 
morning.
    Secretary Richardson, in your statement on page 2, I am 
going to read just a small part back and ask a question. The 
first paragraph on the second page, you state: ``Under the Oil 
for Food program we have taken this excuse away from Saddam, 
instead using the proceeds of Iraqi oil sales to feed, clothe, 
and otherwise aid the Iraqi people. Iraq has imported, under 
U.N. supervision, $2.75 billion worth of food,'' and it goes 
on.
    Could you explain to this committee, Mr. Secretary, how 
that works, the ``under U.N. supervision''?
    Secretary Richardson. I will do my best, although I have 
forgotten a lot of those U.N. bureaucracies.
    Senator Hagel. Well, with two former U.N. Ambassadors, I 
know we will not want for expertise here.
    Secretary Richardson. At the United Nations there is a 
bureaucracy, there is a number of people that administer the 
oil for food program. Right now it is headed by a very 
competent individual by the name of Benon Sevan. The objective, 
Senator Hagel, of this entity at the United Nations is to 
ensure that the oil for food program is properly administered, 
that the Iraqi people are getting the food and medicine that 
are part of this program.
    They have encountered a lot of resistance from the Iraqi 
Government in administering this program. But this is a group 
of men and women very dedicated, that do their best to ensure 
that this program is effectively implemented.
    We have tried as much as we can while I was Ambassador to 
the United Nations to ensure that this program is properly 
administered. There have been some problems. We have had in our 
judgment requests by the Iraqis to, instead of concentrating on 
food and medicine, that some of the funding go to 
infrastructure to improve their oil production, to other areas 
that improve their capacity to--we want to make sure that they 
do not use the funds to build weapons, to increase their 
military arsenal.
    But our objective is to make sure that this board or this 
entity at the United Nations effectively administers this 
program.
    Senator Hagel. Do you believe that the U.N. manpower is 
sufficient to do that, the capability on the ground is able to 
get the job done?
    Secretary Richardson. I believe it is. But maybe the Under 
Secretary may want to add to what I said.
    Ambassador Pickering. I would like to join Secretary 
Richardson in that point. I think that, just to give you a 
brief review, there are contractors as well as United Nations 
inspectors involved on the ground in assuring that this process 
moves effectively. There is a Dutch firm called Saybolt which 
monitors the exports. There are members of a Swiss company, 50 
of them, called Cotecna, which has the contract at the four 
entry points to monitor what goes in.
    The U.N. office has 150 inspectors. Eighty of them are 
sectoral observers operating inside Iraq. They look at the 
goods nationwide from the point of entry to delivery to the 
beneficiary. These are people with strong technical expertise, 
World Health Organization on medicines, for example, Food and 
Agricultural Organization on food warehouses.
    There are approximately, in addition, 50 geographic 
observers from the office of the U.N. Humanitarian Coordinator. 
They track the goods in various geographic regions to assure 
that they are equitably distributed.
    There are 20 members of a multidisciplinary unit, highly 
qualified sectoral experts who are not part of the----
    Senator Hagel. Mr. Secretary, let me be rude here and 
interrupt you since my time is limited here. Are you saying 
that you believe that we have an effective U.N. program in 
place, getting the job done?
    Ambassador Pickering. I believe we have an effective U.N. 
program, but I think Secretary Richardson and I would join 
together to say we need to keep our eye on it, as we do, and if 
the process of food increases and more goes in then we need to 
find ways to be sure that the number of people is properly 
attuned to the volume being looked at.
    Senator Hagel. Let me see if I can sneak one additional 
question in to you, Mr. Secretary. Thank you.
    In your testimony, the last page, you refer to the fact 
that, with respect to the smuggling of Iraqi gas oil through 
Iranian territorial waters, we have had, in your testimony, 
``we have had considerable success over the past year.'' Could 
you explain to me what that means, ``considerable success''?
    Ambassador Pickering. I would say that if the chart were 
put up again that we had looked at, we would see that on a 
number of occasions the amount of Iraq smuggled oil had dropped 
almost to zero, and that in fact some of that success has been 
putting pressure on Iran, through whose waters some of this 
cargo is smuggled, in places where the Multinational 
Interdiction Force can actually interrupt the smuggling of the 
cargo.
    Other areas where we have had success most recently is 
knocking out the portion of the Basra refinery which provides 
gas oil to those ships that are smuggling it. The current 
information I have is that that particular effort in that area 
has reduced to a trickle.
    Senator Hagel. Is the Iranian Government involved in this 
in any way?
