[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]





THE U.N. OIL-FOR-FOOD PROGRAM: THE INEVITABLE FAILURE OF U.N. SANCTIONS

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

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                  EMERGING THREATS, AND INTERNATIONAL
                               RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 12, 2005

                               __________

                           Serial No. 109-43

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida           C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
KENNY MARCHANT, Texas                ELEANOR HOLMES NORTON, District of 
LYNN A. WESTMORELAND, Georgia            Columbia
PATRICK T. McHENRY, North Carolina               ------
CHARLES W. DENT, Pennsylvania        BERNARD SANDERS, Vermont 
VIRGINIA FOXX, North Carolina            (Independent)
------ ------

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

Subcommittee on National Security, Emerging Threats, and International 
                               Relations

                CHRISTOPHER SHAYS, Connecticut, Chairman
KENNY MARCHANT, Texas                DENNIS J. KUCINICH, Ohio
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         BERNARD SANDERS, Vermont
JOHN M. McHUGH, New York             CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           CHRIS VAN HOLLEN, Maryland
TODD RUSSELL PLATTS, Pennsylvania    LINDA T. SANCHEZ, California
JOHN J. DUNCAN, Jr., Tennessee       C.A. DUTCH RUPPERSBERGER, Maryland
MICHAEL R. TURNER, Ohio              STEPHEN F. LYNCH, Massachusetts
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
CHARLES W. DENT, Pennsylvania

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
            Lawrence J. Halloran, Staff Director and Counsel
               Thomas M. Costa, Professional Staff Member
                        Robert A. Briggs, Clerk
             Andrew Su, Minority Professional Staff Member


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 12, 2005...................................     1
Statement of:
    Conlon, Paul, owner, Transjuris e.K., Munich, Germany, former 
      Deputy Secretary, U.N. Security Council Iraq Sanctions 
      Committee; Andrew Mack, Director, Center for Human 
      Security, University of British Columbia, former Director 
      of Strategic Planning, Executive Office of U.N. Secretary 
      General Annan; C. Joy Gordon, associate professor of 
      philosophy, Fairfield University...........................    74
        Conlon, Paul.............................................    74
        Gordon, C. Joy...........................................   105
        Mack, Andrew.............................................    88
    Schweich, Thomas A., Chief of Staff, U.S. Mission to the 
      United Nations, U.S. Department of State...................    18
Letters, statements, etc., submitted for the record by:
    Conlon, Paul, owner, Transjuris e.K., Munich, Germany, former 
      Deputy Secretary, U.N. Security Council Iraq Sanctions 
      Committee, prepared statement of...........................    78
    Gordon, C. Joy, associate professor of philosophy, Fairfield 
      University, prepared statement of..........................   110
    Kucinich, Hon. Dennis J., a Representative in Congress from 
      the State of Ohio, prepared statement of...................     8
    Mack, Andrew, Director, Center for Human Security, University 
      of British Columbia, former Director of Strategic Planning, 
      Executive Office of U.N. Secretary General Annan, prepared 
      statement of...............................................    92
    Ruppersberger, Hon. C.A. Dutch, a Representative in Congress 
      from the State of Maryland, prepared statement of..........    47
    Schweich, Thomas A., Chief of Staff, U.S. Mission to the 
      United Nations, U.S. Department of State, prepared 
      statement of...............................................    23
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut:
        Letter dated August 24, 1990.............................    56
        Prepared statement of....................................     3

 
THE U.N. OIL-FOR-FOOD PROGRAM: THE INEVITABLE FAILURE OF U.N. SANCTIONS

                              ----------                              


                        TUESDAY, APRIL 12, 2005

                  House of Representatives,
       Subcommittee on National Security, Emerging 
              Threats, and International Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 11 a.m., in 
room 2247, Rayburn House Office Building, Hon. Christopher 
Shays (chairman of the subcommittee) presiding.
    Present: Representatives Shays, Kucinich, Duncan, 
Ruppersberger, and Lynch.
    Staff present: Lawrence Halloran, staff director and 
counsel; Thomas Costa, professional staff member; Robert A. 
Briggs, clerk; Andrew Su, minority professional staff member; 
and Jean Gosa, minority assistant clerk.
    Mr. Shays. A quorum being present, the Subcommittee on 
National Security, Emerging Threats, and International 
Relations hearing entitled, ``The U.N. Oil-for-Food Program: 
The Inevitable Failure of U.N. Sanctions'' is called to order.
    The Oil-for-Food Program was destined to degenerate into 
commercialism and corruption. As the humanitarian adjunct to a 
prolonged and notoriously leaky United Nations sanctions regime 
against Iraq, the Oil-for-Food Program inherited the habits of 
secrecy and self-interest that undermined international efforts 
to contain Saddam Hussein from the start.
    Within days of adopting Security Council Resolution 661, 
imposing comprehensive economic sanctions on Iraq after the 
1991 invasion of Kuwait, the committee formed to enforce the 
U.N. mandate began to receive requests from Member States for 
exceptions and waivers. Over the next 4 years, proposals to 
ease rather than enforce the sanctions would dominate 
deliberations of the so-called 661 Committee, which consisted 
of all permanent and rotating Security Council members.
    But few governments beside the United States and the United 
Kingdom consistently reviewed the growing volume of trade 
proposals. Others, over time, appeared to tire of the effort, 
choosing economic gain over continued political cost. Saddam 
and his would-be trading partners intentionally swamped the 
panel with waiver proposals they knew would never be granted in 
an effort to portray the sanctions as both inhumane and 
unsustainable.
    The U.N. was at war with itself. Despite Security Council 
directives, some U.N. agencies resisted sanctions enforcement 
as antithetical to the institution's neutrality and 
humanitarian mission. Other U.N. sanctions regimes had 
foundered when dictators exploited this ambivalence by 
redirecting the intended coercive impacts of economic 
strictures onto oppressed civilian populations. It was a lesson 
Saddam learned well and followed.
    So it should have been of no surprise to anyone familiar 
with the dynamics of the 661 Committee that the Oil-for-Food 
Program weakened rather than strengthened the Iraq sanctions as 
an alternative to armed conflict. According to the Duelfer 
Report, the program ``rescued Baghdad's economy from a terminal 
decline created by sanctions. The Regime quickly came to see 
that the Oil-for-Food Program could be corrupted to acquire 
foreign exchange both to further undermine the sanctions and to 
provide the means to enhance dual-use infrastructure and 
potential WMD-related development.''
    Sitting on the 661 Committee, a blind man could have seen 
that outcome was inevitable. But for too long, we ignored the 
sordid realities of a U.N. security council mired in Saddam's 
anti-sanctions propaganda and the unseemly pursuit of 
commercial interests by some Member States.
    Our purpose today is to help lift the shroud of secrecy 
that still blocks a complete view of the Iraq sanctions and the 
Oil-for-Food Program. Access to most U.N. records on these 
programs continues to be restricted. But thanks to Dr. Paul 
Conlon and the University of Iowa Library, summary minutes of 
the 661 Committee meetings from 1991 through 1994 and other 
U.N. documents are on the public record. They contain pointed 
references to Saddam's recalcitrance, to the scams and 
forgeries that became Oil-for-Food vouchers and kickbacks, to a 
U.N. bureaucracy ill-suited to complex trading regulation and 
to a Security Council politically unwilling to confront any of 
it.
    Testimony today by our witnesses will provide unique 
perspectives on U.N. deliberations and bring additional 
transparency to a process that grew fetid in secrecy. We 
appreciate their time and expertise as we consider the origins 
and implications of the Oil-for-Food scandal.
    [The prepared statement of Hon. Christopher Shays follows:]