    Ambassador Pickering. I cannot tell you for certain whether 
they are or not in a direct sense, but I do know that 
indirectly they have the authority, the right, and the 
obligation to control what moves through their waters in terms 
of United Nations obligations by which they are bound to 
prevent that from happening.
    Senator Hagel. Mr. Chairman, thank you.
    Chairman Helms. Thank you, Senator.
    Senator Murkowski.
    Chairman Murkowski. Thank you very much, Senator Helms.
    I am not sure just how you get to be an enemy of the United 
States any more, because clearly we are propping up this 
regime, just like we are propping up the regime in North Korea. 
You know, if you want to bring Saddam Hussein to his knees you 
cutoff his oil flow. That is his cash-flow. That is 90 percent 
of it.
    This policy of one day bombing, the next day supporting an 
increase in his oil production, is beyond me and it is beyond 
my interpretation of just what kind of a relationship we have. 
Under the policy of the administration, I suppose you could go 
back to the Second World War and wonder if we could provide 
assistance for the people in Germany or the people in Japan or 
the people in Italy and that would somehow allow us to maintain 
a relationship of some kind.
    But you know, clearly we have a different agenda than 
Saddam Hussein. In my opinion, when you send American troops in 
harm's way to do somebody no good, they are the enemy. We are 
propping up this regime.
    Mr. Pickering, your suggestion that somehow, at the 
conclusion of your statement, without sanctions there would be 
a difficult situation because Saddam would use the funds he 
generates from oil to build weapons of mass destruction--but if 
you cutoff his oil flow he cannot build weapons of mass 
destruction, he crumbles, and there will be in Baghdad a 
change. Now, the people will certainly suffer, but they are 
suffering anyway.
    We are sustaining this process for reasons that obviously 
are a change in policy from our traditional evaluation of who 
is an enemy when we send our troops in harm's way to do the 
harm, kill their people.
    When you look at the action taken on this oil refinery, and 
you mentioned it, Mr. Pickering, the question is one day we 
bomb the oil refinery, the next day we allow funds to replace 
it, if you will.
    This was of course the pipeline when the fighter jets 
bombed the communication center and you remember our Secretary 
of Defense indicated that he was deeply concerned about the 
attack, which suspended Iraq's oil exports. Will Saddam Hussein 
now be able to use his oil for food funds to rebuild this 
communications center, Mr. Pickering?
    Ambassador Pickering. I do not believe so.
    Chairman Murkowski. You do not believe. Then it will not 
happen, then?
    Ambassador Pickering. I would like to address the whole 
question you raise, Senator.
    Chairman Murkowski. Well, I do not have a lot of time here. 
I would like you to provide for the record whether or not the 
U.N. in its process is going to allow those funds to repair 
damage to that pipeline complex or not. Is that fair enough?
    Ambassador Pickering. Please, and I will be glad to do it.
    [The information referred to was not available at time of 
publication.]
    Chairman Murkowski. As of March 12, 391 oil sector 
contracts worth $236 million were approved by the U.N. Let us 
see where they have gone: France, $89 million; China, $21 
million; Russia, $17 million; the United States, zero. They are 
not buying anything from us, are they?
    Ambassador Pickering. No.
    Chairman Murkowski. Why?
    Ambassador Pickering. Because they have a conscious policy 
of not buying from us.
    Chairman Murkowski. And we have a conscious policy of 
allowing them to produce more oil. Boy, it is beyond me, I tell 
you. I just cannot quite buy into your--now, the suggestion was 
made, Mr. Secretary, concerning the generalization that somehow 
this policy of allowing Iraq to produce more oil does not have 
anything to do with prices. Yet George Yates, the chairman of 
the Independent Petroleum Association, wrote a recent op-ed in 
the New York Times in which he said: ``He''--meaning Saddam 
Hussein--``is in a position to rock the oil markets in either 
direction, either destabilizing exporting countries as he is 
doing today or punishing the consumer countries by withholding 
oil from the market.''
    Now, I do not know whether you agree with the statement. 
You know OPEC cut their production the other day--Saudi Arabia, 
Iran, Algeria, Venezuela, Mexico. Iraq was not in there. They 
did not cut their production. But you know what happened to the 
price? The price went up. Now, they cut their production by 2.5 
million barrels per day. That is equal to Saddam Hussein's 
current production. The price went up from $12.25 a barrel to 
$14.87 a barrel.
    So Mr. Secretary, I fail to understand your rationale that 
Saddam Hussein's contribution does not significantly have an 
effect on the price of oil when clearly we have evidence that 
just came out the other day that if you cut the production, 
price goes up. Could you explain that, Mr. Secretary?
    Secretary Richardson. Yes, I will, Senator. Let me just say 
that we have--on sanctions, our sanctions policy has cost 
Saddam Hussein about $120 billion between 1991 and 1996. To say 
we are rewarding him is just not correct.
    Let me also say, Senator, that when I was Ambassador at the 
U.N. it was tough to keep those sanctions on. We always 
succeeded because of our persistence and the British. Sometimes 
what we used as an important component in our policy was the 
oil for food program giving humanitarian aid to the Iraqi 
people that Saddam was not willing to give, under very tight 
controls. We were able to achieve our objectives of keeping the 
sanctions on.
    Sanctions are keeping the revenue away from Saddam. They 
are not propping him up.
    Now, let me deal with the energy question. I do disagree 
with----
    Chairman Murkowski. We have a differing interpretation, but 
go ahead. I respect your opinion.
    Secretary Richardson. I do disagree with Mr. Yates, 
although he is from New Mexico and I was with him yesterday and 
he was at the White House meeting eliciting that same point of 
view.
    The price of oil by the way--this is good news--it has gone 
up $3 dollars in the last month. It is now, the west Texas 
intermediate crude is $14.74, which is high for the year.
    My point here, Senator, is that we believe that the effect 
of Iraqi actions has been marginal, that there are other causes 
for the change in Iraqi prices, in world prices. I mentioned 
the Asian financial crisis, the warm winters, other factors. 
Iraq is not a player here. So we fail to see their actions 
determining the international oil market that affects our 
domestic producers. We do fail to see this.
    What we would like to do is find ways together to help the 
domestic oil and gas producer, and we are working together on 
that with you and with members of your committee. But to say 
that Iraq is a major player, it is not the swing producer. 
Saudi Arabia is the swing producer. There is no way that Iraq 
and the oil for food program are making Iraq the swing 
producer.
    This applies to countries that have excess oil capacity 
that they can use to impact world oil markets. Only one 
country, Saudi Arabia, does that. Iraq would likely continue to 
fill its full capacity and therefore would not have their 
influence on world markets. So we reject this view that they 
are the swing producer they are alleged to be.
    Chairman Murkowski. Thank you. My time is up, but I remain 
from Missouri on the explanation.
    Chairman Helms. Senator Brownback, you have been here from 
the beginning.
    Senator Brownback. Thank you, Mr. Chairman. I appreciate 
you holding the hearing. I appreciate very much the witnesses' 
attendance and presentations.
    I am very troubled--I have been stating this for some 
period of time--with our policy toward Iraq. It seems to me 
that we have got an opportune window right now to press this 
issue forward to have Saddam Hussein out of power, and we seem 
to be waiting on him to die of eating too much fatty food 
instead of pressing the case forward. I think that we ought to 
be pressing him much more.
    Mr. Pickering--and I respect greatly both of your 
abilities. You are very talented men and I got to serve with 
Mr. Richardson in the house.
    Mr. Pickering, are we at war with Iraq?
    Ambassador Pickering. No, we are not at war with Iraq. We 
have used military force, as you know, both in Desert Fox to 
deal with his being out of compliance with U.N. resolutions and 
to reduce and diminish his capacity militarily to do that and 
to affect his neighbors, and we are continuing to enforce the 
no-fly zones.
    Senator Brownback. So what would you describe we are in 
with Iraq now?
    Ambassador Pickering. We are certainly in a state of 
animosity. We are using military force to accomplish those 
objectives which I have set out for you.
    Senator Brownback. Well, I think we should be in a degree 
of great animosity----
    Ambassador Pickering. We can be that way.
    Senator Brownback [continuing]. If you would like. And we 
are not acting that way. If I could with you, we have been 
going through and now you want to lift, as I understand, 
entirely all limitations on oil exports, which I disagree 
strongly with.
    I want to read you just the last, the Security Council 
phase five approval contracts and the amount. Phase five, the 
committee, the U.N. committee, has approved contracts worth 
$709 million and put one contract worth $190,000 on hold. Now, 
if my calculations are correct we have put .03 percent of the 
contracts on hold, the value of the contracts.
    Last week the OIP received a further six contracts for the 
supply of oil industry spare parts and equipment worth about 
$2.2 million. The total received now is 534 with a total value 
of $283 million roughly, 661. The committee approved five 
contracts worth $6.5 million, bringing the total approved to 
391 worth $236 million. There are currently 94 contracts on 
hold worth about $28 million or about 13 percent.