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    Mr. Shays. At this time the Chair would recognize the 
ranking member, Mr. Kucinich.
    Mr. Kucinich. Mr. Chairman, thanks for holding this 
hearing. I appreciate it very much.
    I want to welcome all the witnesses and appreciate your 
participation.
    I feel very strongly that the debate in Congress, the 
effect that it might be having on the United States, I'm deeply 
troubled by the fact that many Members on the other side of the 
aisle have already reached a conclusion before all the facts 
have been presented. Last week, the Senate voted along party 
lines to reduce U.S. funding for U.N. peacekeeping activities 
as punishment for the mismanagement of the Oil-for-Food so-
called scandal. Critics have already called for the resignation 
of Secretary General Kofi Annan. They have attacked Paul 
Volcker's investigation before he has even issued his final 
report.
    They want the U.N. to dissolve and stop resisting the 
administration's foreign policy goals. To do this, the White 
House nominated the most simplistic critic of the United 
Nations they could find, John Bolton, as our next Ambassador. 
He's famously used dismissive rhetoric of the international 
body, once claimed if you lopped the top 10 stories off the 38-
story Secretariat building, it wouldn't make a bit of 
difference.
    At his Senate confirmation hearings yesterday, he failed to 
show a thorough understanding of the international body, a 
respect for the U.S.' binding obligations under international 
law, something this administration seems to have a serious 
problem with, and failed to show respect for the sovereignty of 
other nations.
    Sadly, there were indeed mistakes made in the 
administration of the Oil-for-Food Program and in some 
instances, corruption by individual U.N. officials. The 
Secretary General himself could have been more forthcoming 
about his role.
    But let's step back for a minute, and instead of pointing 
fingers, let's remind ourselves who and what the United Nations 
is. The United Nations is a multi-lateral organization composed 
of its Member States, and by far the most influential Member 
State continues to be the United States. We have a permanent 
seat on the security council, we have the largest mission of 
any country at the United States. We provide the most funding 
for U.N. programs. We review and have veto power over every 
single substantive decision made by the Secretary General and 
the U.N. Secretariat, including those made by the Oil-for-Food 
Program.
    Even former Secretary of State Colin Powell admitted that 
the United States is partially to blame, when he stated that 
recently, ``The responsibility does not entirely on Kofi Annan, 
it also rests on the membership and especially on the Security 
Council. And we are a member of the Security Council, it was 
the Security Council that had the responsibility for the day to 
day management of the program.''
    The Oil-for-Food Program was not a failure. And any 
attempts to characterize it as such is flat-out wrong and 
distorts the facts. The humanitarian program achieved its 
goals, which were to keep the Iraqi people from starvation. 
Caloric intake increased and communicable diseases declined 
significantly among the Iraqi population. The program halved 
malnutrition among children, eradicated polio, improved access 
to fresh water, public transportation, electricity, cleared 
minds, helped rebuild schools, clinics, housing and other 
infrastructure.
    We should be taking credit for the enormous success of the 
program, not pointing to it as an example of the U.N.'s 
shortcomings. In this case, the U.N. was dealt a lousy hand. 
Members of the Security Council differed on their support for 
sanctions and support for the Iraqi government. Sanctions 
weren't supposed to last for a decade. They did so only because 
the United States kept pushing for them while inspectors looked 
and looked for a WMD program.
    The program was forced to make compromises with the corrupt 
regime of Saddam Hussein, allowing it to choose its own 
contractors. No one disputes that Saddam Hussein used every 
method at his disposal to bribe officials, smuggle oil, subvert 
and avoid sanctions and deceive the world in order to maintain 
a stranglehold on Iraq. We're all concerned at the alleged 
abuse of the program, from kickbacks and over-pricing of Oil-
for-Food contracts.
    I'm particularly disappointed that we were complicit in the 
Program's failure by allowing Saddam Hussein to sell $8 billion 
worth of oil to Jordan, Turkey, Egypt and Syria in violation of 
the very sanctions we pressed to impose, money that could have 
been spent to better the lives of the Iraqi people. Before we 
go around blaming the United Nations, let me remind you that 
three administrations, both Democrat and Republican, said 
nothing about kickbacks and scanned each and every contract for 
dual-use items. Sixty U.S. officials were employed to 
scrutinize each and every contract. We placed holds, we delayed 
contracts, but never once did we use our veto power to stop a 
contract because of pricing concerns.
    We share responsibility with the Secretariat for allowing 
the abuses that occurred. Mr. Chairman, our job as 
congressional overseers requires us, may require us to throw 
stones, but we live in a glass house. Let us not forget that 
the U.N. Oil-for-Food Program became the Development Fund for 
Iraq in November 2003, and was then turned over to the U.S.-led 
Coalition Provisional Authority.
    According to the Special Inspector General for Iraq, 
Stewart Bowen, Jr., however, the Coalition Provisional 
Authority could not account, could not account for nearly $9 
billion in Iraqi reconstruction funds distributed in less than 
a year. And as we learned in our subcommittee hearing last 
month, nobody in the White House, the State Department or the 
Pentagon is even looking into this missing money. Where is the 
outrage? Why aren't there multiple committees looking into this 
scandal? Why hasn't the subcommittee called CPA head Paul 
Bremer to account for the $9 billion?
    This is what this oversight committee should be 
investigating. U.S. mismanagement, U.S. waste, U.S. fraud, and 
U.S. abuses. Notwithstanding, Mr. Chairman, I'm pleased to 
learn that you have agreed to hold such a hearing in June and 
that you have continued to work with the minority in asking for 
revealing documents.
    As I conclude, I want to say that last month, another 
report was published which further destroyed what little 
credibility the United States has left at the United Nations. 
The bipartisan report of the Presidential Commission on 
Intelligence Capabilities of the United States Regarding 
Weapons of Mass Destruction under the direction of former Judge 
Silberman and former Senator Robb stated that most of our 
intelligence about Iraq's WMDs was ``dead wrong.'' Iraq's 
unmanned aerial vehicles pose no threat, they had no mobile 
biological weapons laboratories, aluminum tubes were not used 
to make centrifuges for the enrichment of uranium. These are 
the examples pointed to as evidence by Secretary Powell in his 
address to the United Nations, where he said, every statement I 
make today is backed by sources, solid sources, not assertions, 
what we're giving you are facts and conclusions based on solid 
intelligence.
    So Mr. Chairman, as we go into these hearings, let's 
dismiss the hypocrisy. Some in the administration take a holier 
than thou pose, more holier than thou than the Vatican, without 
the credibility of the Vatican sponsor. We still don't know all 
the details of what happened with Oil-for-Food. Let's give Mr. 
Volcker an opportunity to finish the investigation, let's help 
further, not hinder, the much-needed institutional reforms that 
Secretary General Annan is attempting to make at the United 
Nations, and let's find an Ambassador to the U.N. who will 
inspire the body, not denigrate it.
    The U.N. is not perfect, but it still needs the leadership 
and support of its most powerful member. Let's all work 
together to solve the many problems that still face Iraq. The 
U.N. needs to move involved in Iraq, not less. Thank you, Mr. 
Chairman. Welcome to the experts. I yield back.
    [The prepared statement of Hon. Dennis J. Kucinich 
follows:]

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    Mr. Shays. I thank the gentleman.
    Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman, and thank you for 
calling this hearing on this very important topic. First of 
all, I want to commend you because no one has looked into this 
scandal more than you have. Second, I want to commend you for 
the series of hearings that you continually hold through this 
subcommittee into many, many important topics, doing almost 
more with this subcommittee than I've ever seen any chairman do 
with any subcommittee in the Congress.
    This Oil-for-Food scandal has been described by many people 
as an unprecedented level of corruption. Most of the reports 
have said it involves $10 billion worth of corruption, some 
reports have said much more than that. I think the only reason 
that more people are not horrified by this is probably because 
of something I heard the very respected political analyst 
Charlie Cook say in a talk several months ago, he said that he 
thought it was impossible for any human being to comprehend any 
figure over $1 billion.
    But $10 billion or $20 billion, whatever it might be, is 
just an unbelievable, staggering amount of money. Apparently 
there is going to be an effort to try to excuse some of this or 
in some way justify it or gloss it over by saying that some 
good things were done with some of the money that came through 
this program. I think that's ridiculous. How anybody can 
attempt to defend what has gone on through this Oil-for-Food 
Program is beyond me.
    And I think the people that are involved with this, in 
fact, the entire United Nations should be ashamed and 
embarrassed about this, but they probably aren't, because it's 
not money coming out of their pockets. I think that's the 
problem with so many things, so many wasteful things that we do 
through the Federal Government.
    But I certainly hope we don't have to sit here and listen 
to an attempt to try to justify or gloss over what happened, 
and we don't have to listen to a lot of testimony about the 
good things that came out of this program. With every penny 
that was spent through this program, good things should have 
happened, and they didn't. So we need to, we don't need to find 
out what went right in this program. Everything should have 
been that way. What we need to find out is what went wrong and 
why, and what's being done about that to correct that 
situation, so that this level of corruption, this level of 
scandal, this unprecedented level, will not happen again.
    Thank you very much.
    Mr. Shays. I thank the gentleman very much.
    I ask unanimous consent that all members of the 
subcommittee be permitted to place an opening statement into 
the record and that the record remain open for 3 days for that 
purpose. Without objection, so ordered.
    I ask further unanimous consent that all witnesses be 
permitted to include their written statement in the record, and 
without objection, so ordered.
    We have two panels. Our first panel is comprised of one 
individual, Mr. Thomas Schweich, Chief of Staff, U.S. Mission 
to the United Nations, U.S. Department of State. Our second 
panel will be Dr. Paul Conlon, Mr. Andrew Mack and Dr. Joy 
Gordon, who was reluctant to give me a high-five, even though 
she is a constituent and from Fairfield University. [Laughter.]
    Witnesses were told, the purpose of the hearing is to 
examine the U.N. Security Council management of the Iraqi 
sanctions and the Oil-for-Food Program, and the implications of 
U.N. failure to maintain the integrity of the sanctions regime. 
Witnesses were asked to provide their views.
    Mr. Schweich, the State Department witness, was also asked 
to address: one, the Department's view of the Iraq sanctions in 
retrospect; two, the Department's view of how the 661 Committee 
functioned; three, the Department's view of how possible future 
sanction regimes might work; and four, the status of ongoing 
Department efforts to review and declassify U.S. Government 
reporting of the Iraq sanctions and Oil-for-Food.
    Let me say that there is much of what my ranking member 
said that I happen to agree with. I don't take the position 
that the Secretary should resign. But what I do take, and I 
think the full committee takes this, that there needs to be 
transparency and that Members shouldn't be allowed to deny 
access to other Member States and their elected officials to 
examine how their money was spent and how their money was being 
used.
    So at this time, Mr. Schweich, I would welcome you to stand 
so we can administer the oath to you.
    [Witness sworn.]
    Mr. Shays. And say to you that we have a 5-minute rule, but 
we will roll it over another 5 minutes, we'll stop you at 10. 
So if you're somewhere between 5 and 10, that's fine, you need 
to kind of put the ball in play here. Bottom line is, what Mr. 
Kucinich and I want, and what Mr. Duncan wants as well, we just 
want to understand the truth of this program. Then we will 
disagree on what those facts tell us. But we will have good 
information from you.
    We appreciate your being here. The floor is yours.

 STATEMENT OF THOMAS A. SCHWEICH, CHIEF OF STAFF, U.S. MISSION 
        TO THE UNITED NATIONS, U.S. DEPARTMENT OF STATE

    Mr. Schweich. Mr. Chairman, distinguished members of the 
subcommittee, I welcome this opportunity to appear before you 
today to discuss the U.N. Security Council's management of the 
multi-lateral sanctions regime on Iraq, including the Oil-for-
Food Program, to share with you our thoughts on how sanctions 
regimes might be made more effective.
    I will also update you on the status of the Department's 
efforts to provide Congress with access to documents related to 
these matters.
    Mr. Chairman, let me start by discussing why the Iraq 
sanctions were imposed and why the Oil-for-Food Program was 
established. Four days after Iraq invaded Kuwait, the Security 
Council adopted Resolution 661, in 1990, that imposed 
comprehensive trade and financial sanctions against the former 
Iraqi regime. The U.S. Government supported this measure as 
part of a larger strategy to force Iraq to cease hostilities 
and to withdraw its forces from Kuwait.
    At the end of the Gulf war in 1991, the Security Council 
adopted Resolution 687, that extended comprehensive sanctions 
on Iraq to ensure that Saddam Hussein complied with the major 
provisions of the cease-fire. By retaining the sanctions, the 
Council also sought to deny Iraq the capability of rearming or 
reconstituting its weapons of mass destruction and other 
military programs. The sanctions were not anticipated to remain 
in place for more than a year or two before Saddam complied.
    We now know that Saddam chose not to comply. By 1995, in 
the wake of deteriorating humanitarian conditions in Iraq, many 
in the international community called for an end to the 
restrictions, reflecting concern that the impact of the 
sanctions was being borne primarily by the innocent Iraqi 
civilian population. In April 1995, the Security Council 
adopted Resolution 986, establishing the Oil-for-Food Program, 
to alleviate the serious humanitarian crisis while maintaining 
comprehensive restrictive measures to deny Saddam access to 
items that he could use to again pose a threat to his neighbors 
in the region.
    The sanctions committee that was established under 
Resolution 661 in 1990, the 661 Committee, monitored the 
implementation of the overall sanctions regime on Iraq and 
after the adoption of Resolution 986, it also monitored the 
implementation of the Oil-for-Food Program. The 661 Committee, 
like all sanctions committees, operated as a subsidiary body of 
the Security Council. Unlike the Council, decisions were made 
on a consensus basis, requiring the agreement of all parties 
and members.
    In addition to providing general oversight of the Oil-for-
Food Program and to monitoring Member State compliance with the 
sanctions, the committee through each of its members, was also 
responsible for reviewing humanitarian contracts, oil spare 
parts contracts and oil pricing submitted on a regular basis by 
Iraq to the U.N. for approval. The U.S. delegation was an 
active participant in all such reviews.
    The efforts of the United States and United Kingdom to 
counter or address non-compliance were often negated by other 
members' desires to ease sanctions on Iraq. The atmosphere in 
the committee, particularly as the program evolved during the 
late 1990's, became increasingly contentious and polemic. The 
fundamental political disagreement between members over the 
Council's imposition of comprehensive sanctions was often 
exacerbated by the actions of certain key Member States in 
advancing self-serving national economic objectives.
    In retrospect, although the consensus rule often stymied 
progress in the committee, that same consensus rule helped the 
United States achieve its objectives in a number of critical 
ways. The imposition of a retroactive pricing mechanism and our 
ability to place holds on humanitarian contracts that contain 
potential dual-use items were both made possible by the use of 
the consensus rule.
    Judging the success or failure of the Iraq sanctions 
depends on the view of their objectives. Clearly, they failed 
to force the regime of Saddam Hussein to comply with its 
international obligations. But they did succeed in limiting 
Iraqi efforts to rebuild their military capabilities after the 
Gulf war.
    As regards the Oil-for-Food Program, similar considerations 
apply. The major shortcomings of the program have been widely 
documented in recent months. But the Oil-for-Food Program did 
succeed in its humanitarian objective of ensuring that the 
Iraqi people were adequately fed, thus limiting the impact of 
sanctions on them.
    Mr. Chairman, the U.S. Government believes that sanctions, 
appropriately structured and targeted, when accompanied by 
effective diplomatic and military pressure, whether they are 
imposed unilaterally or in concert with other nations, can 
serve as a valuable tool to minimize threats to international 
peace and security. Sanctions can significantly restrict access 
to arms, finances and political support by international 
actors, while raising the personal cost to the leadership of 
targeted sanctions.
    Sanctions are measures meant to induce a change in the 
policies and actions of targeted actors. However, they are not 
a panacea. They depend for their full effectiveness on the 
ability and willingness of Member States to implement them. 
Sanctions must be part of a larger strategy to address threats 
to international peace and security.
    In the wake of the comprehensive sanctions regime 
previously imposed upon Iraq, and given the history of the Oil-
for-Food Program, we have identified a number of opportunities 
for improving the Security Council's use of multi-lateral 
sanctions. In particular, we believe: one, Member States must 
be held accountable for enforcing agreed-upon sanctions; two, 
sanctions committees and the U.N. Secretariat's proceedings 
should be more transparent; and three, there must be more 
independent and effective oversight of U.N. operations.
    Under the U.N. charter, all Member States are obligated to 
implement Security Council Chapter VII decisions. However, 
certain states, either through lack of capacity or lack of 
political will, or both, have in a number of instances failed 
to fulfill their enforcement obligations. If sanctions are to 
be more effective, the United States and its allies need to 
increase the pressure brought to bear on those governments that 
failed to abide by the binding, multi-lateral sanctions adopted 
under Chapter VII by the Security Council.
    Every Member State should be required to report on actions 
taken to enforce sanctions, including information on 
legislation enacted where necessary and administrative policies 
put in place that ensure a state is in full compliance with the 
decisions of the Council. Such certifications should be done on 
an annual basis. When states fail to report, and more 
importantly, fail to comply with the obligations to implement 
the measures authorized by the Council, appropriate follow-on 
actions should be considered.
    That said, certain unusual circumstances may require the 
Council to consider authorizing possible modification of Member 
States' obligations to implement the measures it has imposed. 
Both the Jordanian and Turkish barter arrangements with Iraq 
violated UNSC sanctions against Iraq. But we recognize that 
both countries were acutely vulnerable to a cutoff in their 
trade with Iraq and that our strategic interests on balance 
argued against exposing them to that risk.
    Accordingly, the President, on an annual basis, waived the 
prohibition on U.S. Government assistance to violators of the 
sanctions, and so notified Congress. These were carefully 
considered, deliberate decisions. They are in no way comparable 
the kind of corruption, bribery or kickbacks that this 
committee or other investigative bodies are now looking at.
    Mr. Chairman, a key obstacle currently preventing improved 
Member State compliance has been the lack of sufficient 
capacity. This is particularly true in the context of border 
monitoring, where many states lack sufficient funds, technology 
and well-trained personnel to prevent the movement across 
national boundaries of certain individuals and prohibited 
goods. As in the case of the former Yugoslavia, we should 
employ sanctions assistance monitors to support and train 
national customs authorities and border monitors to improve 
their compliance with relevant Council resolutions.
    Mr. Chairman, increased transparency in the development and 
implementation of sanctions regimes is essential. The U.N. 
Security Council Sanctions Committee should consider making 
minutes of committee meetings and committee reports available 
to all Member States. There should be increased interaction and 
dialog between each sanctions committee and Member States, 
including through participation of interested members in 
committee meetings.
    The Secretariat also must operate with greater 
transparency. More publicly available information concerning 
the U.N. Secretariat's operations and decisionmaking processes 
will help strengthen program administration and allow Member 
States to exercise appropriate additional oversight. The U.N.'s 
Office of Internal Oversight Services, OIOS, is responsible for 
evaluating the efficiency and effectiveness of the 
implementation of U.N. programs and mandates.
    In a U.S-led initiative, the general assembly this past 
December, strengthened the regulations for OIOS reporting 
procedures by requiring OIOS to make original versions of its 
reports available to Member States upon request. We believe 
this represents a significant step forward. OIOS' current staff 
and funding levels are, however, inadequate to oversee a 
program on the scale of the Oil-for-Food Program. OIOS should 
be provided additional funds from proceeds of any similar 
sanctions regimes to fund expertise in auditing large-scale 
commercial operations and complex financial transactions.
    Last, Mr. Chairman, you asked for an update on the status 
of ongoing Department efforts to review and declassify OFF 
related documents. The Department received numerous 
congressional requests to provide documents, as well as 
requests from the Independent Inquiry Committee into the Oil-
for-Food Program, the Volcker Commission, and the Department of 
Justice. The Freedom of Information Act requests have also been 
received. In response, the Department initiated a comprehensive 
search of its files generating thousands of documents.
    The Department has reviewed and processed a significant 
portion of these materials. We have provided copies of 
specifically requested documents to Congress and are continuing 
to make additional documents available on an ongoing basis. The 
Department has also provided the IIC access to documents 
identified as relevant to its ongoing investigation.
    Mr. Chairman, thank you for this opportunity to appear 
before the subcommittee. I now stand ready to answer whatever 
questions you and your fellow committee members may wish to 
pose.
    [The prepared statement of Mr. Schweich follows:]