    So we are basically letting everything flow through. If I 
might note in the humanitarian area that the chairman held up 
this package containing, the note on it says, approximately 20 
percent of the so-called distribution list of the items 
requested by Iraq under the oil for food program. I just want 
to look at that. The chairman held it up, and it does strain 
one.
    But you know what is even more straining, is to listen to 
what is approved under this list of items that are food aid, 
food processed items. Listen to this: transportation trucks, 30 
to 35 ton capacity with spare parts. Now, I wonder what all 
that could be used for? I know how we could use it on our farm 
in Kansas, but I also know how it could be used in the field of 
war in Iraq.
    Forklifts, different types, and caps, with spare parts. 
Diesel engine generating set. You go on. That is just the first 
page I picked out of here. You could have picked out 100 
different pages.
    Well, let us see what we get on this one. Steel wire, 
construction, railway crane, hydraulic crawler crane. I just 
pulled that one up in the middle of this list of 20. I wonder 
what else we could get here. This is all under food aid. This 
is the food humanitarian aid.
    Well, here is a colonoscopy scope. I do not know what 
that--that must be in another category. Maybe that is for 
lifting all this.
    My point in saying this, and I will wrap up, Mr. Chairman, 
is we are not at a stage of great animosity. Perhaps we are at 
a containment strategy. We are not at a containment plus 
removal strategy to any effectiveness. We are allowing 
virtually everything to flow freely through, and we are at a 
time, if I could, we are at a time when he is in a weakened 
state, and we should prosecute this on to its completion at 
this point in time, at this point in time, and not be waiting 
and waiting and allowing more to flow through.
    This is the time to move forward.
    I appreciate your patience and indulgence.
    Chairman Helms. Senator Nickles.
    Senator Nickles. Mr. Chairman, thank you very much.
    This has been a very interesting hearing. I think I heard 
both witnesses say that our policy has not rewarded him. I 
wrote down ``Rewarding him is not correct,'' rewarding him for 
noncompliance. Is that your statement?
    Ambassador Pickering. Yes.
    Secretary Richardson. Yes.
    Senator Nickles. Let me just take you back to January of 
last year. January of last year we had 30,000 troops in the 
area and we were very close to going to war, is that correct? 
We were really close to having a significant punishing military 
strike in January 1998, correct?
    Ambassador Pickering. Correct.
    Senator Nickles. Is that not correct? I did not dream this 
up?
    Secretary Richardson. Yes.
    Senator Nickles. And then in February, due to the 
leadership of Kofi Annan and the support of the United States, 
we passed a resolution that said that he could double his oil 
for food program to where he could sell up to $10.4 billion 
worth of oil. In exchange for that, we had renewed access to 
UNSCOM, is that not correct? UNSCOM had access into Iraq?
    We were going to strike to force him to comply with UNSCOM, 
and in exchange, although there is 3 days difference in timing, 
but we granted him that $10.4 billion, doubled his oil sales, 
and in exchange we now had renewed access for UNSCOM. Is that 
not correct?
    Ambassador Pickering. I do not believe that there was an 
exchange involved, because there is no program that Saddam 
dislikes more than the oil for food program. It is a program 
designed to deny him revenue, $120 billion through sanctions. 
Each year whatever amount goes into the oil for food program is 
no longer available to Saddam. It takes money away from Saddam.
    Senator Nickles. Correct me if I am wrong, Mr. Secretary. 
We were close to going to war in January. We were very close to 
going to war in January and February. On February 20 the U.N. 
passed a resolution allowing him to double his oil sales.
    Ambassador Pickering. It came at the end of the regular 6-
month period for renewals. It was a conjunction of time. I do 
not believe--and I watched that very carefully--it had anything 
to do with Kofi Annan's visit or the memorandum which was 
produced and endorsed by the United Nations----
    Senator Nickles. They were separated by a week.
    Ambassador Pickering. They were separated by a week, but he 
knew 6 months ahead of time that it was coming.
    Senator Nickles. Well, listen to this, Mr. Secretary. So 
all of a sudden we have renewed cooperation for UNSCOM, which 
lasted about 6 months. UNSCOM was basically denied access in--
--
    Ambassador Pickering. In August and October.
    Senator Nickles [continuing]. In August and kicked out in 
October. So he doubled his oil sales, we had temporary renewed 
access for UNSCOM. They were denied access throughout 1997. We 
had renewed access in 1998 for about 6 months. They started 
getting close, they were denied access in July, kicked out--or 
August, and kicked out in October.