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    Mr. Shays. I thank you very much.
    How long have you been at the U.N. in this capacity?
    Mr. Schweich. Nine months.
    Mr. Shays. I'm going to run through a number of questions 
that we would like answered. First off, if you would state the 
reason why Saddam waited until 1995 to approve the Oil-for-Food 
Program? In other words, what concessions did we have to make 
in order to get him to approve it?
    Mr. Schweich. Mr. Chairman, as the subcommittee is aware, 
an Oil-for-Food Program was attempted much earlier than 1995 
under Resolutions 706 and 712. And Saddam Hussein claimed that 
by not having the authority to approve contracts himself, oil 
and food contracts, it was an imposition on his sovereignty and 
he refused to abide or comply.
    So the main concessions that were made to get an Oil-for-
Food Program going was to allow Saddam to pick the people who 
he would be selling the oil to and to pick the companies that 
he would be buying the food and other goods from.
    Mr. Shays. Which is basically how the scam occurred, he 
would undersell his oil and get a kickback, and he would 
overpay for commodities and get a kickback. And the key though, 
was, in order for him to do that, he had to be able to pick who 
he sold to and who he bought from. And you're saying that the 
agreement that occurred in 1995 enabled him to do that, is that 
correct?
    Mr. Schweich. That's correct.
    Mr. Shays. OK. This may seem like an obvious statement in 
answer to the question, but let me just put it on the record. 
To what extent was Saddam responsible for the humanitarian 
crisis that affected the Iraqi people in the early 19902?
    Mr. Schweich. Well, I think he was totally responsible for 
it. Because the sanctions would have been lifted had he 
complied with the requirements of the cease-fire. The sanctions 
were retained after the war was over in order to get him to 
comply with the various requirements of the cease-fire, 
including allowing inspectors to come in and check for weapons 
of mass destruction. Had he complied, the sanctions would have 
been lifted.
    Mr. Shays. And the cease-fire occurred because there was an 
agreement he would do the following things, in other words, 
there wasn't a march to Baghdad, we didn't annihilate as we 
could have the Republican Guard, because he agreed to certain 
conditions which he then didn't followup on, is that your----
    Mr. Schweich. That's correct, Mr. Chairman.
    Mr. Shays. What was the responsibility of the 661 Committee 
members to carry out oversight of the Oil-for-Food Program? 
What was its responsibility?
    Mr. Schweich. Well, the 661 Committee's primary 
responsibility was to review the humanitarian contracts as they 
came in, to work with the oil overseers for oil pricing at the 
beginning of each month and to try to ensure those were done 
properly.
    Mr. Shays. How did specific 661 Committee members respond 
to corruption concerns raised by the United States, U.K. and 
other governments?
    Mr. Schweich. Many of them demanded proof, excessive levels 
of proof. Some of them resisted the notion that there was any 
corruption going on at all. We had a lot of trouble getting 
retroactive pricing which we eventually did to eliminate some 
of the surcharges on the oil.
    Mr. Shays. What kind of pricing again?
    Mr. Schweich. Retroactive pricing. Yes, once we learned 
that there was----
    Mr. Shays. Just define retroactive pricing.
    Mr. Schweich. Retroactive pricing is pricing the oil 
contracts at the end of the month instead of the beginning of 
the month. The way the program was set up, Mr. Chairman, the 
oil overseers would recommend a price at the beginning of the 
month. Saddam Hussein would try to get as low of a price as 
possible so he would get that kickback you were talking about.
    When we realized this was going on in 1998 and 1999, or 
maybe a little bit later than that, we withheld our consent to 
the pricing until the end of the month when we could see what 
the actual price of oil had been over the course of the month. 
That allowed us to eliminate the margin he had from about 50 
cents a barrel down to about 5 cents a barrel, made it much 
harder for him to get his kickback.
    Mr. Shays. When did that occur?
    Mr. Schweich. That was around the year 2000, early 2001.
    Mr. Shays. The program began in 1996?
    Mr. Schweich. That's correct.
    Mr. Shays. So around 1999, you said?
    Mr. Schweich. The first charges, some of the oil 
periodicals, some of the press started reporting on surcharges 
in 1999, I think, yes.
    Mr. Shays. Which nations were more influenced by national 
economic objectives than making sanctions work? Can you 
identify any?
    Mr. Schweich. Mr. Chairman, it's hard to make 
generalizations like that. Certainly Syria would qualify, and 
then a lot of people have accused other countries as well. Some 
have said the French were interested in national economic 
objectives as well. That was less obvious than the Syrians.
    Mr. Shays. It was pretty clear the Syrians were.
    Mr. Schweich. Yes.
    Mr. Shays. How did Iraq influence the 661 Committee?
    Mr. Schweich. Well, they embarked on a campaign of claiming 
that the sanctions were killing their people, of course. There 
was some truth to that, but I think it was in some respects 
exaggerated.
    The way they tried to influence the 661 Committee is, they 
recognized, Mr. Chairman, the inherent shortcomings in a 
committee that's just basically reviewing paper in New York. So 
what they did is they developed a whole pull-down menu of 
manipulative mechanisms in order to circumvent that paperwork. 
I have a list, if I can read it into the record.
    Mr. Shays. Sure.
    Mr. Schweich. As I was preparing for this hearing, there 
were surcharges, topping off, influence peddling, product 
substitution, product diversion, phony service contracts, 
phantom spare parts, shell corporations, illusory performance 
bonds, hidden bank accounts and then plain old-fashioned 
bribery and kickbacks to the tune of several billion dollars.
    Mr. Shays. I'm going to ask you to read that over again, 
one more time, and read it more slowly. Is this my first 5 
minutes or second? Roll it one more time.
    Mr. Schweich. Surcharges, topping off, influence peddling 
through the voucher system we all learned about, product 
substitution, product diversion, phony service contracts, 
phantom spare parts, shell corporations, illusory performance 
bonds, hidden bank accounts and a whole lot of bribery and 
kickbacks.
    Mr. Shays. I'm going to ask you to read it one more time.
    Mr. Schweich. Surcharges, topping off, influence peddling, 
product substitution, product diversion, phony service 
contracts, phantom spare parts, shell corporations, illusory 
performance bonds, hidden bank accounts, bribery and kickbacks.
    Mr. Shays. Still sounds the same the third time. Thank you.
    How did Iraq influence the Secretariat? And define to me 
the Secretariat.
    Mr. Schweich. The Secretariat is the group of about 8,800 
employees who work directly for the Secretary General of the 
United Nations, in the big tall building, 38 stories, in New 
York.
    Mr. Shays. And can you describe how Iraq would have had 
influence over them?
    Mr. Schweich. Well, Paul Volcker is still investigating 
that and I don't think there are any definitive conclusions. 
One allegation is that certain members of the Secretariat 
actually got the oil vouchers in order to influence them to try 
to alleviate the sanctions. Benon Sevan is one of the people 
that's been accused of that. So that would have been one of the 
principal tactics.
    Mr. Shays. OK. And describe to me how some of the 661 
Committee members, and that's the permanent members of the 
Security Council and those that were assigned during--it was 
basically the Security Council but they were functioning as the 
661 Committee, correct?
    Mr. Schweich. That's correct. It was a subsidiary body of 
the Security Council, Mr. Chairman, that was represented by 
each country on the Security Council.
    Mr. Shays. So it was comprised of the same people. It's 
almost like on the House floor when we go from the Congress to 
what we call the committee of Congress, it's still the same 
people debating and articulating.
    Mr. Schweich. Well, they had a group of experts that were 
on the 661 Committee but they reported to their Ambassadors. So 
yes, that would be effectively the same.
    Mr. Shays. Describe to me, though, how the 661 Committee 
members undermined the sanction process? What were some of the 
things that they would have done to undermine?
    Mr. Schweich. Well, they consistently pointed out the 
problems that were being incurred by the Iraqi people, and 
suggested that the sanctions regime was outdated. Mainly what 
they did was inaction. There was a consensus rule, Mr. 
Chairman, where everybody had to agree before any action could 
be taken. And if you look at the minutes, which I'm sure the 
committee has done, you see the same item on the agenda over 
and over and over again, week after week. They can't get 
consensus because the parties just roll it over to the next 
meeting.
    It was basically complacency and ambivalence, was their 
principal tactic.
    Mr. Shays. OK. How did other nations influence the 
sanctions regime, outside the Security Council or the 661 
Committee?
    Mr. Schweich. Mr. Chairman, I don't have a lot of 
information on that, except to say that there were continuous 
reports from various countries, organizations, non-government 
organizations affiliated with other countries, pointing out the 