    So the net result was we allowed him to double his oil 
sales, we had temporary access for UNSCOM, and then UNSCOM was 
kicked out and his oil sales continued. I find that rewarding 
his noncompliance.
    He did not comply. We were using the sanctions, including 
oil sales sanctions, limits on what he could sell, in a measure 
to put leverage on him to get him to comply. We doubled it so 
he would comply again and avert war. We did that, he complied 
temporarily, he withdrew his compliance, and he continued to 
sell the oil. That has rewarded his noncompliance.
    The net result is you have no UNSCOM. Correct me if I am 
wrong. Did I sleep through something? Is UNSCOM in Iraq today? 
Are they conducting onsite inspections today? No, the answer is 
no. So Saddam Hussein is now able--and Secretary Richardson, 
you made a comment that I have to--you said, well, these 
policies in lifting the cap will have no future impact, 
negative impact on oil prices.
    What you are really saying is that the deal that was cooked 
by the U.N. resolution of February 20 allowing him to double 
the oil sales more than exceeded his capacity for a long time 
and so the damage is already done.
    Oil sales in 1998 went from 1.2 to 2.5 just in this last 
year, which was allowed by the resolution that passed in 
February. So basically that resolution in January--that passed 
in February allows him to produce all the oil that he wants.
    Mr. Secretary, one other comment that you will regret. You 
said Iraq is not a player dealing with these oil prices. The 
very fact they are producing 2 million barrels more per day 
today than they were 3 years ago means that they have greatly 
contributed to an already soft market, which was the other 3 
reasons which you alluded to in the EIA statement.
    Secretary Richardson. Senator, I do stand by my statement.
    Senator Nickles. They are not a player?
    Secretary Richardson. Iraq is not a swing player.
    Senator Nickles. That 2 million barrels had nothing to do 
with the softness of the market.
    Secretary Richardson. It has a marginal, manageable effect. 
Our economists at the Energy Information Agency concur with 
that.
    Let me just say, Senator, there are two premises that I 
think you are making that are incorrect. The first one is 
Saddam Hussein does not like this program, because what we are 
doing is feeding his people against his will because he wants 
to use all revenues to increase his weapons of mass 
destruction, his military capability.
    Second, the oil for food program is a very tightly 
controlled program. The United Nations is able to control how 
this money is spent. It is not as if he is enriching himself or 
he is diverting some of these funds to other purposes. We have 
worked very hard to make sure that he spends it on food and 
medicine.
    Senator Nickles. Mr. Chairman, I know you are gaveling.
    I would urge you to look at Platt's Oilgram November 1998 
that basically implies that he is able to funnel millions of 
dollars, maybe very significant, hundreds of millions of 
dollars, by discounts and use that money for weapons or 
anything else. This is a report that I would urge you to look 
at and respond to.
    Ambassador Pickering. I would just say, Senator Nickles, we 
have looked at that very, very carefully. We have found no 
evidence of that.
    Senator Nickles. Would you give that to me in writing?
    Ambassador Pickering. Yes.
    Senator Nickles. I appreciate that.
    Senator Nickles. Thank you, Mr. Chairman.
    Chairman Helms. Senator, maybe we can beat him to death 
with a wet noodle. Have you ever thought of that?
    Senator Biden.
    Senator Biden. Thank you, Mr. Chairman.
    Gentlemen, you should get combat pay today. You have been 
dealt a lousy hand here to come up and make this case. Quite 
bluntly, you have only one of three arguments you can even 
begin to sell here.
    One is that somehow if we lift the ceiling more Iraqi 
people are going to be better off physically and in terms of 
health, and that is going to cause them to look with favor on 
us and disfavor on Saddam and throw him out more rapidly. It 
does not sell very well.
    The second one is that if we do not raise this our 
erstwhile allies are going to walk on us. That is your most 
powerful argument: If we do not do this the French, the 
Russians, everyone else, is going to walk away from sanctions 
policy, so notwithstanding the fact that we maintain sanctions 
there will be no sanctions policy.
    The third argument is the one most fascinating, which you 
cannot make. I am going to be a little facetious. That argument 
says by raising the ceiling oil prices will stay low because, 
notwithstanding all the oil State producing Senators here, my 
folks back home listen to this--and by the way, I happen to 
agree that we are in trouble, but back in my State people are 
saying: Now, those guys from Oklahoma and Kansas, what are they 
doing? They want my gasoline prices to go up? They want my 
heating oil bills to rise? They kind of like this idea, you 
know what I mean? They kind of like the idea that prices are 
low.
    So they have got a lousy argument, substantively correct 
but a lousy argument politically. And you all have a horrible 
argument politically to make here.
    I only have one question. You cannot--you are not able now. 
There is nobody on the ground. No one is controlling the 
distribution except in northern Iraq. We do not know for 
certain where this is going in central and southern Iraq. We do 
not have the kind of control we had before. The U.N. is not 
there in the same--oh, come on now. Look, I am on your team. 
These guys are not. I am. I mean, we are all on the same team, 
but I mean I am with you guys.
    But we have an old expression, do not kid a kidder, you 
know what I mean? This is a lousy idea. Unless you are able to 
come up here and show some of us that the whole sanctions 
regime falls unless this happens, then do not count me in, do 
not count me in to help you.
    I will be blunt about it. If I do not help you, it ain't 
going to happen, only because they ain't going to help you. 
They disagree with you. It is not that I am so special. It is 
just that I happen to be a Democrat who thinks the idea is 
lousy.
    I happen to agree with Mr. Brownback right now, Senator 
Brownback. This is the time to pursue.
    Now, if you can give me the reason why--I say to my friend 
from Oklahoma, the reason why the action was taken so hastily 1 
week after we--pardon me? One week before, I should say. Thank 
you very much, I appreciate that.
    I do not know what I would do without these staff guys, you 
know what I mean? I do not know how I could speak. I would get 
up in the morning and I do not know what I would be able to do.
    Senator Wellstone. Joe, we are pretty sure you could speak.
    Senator Nickles. We were not worried about that.
    Senator Biden. I am not all that sure you would understand. 
That is my only concern.
    Now, what happened was, the reason why we did pass the 
resolution to expand the oil for food program as hastily as we 
did, if I remember correctly, we did it because we thought we 
were going to bomb and we wanted to lessen international 
opposition. That is what I remember doing. I remember those 
discussions.
    Why do you not just say that? That is what happened. We 
wanted to have the authority and did not want the U.N. getting 
in the way and we wanted to bomb. And we were told, at least I 
was told, by everyone at the White House and everyone that 
talked to me and everyone I talked to in Europe, that: Hey 
look, man, we are not going to stay with you, we are not going 
to stay with you.
    Our Republican friends kept saying: Why can you not hold 
the coalition together? Why can you not do that? George did it. 
Why can you not do it? So you held the coalition together, but 
one of the things you had to do is you had to give, and you 
gave on this, we gave on this. That is what I remember. That is 
factually what happened.
    But if you guys cannot come up here and lay out a case that 
the whole sanctions regime falls or is likely to fall if this 
does not rise. You have forgotten, Bill, more about the House 
than I am going to ever know--I mean it sincerely. This dog 
will not hunt, as they say.
    So you have got to come up with a rationale different than 
the one that is being offered here. And unless in fact, in my 
humble opinion, you can show we are worse off relative to 
containing Saddam if this is not raised, then I do not think 
you can sell this.
    Chairman Helms. Senator Wellstone.
    Senator Nickles. Mr. Chairman, could I have one 30-second 
question?
    Senator Wellstone. Sure.
    Senator Nickles. Mr. Secretary, you mentioned that the 
refinery in Basra was hit during the bombing campaign in 
December.
    Ambassador Pickering. That is correct.
    Senator Nickles. Are we going to use these funds--is that 
going to be repaired with this money?
    Ambassador Pickering, No.
    Senator Nickles. But they are using a lot of other money to 
enhance their oil infrastructure, is that not correct?
    Ambassador Pickering That is correct, their oil export 
infrastructure.
    Senator Nickles. But not for the refinery?
    Ambassador Pickering. They are in some cases for refineries 
that provide some product to the domestic market, so they can 
move food.
    Senator Nickles. But none of that money is going to be used 
to repair the Basra refinery?
    Ambassador Pickering. For Basra.
    Senator Nickles. Thank you.
    Thank you, Senator.
    Chairman Helms. Before Senator Wellstone begins, just one 
moment for housekeeping. For Senators who are not able to be 
here, we will keep the record open for a couple of days so that 
they can file written questions, to which I presume that both 
of you are willing to respond.
    At the conclusion of Senator Wellstone's questioning, we 
will declare the meeting in recess and get you out of here, as 
I promised to do, by 12 o'clock.
    Senator Wellstone.
    Chairman Murkowski. Thank you. Mr. Chairman, thank you. I 
had some people outside. I am not back for any more questions.