severe adverse effect that sanctions were having on the Iraqi 
people.
    Mr. Shays. What did the United States do to push the U.N. 
to investigate allegations of corruption? And I'm going to say 
that I suspect sometimes it was somewhat aggressive and 
sometimes it wasn't. Dissuade me if I'm wrong; I believe that 
it was pretty much a mixed bag. Is that an accurate feeling, or 
were we always aggressive, always pushing, always questioning 
or did we sometimes back off?
    Mr. Schweich. Well, the problem we had was getting concrete 
evidence. That's what Paul Volcker is having so much difficulty 
doing and spending so much time doing. A lot of people, for 
example, when we were told that there was kickbacks on the 
humanitarian goods said, where's the evidence. We tried to 
produce evidence but it was fairly circumstantial at the time.
    Now, we did put holds on $5.4 billion worth of contracts. 
So we did try to stop some of the contracts that looked most 
suspicious to us, particularly for dual use purposes. But the 
problem we had with the 661 Committee was, members would say, 
we've heard allegations, but can you show us any examples. And 
of course, the OIOS, which would have been the principal 
mechanism to do the auditing of these contracts and the bank 
accounts and the places where the kickbacks went did not have 
the authority to audit the actual contracts.
    So we really were not able to come up with specific 
evidence of the kickbacks, only allegations and hearsay, which 
was not sufficient to convince other 661 Committee members. But 
I do think, Mr. Chairman, that the United States and the United 
Kingdom were fairly aggressive in placing holds on contracts, 
the whole retroactive pricing mechanism that I discussed with 
you, to try to keep the surcharges from putting extra money in 
Saddam Hussein's pockets. We did what we could, I think.
    Mr. Shays. So if we saw a contract we were suspicious of 
and raised questions, if we couldn't show them the smoking gun, 
it became more rhetoric as far as the other members were 
concerned and then the committee chose not to act, is that your 
basic point?
    Mr. Schweich. That happened frequently, yes, Mr. Chairman.
    Mr. Shays. Why did the United States accept the trade 
protocols signed between Iraq, Jordan and Turkey? Let me back 
up and say, this is an area where I have some background, and I 
need to put it on the record. When I met before the war with 
Iraqi officials and Turkish officials, there was no doubt, 
excuse me, when I met with Jordanian officials and Turkish 
officials, there was no doubt in our mind, the Government's 
mind that, forget the oil sanctions, but that there was 
smuggling going on to both countries, and that I had the view 
that our country was somewhat tolerant of some smuggling to 
make up for their loss of trade with these two countries. In 
other words, these were two important countries whose support 
we needed in order to have some capability to contain Saddam.
    Am I wrong in believing that the United States was aware 
that smuggling was occurring between--so it's a slightly 
different question--am I wrong in believing that the United 
States was aware that smuggling was occurring between Turkey 
and Jordan, and that there was tacit tolerance of some level of 
smuggling? This is different from the Oil-for-Food Program 
issue right now.
    Mr. Schweich. Right. Mr. Chairman, I'm glad you brought 
that up. If I can take a few minutes to explain the situation, 
it will take a little bit of time. When Iraq invaded Kuwait in 
1990, a few days later, Jordan came to the Security Council and 
said, we have a big problem here. We do 10 to 20 percent of our 
business, national economic business, with the Iraqi 
government. And if we are forced to comply with the 661 
Committee sanctions on Iraq, it will have a devastating effect 
on our economy.
    They came with a formal request under Article 50 of the 
U.N. charter for relief, with a letter. This was not sort of an 
under the table deal. They came with sort of hat in hand and 
said, we've got a huge problem here. They provided an extensive 
amount of backup materials supporting that. So it was put on 
the 661 Committee's agenda that Jordan had a serious problem.
    It was again, as I said with this problem with the 
consensus rule, it was rolled over for month after month after 
month without anybody doing anything about it. A mission was 
actually sent to Jordan to investigate the allegations that the 
Jordanians were making about the impact of this on their 
economy.
    But nothing was done for many, many months. Finally, after 
9 months of repeatedly asking the 661 Committee to do something 
about the problems it had, and asking specifically for Article 
50 relief under the U.N. charter, again, not a back-room deal, 
the 661 Committee received a letter from Jordan saying, we are 
trying to comply with the sanctions, I have a copy of it here 
if the subcommittee would like it, we are trying to comply with 
these sanctions but we can't do it. So we are notifying you 
right now that we are resuming the importing of oil from Iraq 
to Jordan in order to prevent an economic catastrophe in our 
country. We will report to you regularly on what we're doing. 
And we're sorry, but that's just the way it's going to have to 
be. Because there's been no action by the 661 Committee to 
address our concerns.
    Shortly thereafter, the 661 Committee sent a letter to the 
Jordanian Ambassador to the United Nations, a copy of which I 
also brought with me if the subcommittee would like to see it. 
And the letter said, we take note of the concern you have, and 
we take note of the serious economic impact that these 
sanctions are having on Jordan and we request that you do 
report to us on how much you're importing.
    You can't really say it was consent, but it was something 
very close to that. Should we take note of it, we understand 
you're doing it, please tell us how much you're doing and don't 
do any more than you have to. And this was in writing, again, 
from the 661 Committee back to the Jordanian Ambassador.
    So at that point, the trade was started up at $200 million 
or $300 million a year. So it wasn't really secretive.
    Then in the United States, of course, we had a law under 
the Foreign Operations Appropriations Act, that prohibited 
assistance to countries that were violating the 661 sanctions. 
And Section 531 of that law allowed a waiver to be granted. And 
in the case, over three administrations, starting with the 
first Bush administration, throughout the entire Clinton 
administration and then through the current Bush 
administration, a waiver was granted by the President and then 
eventually I think it was delegated to the Secretary of State 
and Deputy Secretary of State.
    Congress was notified that there was a waiver granted here 
and that Jordan would be allowed to import the oil without 
incurring any problems with their foreign assistance. And it 
was published in the Federal Register. And the reason why I 
bring it up, a similar thing happened to Turkey about 5 years 
later, a similar type process, not exactly the same but 
analogous.
    Mr. Shays. How much later?
    Mr. Schweich. About 5 years later, this happened in 1996. 
Turkey requested also similar Article 50 relief----
    Mr. Shays. Hold on, back up. Jordan was 1996 and then----
    Mr. Schweich. Jordan was 1990, 1991 and Turkey in 1996. And 
they went through a similar process.
    The reason why I'm very glad, Mr. Chairman, that you 
brought this up is, if you've been reading some of the press 
article, there are certain, former Secretary General of the 
United Nations, there are other U.N. officials and other 
countries that are trying to suggest that the U.S. acceptance 
of the Jordanian-Turkish protocols is somehow analogous to the 
things I just read off, the bribery, the corruption, the 
kickbacks, the things that were done for self-interest, 
secretively in an non-transparent manner that are really just 
acts of fraud and crime. And they're trying to suggest that the 
United States should just take a look in the mirror, you're 
here using the Oil-for-Food scandal as a pretext for reforming 
the U.N. when you were just as guilty by accepting the 
Jordanian and Turkish protocols.
    And we at the State Department, Mr. Chairman, categorically 
reject that comparison. The Jordanian and Turkish protocols 
were done to alleviate economic hardship. It was an exception 
to the sanctions regime because of the severe consequences that 
a failing Jordanian and Turkish economy might have on the 
world. It was done transparently, openly with the knowledge of 
the entire 661 Committee and the international community and 
for a valid purpose.
    And to allow other countries and individuals to equate that 
with the type of corruption that went on could seriously 
undermine our efforts to reform the U.N. that are going on now.
    Mr. Shays. Let me say, Mr. Schweich, I particularly 
appreciate, and then I'm going to yield to my colleague for 
such time as he may want to consume, given I've probably done 
about, how much extra over my 10? OK. You're just very well 
prepared. And your answers are succinct. You're really an 
excellent witness. I just appreciate the seriousness with which 
you are treating this hearing and the preparation you have done 
for it. I thank you for that.
    At this time, Mr. Kucinich, you have the floor. My 
colleague, Mr. Duncan--do you have to go?
    Mr. Kucinich. If he has to go, I'll be glad to yield to 
him.
    Mr. Duncan. Thank you. I've got less than 5 minutes, 
probably. Thank you very much.
    Mr. Schweich, we noticed that when you were going through 
your testimony, you got to page 6 and you left out the words 
``including subjecting the offending state to a possible loss 
of U.N. privileges or possible targeting for new measures.'' 
What action is taken or do you think should be taken against 
Member States that don't enforce agreed-upon sanctions?
    Mr. Shays. Before the gentleman responds, you had two 
letters that you had mentioned.
    Mr. Schweich. Yes.
    Mr. Shays. I think, if you don't mind, we'll take those 
letters, we'll put them into the record. We'll reproduce those. 
So without objection, we are going to put those letters into 
the record, and we'll describe what those letters are, and 
we'll give you back your copies.
    I'm sorry, do you want to repeat your question?
    Mr. Duncan. Well, I just was curious why you left out those 
words, ``including subjecting the offending state to a possible 
loss of U.N. privileges or possible targeting for new 
measures.''
    Mr. Schweich. You're very observant, Congressman, that was 
changed this morning. Because originally, people thought it 
might imply that we could revoke the voting capability of other 
countries, which we really don't have the authority to do. But 
what we do think could be done is to impose similar types of 
sanctions, in other words, failure to abide by sanctions could 
result in similar sanctions, restricting travel, asset freezes 
and things like that we would be willing to consider.
    Mr. Duncan. Restricting travel and asset freezes and what 
else?
    Mr. Schweich. Well, there's a wide variety, restricting 
trade in certain sectors, like we do in Sierra Leone and other 
countries. What we weren't willing to go so far is to say we 
would have the authority to revoke their vote.
    Mr. Shays. Could the gentleman just suspend a second, 
because this is an important question. Mr. Kucinich and I were 
just saying something and we missed it. What was changed was 
you didn't read what from your statement which we will now make 
you read? When states fail to report, is that it? And it's 
because something--on page 6?
    Mr. Duncan. Page 6, including--the bottom of the first 
paragraph, ``including subjecting the offending state to a 
possible loss of U.N. privileges or possible targeting for 
new----''
    Mr. Shays. Let me read the whole sentence. It says ``When 
states fail to report, and more importantly, fail to comply 
with the obligation to implement the measures authorized by the 
Council, appropriate follow-on actions, including subjecting 
the offending state to a possible loss of U.N. privileges or 
possible targeting for new measures should be considered.'' And 
your response to Mr. Duncan----
    Mr. Schweich. Right. What we changed this morning, I said 
appropriate follow-on actions should be considered. And I left 
it more general. It didn't preclude anything. But the thought 
was possible loss of U.N. privileges might imply that we could 
revoke their ability to vote like occurs when you're in areas. 
We got a legal opinion that we probably wouldn't have the 
authority to do that, so that's why we changed it.
    Mr. Shays. Thank you.
    Mr. Duncan. Now, a similar type question, except not 
leaving out anything out of your testimony, but basically 
because the important part of that question was, what actions 
would you recommend. But there is something that is of concern 
to me. A later witness, the chairman's constituent will testify 
that contrary to common views, the Oil-for-Food Program did not 
give Saddam Hussein a free hand to use oil proceeds as he 
wished without oversight or monitoring. Rather, the OFF Program 
had multiple levels of oversight for both import contracts and 
oil sales involving scrutiny by U.N. staff and every member of 
the Security Council of nearly every aspect of every 
transaction. To the extent that there were kickbacks or other 
improprieties in the Program, these occurred despite an 
elaborate system of oversight.
    Now, and yet you testified a few minutes ago that the OIOS 
did not have authority even to audit the contracts.
    Mr. Schweich. That's correct, yes.
    Mr. Duncan. It almost sounds like, when I read the 
testimony of Professor Gordon, if there was such tremendous 
oversight, but then you say the OIOS did not have authority to 
audit the contracts, and one of the main purposes of this 
meeting should be to try to figure out how we can keep 
something like this from ever happening again.
    Yet she says there is just all this oversight over every 
aspect of the program. So is it hopeless? Surely we're not 
going to say that, that we just can't stop things from 
happening again. She says there was elaborate oversight, an 
elaborate system of oversight.
    Mr. Schweich. Congressman, there was oversight. The way it 
worked was, with respect to the oil contracts, there were oil 
overseers that would review the contracts for pricing and 
approve of those contracts. With respect to the humanitarian 
contracts, the contracts would be signed by Saddam Hussein or 
his agents and they would be sent to the Office of Iraq 
Programs that would review them and send them to the 661 
Committee. And the 661 Committee did review 36,000 contracts.
    The problem was, when you have somebody that is so 
determined to circumvent it and willing to set up the shell 
corporations and the phony bank accounts and the things that 
the 661 Committee did not have insight into, just looking at 
the paper isn't enough to find the fraud. In fact, DCAA did an 
audit in 2003 of a bunch of the food programs. They said 
basically the same thing, on the surface of the contract, it's 
hard to see the fraud.
    So yes, there was oversight, but Saddam Hussein had an 
aggressive assault on that process that managed to circumvent 
it.
    Mr. Duncan. Well, are we giving people the authority now 
to, have any changes been made yet?
    Mr. Schweich. Yes, Congressman.
    Mr. Duncan. I know some of this investigation is still 
going on. But surely some changes have been made.
    Mr. Schweich. Yes, Congressman. First of all, I'm not aware 
of any situation where a country that was the subject of the 
sanctions was allowed to approve and sign and negotiate the 
contracts. That was certainly one of the biggest flaws.
    Now, as I said earlier, it was almost a necessity, because 
Saddam Hussein would have rather seen his own people suffer 
than not have that occur. But I don't think that mistake will 
be made again.
    Mr. Duncan. My time is up, but one last question. Let me 
ask you this. What action is taken against contractors that 
have been involved in this scandal? Has action been taken? Are 
the contractors that have been involved in this scandal, are 
they still doing business with the United Nations, still making 
money off the U.N.?
    Mr. Schweich. My understanding is most of these are large 
and small international companies. I know that the Volcker 
Commission is working with the authorities in the various 
countries to try to get some of these people prosecuted.
    Now, some of that will come out, I think in the next 
report. We know in this country, the U.S. attorney for the 
southern district of New York, Mr. Kelly, has already indicted 
one person who mis-used an oil voucher he got in the United 
States. This is an American citizen.
    Unfortunately, Mr. Volcker has no prosecutorial authority, 
so he has to refer these to the authorities in the various 
countries. In one case I know, I think Mr. Samir Vincent 
already pleaded guilty of mis-using oil vouchers and agreed to 
cooperate with others. So I think there will be people brought 
to justice.
    Mr. Duncan. I'm glad that they are prosecuting people, but 
we need to make sure that these contractors don't do business 
with the U.N. The United States pays by far the biggest share 
of U.N. costs in all kinds of ways. So we need to make sure 
these contractors don't do business with the U.N. in the 
future, if they've ripped us off in the past like this.
    Thank you. Mr. Kucinich, thank you very much. And Mr. 
Chairman, thank you.
    Mr. Shays. Thanks for being here.
    Mr. Kucinich, you have the floor for give or take 15 
minutes.
    Mr. Kucinich. Thank you very much, Mr. Chairman.
    At the outset of my remarks I said, and I want to repeat, 
that we are all concerned about the alleged abuse of the 
program, from the kickbacks and overpricing schemes to the 
litany that the gentleman laid out. We're all concerned about 
that.
    Mr. Shays. Do you want him to read it again? [Laughter.]
    Mr. Kucinich. No, actually I'm going to go over some of 
those elements in my questions. You'll know that I got it.
    Were you at the U.N. a few days ago after the President's 
Commission on Intelligence Capabilities released their report?
    Mr. Schweich. I was at the United Nations, yes, but I 
haven't read the report.
    Mr. Kucinich. Well, can you say what the reaction was of 
some of your colleagues from other Member States to that 
report?
    Mr. Schweich. Mr. Chairman, I was at the U.N. with 
Ambassador Sharin Tahir-Kheli going over our proposals for 
reform and I did not cover that with anybody.
    Mr. Kucinich. So do you have any idea whether anyone was 
upset about it or----
    Mr. Schweich. I don't know.
    Mr. Kucinich [continuing]. That the United States had 
misled them?
    Mr. Schweich. I don't know.
    Mr. Kucinich. You don't know? Are you worried that the 
credibility of the State Department may have been undermined by 
the report of the Commission on Intelligence Capabilities?
    Mr. Schweich. Mr. Chairman, I am not familiar with the 
report and don't really have an opinion on that.