    Chairman Helms. Senator Wellstone.
    Senator Wellstone. Thank you, Mr. Chairman.
    One political economy point and then my one question, which 
is apparently a very different question than the ones that have 
been put to you. In all due respect to some of my colleagues, I 
do not think Minnesotans are as concerned about an increase in 
supply of oil and somehow that leading to lower prices. 
Minnesotans do not necessarily equate the health of the oil 
companies with their own, the health of their families, and 
would not put that as a sort of major kind of rationale for any 
foreign policy decision we make.
    This is my question. I feel like I am, Mr. Chairman, just 
thinking about this in a very different way, but I have seen 
the reports on the number of innocent people who have died in 
Iraq since the sanctions went into effect--men, women, and 
children. I have met with very reputable doctors and others in 
the health care field who have visited Iraq and have come back 
and have presented reports which, translated into personal 
terms, are I think devastating.
    I have no doubt that Saddam Hussein is a very cruel man who 
cares not a whit about these people. But that does not mean we 
should not. That does not mean we should not. I have not heard 
a word about this today.
    So my question is, what do you believe that we should--what 
is the best public policy for our country? What should we do, 
since we do care about innocent people, to try and make sure 
that this does not go on? I mean, the only questions I have 
heard have been about the oil companies and prices and all of 
the rest and going to war. I am concerned about what is 
happening to people in Iraq. I think this is the best of our 
country, to be concerned.
    Could you tell me what your best recommendation is?
    Secretary Richardson. I will let Secretary Pickering 
amplify, but, Senator, I think the best argument is our policy, 
oil for food, where to address the concerns that you mentioned, 
very rightly so--our beef is not with the Iraqi people; it is 
with Saddam Hussein--that we deal with the oil and medicine 
needs of the Iraqi people.
    The oil for food program that allows Saddam to sell his 
oil, expressly controlled so that, by the United Nations, the 
Iraqi people can get some food and medicine, that we believe is 
the best way to deal with those humanitarian needs that you 
mention.
    I also want to say something----
    Senator Wellstone. Do they have the infrastructure to do 
it? Can he do it or not?
    Ambassador Pickering. It has to be increased. Senator 
Wellstone, let me----
    Senator Wellstone. What has to be increased?
    Ambassador Pickering. Some of his infrastructure, and that 
is what some of the money is going for.
    Let me just emphasize what Secretary Richardson has said 
because, contrary to what I have been hearing around the table, 
our policy is not to go to war with the people of Iraq.
    Senator Wellstone. Yes.
    Ambassador Pickering. Our policy has been----
    Senator Wellstone. I would like to thank you for stating 
that.
    Ambassador Pickering. I thank you for the chance to state 
it.
    Senator Wellstone. It needs to be said today.
    Ambassador Pickering. I have not had a chance until now to 
state that. But it is very important. It was part of my initial 
statement.
    Second, we have been concerned, as you have. For 5 years he 
refused to open the door, Saddam did, on this possibility, and 
we had very serious accounts of starvation and malnutrition, 
verified by people who went there, verified by U.N. surveys.
    By 1997 we began this program. It became clear early on 
that the initial judgments about the level of activity were not 
correct and they needed to be increased. Some months before the 
incident that Senator Nickles talked about, the Security 
Council asked the Secretary General for a report on what was 
necessary, coterminous with the fact that the whole program ran 
out just at about that time, 6 months after its second 
approval.
    We therefore approved an increase because that was what the 
Secretary General told us was needed by the people of Iraq to 
reduce malnutrition, to deal with deaths, to increase the 
amount of food and medicine. We are still deeply concerned 
about this program because Saddam is not cooperating. It 
requires some cooperation on the part of Iraq. The 
infrastructure for moving larger amounts of oil is not there. 
It needs, obviously, to be repaired and improved and put in 
place.
    So all of those things I think are germane and appropriate 
to the point that you have made and the question you have 
asked.
    Secretary Richardson. Senator Helms, if I could just 
respond to Senator Biden. Could you allow me 2 minutes?
    Chairman Helms. Sure.
    Secretary Richardson. Senator Biden, before you came we 
were very clear that one of the rationales for the cornerstone 
of our Iraq policy, sanctions, keeping them on, which I had to 
fight and Secretary Pickering, too, to keep within the Security 
Council that we maintain the sanctions, was to have the oil for 
food program. It was not a direct connection, but we also 
happen to think that that is good policy.
    Senator Biden. I am not suggesting you do not think it is 
good policy. I am not suggesting you do not. But I am telling 
you politically, that is all.