    Mr. Kucinich. Did you read any news stories about the 
report?
    Mr. Schweich. I think I probably did read a little bit 
about it, yes.
    Mr. Kucinich. But you haven't talked to anyone about it at 
all?
    Mr. Schweich. I honestly don't think I have, no.
    Mr. Kucinich. Does your job at the State Department depend 
on the credibility of the U.S. State Department with respect to 
its statements and what the present to the world?
    Mr. Schweich. It certainly does.
    Mr. Kucinich. Are you concerned that statements may, that 
were presented to the world through the State Department were 
later on found out not to be true?
    Mr. Schweich. Yes, and I'm very hopeful that Ambassador 
Negroponte, who I think is going through hearings right now, 
will be able to alleviate that problem.
    Mr. Kucinich. Have you ever had any discussion with anyone 
about Colin Powell himself being misled?
    Mr. Schweich. No. I arrived at the U.N. after all that had 
occurred, Congressman.
    Mr. Kucinich. Are you aware that Colin Powell feels that 
he's been misled?
    Mr. Schweich. I heard the statement that he made this 
morning, and I read some of those.
    Mr. Kucinich. Is it possible that in your statements today 
that you've been misled by the administration?
    Mr. Schweich. I don't think so.
    Mr. Kucinich. You don't think there's any chance of that, 
that any of the information you're presenting to this 
subcommittee will later on come back and prove not to be true?
    Mr. Schweich. Congressman, I think most of what I presented 
today is somewhere in the public record.
    Mr. Kucinich. Isn't it in the public record that there were 
about 60 U.S. officials employed to scrutinize each and every 
contract?
    Mr. Schweich. There was a large number. I wasn't aware it 
was 60, but yes.
    Mr. Kucinich. And those individuals had the ability to 
place a hold on a contract?
    Mr. Schweich. That's correct, and they did frequently.
    Mr. Kucinich. But they never used their veto power, am I 
correct, to stop a contract because of pricing concerns?
    Mr. Schweich. Actually, the vast majority of the holds, 
Congressman, were for possible dual use. But there were certain 
contractual irregularities, and I understand also some pricing 
concerns that were expressed.
    Mr. Kucinich. But they never vetoed something based on 
pricing?
    Mr. Schweich. Congressman, under the 661 Committee rules, 
no one actually had a veto. They could put a hold by 
withholding consensus, and they did do that.
    Mr. Kucinich. So they had holds based on pricing concerns?
    Mr. Schweich. I don't think it was a lot of them, but I 
think there were some, yes.
    Mr. Kucinich. Can you present this committee with 
information to support that?
    Mr. Schweich. I probably can. I don't have it right here in 
front of me. But I'd be happy to take that under advisement and 
get back to you, if you would like.
    Mr. Kucinich. Mr. Chairman.
    Mr. Shays. That would be great, thank you. And if you could 
just submit it to me, we'll make sure Mr. Kucinich gets it.
    Mr. Kucinich. OK, thanks.
    Do you think it's absolutely improbable that any U.S. 
official knew anything about the kickbacks that were going on?
    Mr. Schweich. I'm not aware of any U.S. official who knew 
about it. I think there were individual Americans, like Mr. 
Vincent who got a voucher, who knew something about the 
process.
    Mr. Kucinich. But the United States was totally surprised 
that there were kickbacks in this program, is that correct?
    Mr. Schweich. Well, Congressman, we're not even exactly 
sure when the kickbacks began. We don't think they started at 
the beginning of the program. They came to light in some press, 
some oil industry press in the late 1990's, and some of the 
evidence we have suggests that's around the time when it 
started.
    Mr. Kucinich. And do you have any information specifically 
about what Saddam Hussein specifically did with the money that 
was diverted? What did he do with it? What did he buy? What did 
he use the money for?
    Mr. Schweich. Well, money is fungible, so we think that the 
palaces, and there's a lot of--he could have bought pretty much 
anything with the money, because it was cash.
    Mr. Kucinich. What about the palaces? Tell me about that.
    Mr. Schweich. I don't know much more than he built very 
lavish palaces with money that we don't know where he got it.
    Mr. Kucinich. OK, let's get this, Mr. Chairman. We've got a 
person whose nation is under sanctions, there is an Oil-for-
Food Program, and we do know that he's building these elaborate 
palaces. Did anyone think to ask where he's getting the money?
    Mr. Schweich. I think that there's a coincidence of the 
timing of when he was using this money for whatever purposes he 
used it for and when we first were aware of the kickbacks and 
things that were occurring.
    Mr. Kucinich. Well, it seems to me, to the gentleman, it 
seems to me that someone somewhere had to know that Saddam 
Hussein is building palaces and Iraq's under sanctions, that 
he's getting the money from somewhere. So if there is physical, 
visible evidence of Saddam Hussein spending money, you would 
think that it would trigger some questions on the part of 
somebody somewhere about where the money is coming from, 
wouldn't you?
    Mr. Schweich. Yes, and I think the United States did raise 
those questions in 1999 and 2000 and 2001.
    Mr. Kucinich. And did they raise the questions that it 
could have been coming from the Oil-for-Food Program then?
    Mr. Schweich. Yes, I think that's when the surcharges and 
the kickbacks came to light and we were very concerned about 
it.
    Mr. Kucinich. But they never moved to aggressively block 
the program?
    Mr. Schweich. Well, they tried, but again they had the 
consensus rule in the committee, which precluded us from acting 
unilaterally. And they did place holds on contracts and did 
implement the retroactive oil pricing, which was something we 
used sort of our ability to block, being one of the 15 members, 
to do that retroactive pricing. That did really cut down on his 
extra revenue.
    Mr. Kucinich. So you're saying that the Security Council, 
of which the United States is a member, did or didn't have the 
responsibility for the day to day management of the Oil-for-
Food Program?
    Mr. Schweich. They did have responsibility for the day to 
day management, yes, along with the Office of Iraq Programs and 
others.
    Mr. Kucinich. So do you then agree with Colin Powell when 
he says that the United States is partially to blame?
    Mr. Schweich. I'm not sure of the context in which 
Secretary Powell made that statement.
    Mr. Kucinich. Here's his quote. He said ``The 
responsibility does not rest entirely on Kofi Annan. It also 
rests on the membership, and especially on the Security 
Council, and we are a member of the Security Council. It was 
the Security Council that had the responsibility for the day to 
day management of this program.''
    Mr. Schweich. And Congressman----
    Mr. Kucinich. Do you agree with that statement?
    Mr. Schweich. I agree with the statement, but I also would 
point out the Security has 15 members. And I think the United 
States and the United Kingdom acted very honorably in trying 
their best to stop the corruption when it came to light.
    Mr. Kucinich. And what specific steps were taken when the 
corruption came to light?
    Mr. Schweich. As I said, the retroactive pricing was 
extremely effective, placing holds on goods that might have 
dual use items. And then in other cases, we were less 
successful. We tried, for example, something called smart 
sanctions, Congressman, where we were trying to get increased 
border patrols. We were not able to get that through because 
other committee members weren't interested in it.
    Mr. Kucinich. Isn't it true that the United States has veto 
power over every substantive decision made by the Secretary 
General?
    Mr. Schweich. No, over every resolution that's proposed to 
be passed by the Security Council.
    Mr. Kucinich. And the U.N. Secretariat, including those 
regarding the Oil-for-Food Program?
    Mr. Schweich. I don't think the United States has any veto 
power over decisions made by the Secretariat within the scope 
of the authority of the Secretariat.
    Mr. Kucinich. But within the scope of the management of 
specific programs, we sat and we had 60 people who were 
scanning all these documents, and you're saying we couldn't do 
anything about any of the kickbacks, we were powerless?
    Mr. Schweich. We actually did, as I said, with the 
retroactive pricing and the holds, we actually did a 
significant amount to try to stop it.
    Now, I agree with you 100 percent, Congressman, that it was 
not a leak-free process. We definitely had problems, and there 
was definitely money that got through. But I think if you look 
through the 661 Committee minutes over an extended period of 
time that the conduct of the United States and the United 
Kingdom was honorable and we did our best.
    Mr. Kucinich. Isn't it true that the Oil-for-Food Program 
became the Development Fund for Iraq?
    Mr. Schweich. That's my understanding.
    Mr. Kucinich. And that happened in November 2003?
    Mr. Schweich. Right.
    Mr. Kucinich. And that Development Fund for Iraq was then 
turned over to the Coalition Provisional Authority?
    Mr. Schweich. That's my understanding, yes.
    Mr. Kucinich. Are you familiar with the report of the 
Special Inspector General for Iraq relating to the handling of 
$9 billion in Iraq reconstruction funds?
    Mr. Schweich. Congressman, I don't want to not answer your 