    Secretary Richardson. I understand. But at the same time, 
Senator, let me just say that the impression by some members of 
this committee is that our Iraq policy is not working. I 
disagree. Saddam Hussein is contained, he is further isolated. 
We have inflicted considerable damage on his military with the 
bombing that took place. He is right now a pariah. The 
prospects of sanctions being lifted in the United Nations--I 
have not been there recently--I do not think they are looking 
particularly good.
    So I reject this view that what we have done is not 
working. It is working.
    Now, on the oil for food issue, Senator, I am here to say 
on the domestic side that the oil for food program has not 
adversely affected international oil prices to the point where 
our domestic oil producers should be concerned. Iraq is not a 
swing player. It affects marginally world oil prices.
    The best way to help the domestic industry is to increase 
demand by helping to rebuild the Asian economy and to lower 
production costs at home, that I think we are doing.
    I did not want to--I know this is on your time, but----
    Senator Biden. No, I appreciate the chairman allowing it. 
If I could have 10 seconds, Mr. Chairman?
    Chairman Helms. Sure, sure.
    Chairman Murkowski. You will never make it. Ten seconds, 
Joe? Come on.
    Senator Biden. All right. Get ready, get set, go:
    I think what these guys are worried about is you are going 
to make the same mistake that Bush made. You have them down, 
the policy is working; this is going to let him up.
    How many seconds?
    Chairman Helms. Exactly.
    Now, I will tell you what we have not discussed, and that 
is the fact that the survivors or the thousands upon thousands 
murdered by Saddam Hussein will tell you that the most humane 
thing you can do for the people is to get rid of him.
    Well, thank you very much, gentlemen.
    Chairman Murkowski. I thank you as well.
    Go ahead. You conclude and then I will conclude.
    Chairman Helms. I am simply going to conclude. I have 
already told them that they will receive written questions and 
they will respond to them.
    Now I turn it over to the co-chairman.
    Chairman Murkowski. Thank you very much. I want to thank 
you, Senator Helms.
    I would make a couple of reminders to the Secretary. You 
know, when we have a resolution such as 687 and it is not 
binding, we are playing games. That is just what we are doing 
when we passed that resolution which required him to disclose, 
destroy, and undertake unconditionally never to resume such 
activities again.
    Mr. Secretary, this has not happened. We both know it. That 
is wrong. You are either going to have resolutions that are 
binding or you are not.
    For the benefit of my friend from Minnesota, I remember the 
gas lines around the block, and the people in Alaska and the 
people in Minnesota, who did they blame? They blamed government 
for allowing this to happen. This is going to happen again some 
day, because we are now 54 percent on imported oil. The 
Department of Energy suggests we will be up to 62 or 64 percent 
by the year 2005 to 2010.
    We are compromising our energy security for imports, and 
that is dangerous.
    Finally, Mr. Secretary, if you dump a gallon of oil on that 
table it is going to spread all over, your side and my side. My 
point is when you take 2.5 million barrels of oil, if it is 
Saddam Hussein's, out of the marketplace, it is not swing, but 
it makes a difference in the price, just like it did the other 
day when the OPEC nations cut production 2.5 million barrels 
per day and the price went up two dollars. It is not swing, but 
it does make a difference.
    Thank you.
    Chairman Helms. We stand in recess.
    [Whereupon, at 12:03 p.m., the committees were adjourned.]
                            A P P E N D I X

                              ----------                              


Response of Secretary Richardson to an Additional Question Submitted by 
                         Senator Jeff Bingaman

    Question. You testified that Iraq is not a swing producer, 
therefore Iraqi oil exports are not affecting the world oil price. In 
testimony before the Energy and Natural Resources Committee in January, 
Jay Hakes, the Administrator of the Energy Information Administration, 
put Iraqi oil exports at the top of the list of causes for the 
continuing low prices. All outside oil market analysts who have either 
testified before or briefed the Committee have clearly identified the 
rapid escalation in Iraqi exports as a contributor to the fall in oil 
prices and the sustained weakness. How do you explain your statement at 
the hearing?
    Answer. I am in agreement with Jay Hakes that Iraqi oil exports are 
one of the factors that have contributed to lower world oil prices. 
Iraqi oil exports have increased by about 2 million barrels per day 
since late 1996 and occurred at the same time as the slowdown in oil 
demand growth in Asia. However, Iraq is not a ``swing producer'' since 
it does not have the flexibility to increase production significantly 
in the near future.

                                  
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