question, but I have only very limited familiarity. Once it 
went over to the CPA, it became more of a DOD activity, and I 
haven't paid a whole lot of attention to it, to be honest with 
you.
    Mr. Kucinich. You're speaking to a certain fluency that 
existed at the State Department with respect to Oil-for-Food. 
Do you know if there is any such fluency at the State 
Department with respect to the missing $9 billion?
    Mr. Schweich. I'm not aware of that.
    Mr. Kucinich. So you really don't know anything about it?
    Mr. Schweich. No, I don't.
    Mr. Kucinich. Are you interested in it?
    Mr. Schweich. Yes, sure.
    Mr. Kucinich. Do you feel that it would undermine the 
credibility of the United States on one hand to be raising 
questions about the accounting of the Oil-for-Food Program in 
which we discovered there were bribery kickbacks, and you went 
over the list, and on the other hand a program that we had 
direct responsibility for accounting for that $9 billion is 
missing? Do you think that raises questions of our credibility 
before the United Nations?
    Mr. Schweich. Congressman, I just don't know enough about 
the issue to make any statement on that.
    Mr. Shays. Would the gentleman just suspend 1 second? This 
will be on my time. We are going to have a hearing some time in 
June on this specific issue of the $9 billion. It is an issue 
of how was the money accounted for.
    So it may be ultimately $100 million are missing or $10 
million or whatever. It's not that $9 billion can't be 
accounted for. It's that there was not proper accounting of the 
$9 billion.
    But the gentleman has raised absolutely the right question 
about this issue. And we'll be bringing in the experts to do 
that. We think it may be on June 21st, and we've got a sign-off 
on that hearing from those that we need to get sign-off on, at 
the gentleman's request. I haven't had a chance to----
    Mr. Kucinich. Well, you know, Mr. Chairman, when there was 
money missing at ENRON, we found out later it was stolen. So we 
don't know that any of that money hasn't been stolen. I'm not 
charging that it has been. But what I'm saying is that when you 
have money missing and you have a special investigation of it, 
and it raises the questions about $9 billion missing, I mean, 
on one hand, if we're concerned about Oil-for-Food, and we 
ought to be, then we also ought to look at the handling of 
successor programs.
    Mr. Shays. Would the gentleman allow me?
    Mr. Kucinich. Of course.
    Mr. Shays. It's like saying that DOD is missing $100 
billion, because no part, frankly, very little part of DOD is 
accountable. In other words, at one point there was over a 
trillion dollars of transactions that were not properly being 
accounted. But that didn't mean we didn't know where a trillion 
dollars of transactions were. It's that they weren't being 
properly accounted for.
    And the gentleman is right, they are not being properly 
accounted for. There's not $9 billion missing, it's just not 
being accounted for. And when I say just, I mean it's serious. 
But this gentleman, nor do you or I really have the expertise 
yet to do it. But we will have a hearing, we will have 
witnesses that you would like us to get, and we will get an 
answer as to, of the failure to account for $9 billion, how 
much is actually missing, where did it all go.
    I thank the gentleman.
    Mr. Kucinich. What I'm getting at here, Mr. Chairman, is 
this. And I want to thank you, by the way, for being responsive 
and being willing to hold a hearing on that. What we're looking 
at here is a mentality. There was, you know, it's conceivable, 
when you consider that we had so many people who were involved 
in scrutinizing these contracts, it's conceivable that we had 
an anything goes approach, because it's Iraq. It's like a run-
up to the signature line in the movie Chinatown. I mean, it's 
just Chinatown. Or maybe it's just Iraq.
    So if it's in Iraq, anything goes. Anything goes, and all 
of a sudden you have this Oil-for-Food and all these kickbacks, 
it's Iraq. Then you have $9 billion that hasn't been properly 
accounted for, it's Iraq.
    Well, you know, that's not good enough. And you know why, 
and it's particularly not good enough, Mr. Chairman, when now 
you see the credibility not only of U.S. intelligence agencies 
under attack, but also the credibility of the State Department 
under attack.
    Now, I'm going to, before I conclude, I just want to share 
this thought with you. It's no secret around the world, because 
we're talking about the world here, and I happen to believe 
there is a legitimate role for the United Nations. My view is, 
I look at the world as one. I see it as being interconnected 
and interdependent. That's why we should be concerned with 
what's happening in different nations, as they should be 
concerned what happens here.
    But when you see this whole story about Oil-for-Food here, 
and $9 billion that can't be accounted for there, and you see 
the charade of the State Department taking the rap for a 
decision that was made by the White House to invade Iraq no 
matter what, when you see the intelligence community taking a 
rap for a decision that was made by the White House to attack 
Iraq no matter what, it leaves us here in a state where we're 
reviewing a farce. That is tragic.
    So the buck has to stop at the administration. Colin Powell 
is one of the most honorable men who has served this country 
and he was basically put in an impossible position. We have 
some of the best people serving America in the State 
Department, and they have been put in an impossible position, 
because the administration made the decision to attack Iraq, 
notwithstanding the facts.
    And the people in our intelligence community, I'm going to 
just say this and then let it go, the people in our 
intelligence community, we have some of the best people in 
intelligence, the career employees serving this country, and 
they are getting smeared, because this administration basically 
fed intelligence to certain people and told them this is what 
they had to say and later on it turned out not to be true.
    Mr. Chairman, so much of what we're looking at here is not 
just a question of the credibility of the State Department or 
the United Nations or our intelligence capability. It goes 
right back to the administration. It's time for someone to dust 
off Harry Truman's old plate that said ``The buck stops here.'' 
Because in this administration, it looks like the buck stops in 
somebody's pocket.
    Thank you.
    Mr. Shays. I thank the gentleman.
    We've been joined by Mr. Ruppersberger and Mr. Lynch. We 
thank both of them for being here, they have been very 
important members of the subcommittee.
    Mr. Ruppersberger. Mr. Chairman, first, I want to thank you 
for continuing to focus on this issue. It's extremely important 
as we deal with all of the issues facing us, including the 
security of our country and the world, basically.
    I have just a quick statement, I want to read a couple 
paragraphs, and then just a couple basic questions. I'm sure a 
lot of this has been repeated.
    Mr. Shays. The gentleman has 10 minutes.
    Mr. Ruppersberger. That's good, usually we have 5. That's 
good, Mr. Chairman, thank you.
    First thing, I was struck last year at one of our Oil-for-
Food hearings when it was first announced that the U.N. had 
agreed to an independent inquiry committee and Paul Volcker was 
appointed to lead it. I remember members on both sides of this 
dais commenting on Mr. Volcker, and that if he received the 
necessary cooperation from the United Nations, we believed the 
investigation would be thorough and productive.
    As we know, the inquiry committee released its interim 
report on February 2, 2005. When it was released, Mr. Volcker 
commended the U.N. for its cooperation, saying that ``Few 
institutions have freely subjected themselves to the intensity 
of scrutiny entailed in the committee's work. I don't know of 
any other institution that has been scrubbed quite as hard as 
this.''
    Now, like it or not, this is a global world today. Our 
economies, cultures and travels are linked with other nations 
and other parts of the world. Unfortunately, we have learned a 
terrible and difficult lesson: that terrorism is a global 
problem as well. When we face an enemy that is stateless, that 
can move people, money and weapons across borders with ease, 
peaceful and democratic nations must come together in some 
institution to face these global threats. I believe our 
relationship with our international partners is critical to our 
success in the global war on terror.
    So when I look at the Oil-for-Food issue, of course I'm 
concerned about allegations of corruption. We all should be. 
And we need to deal with that. I'm concerned when laws are 
broken, I believe we should follow the facts and punish those 
proven guilty. We need to hold people accountable, including 
the leadership at the top, especially the United Nations, and 
also the Security Council, of which we are a member.
    But beyond the punitive element, I am concerned with how we 
move forward and keep our eye on the ball, what we have learned 
from this and what constructive recommendations can we take 
from Mr. Volcker and others to strengthen the U.N. and move 
forward.
    Now, Mr. Schweich, first thing, do you feel that based on 
the information that you have, and especially with the issue of 
Oil-for-Food, and other issues that are out there involving the 
U.N. that the U.N., can be successfully reformed to do the job 
that's needed to be done, that they need to do to pull our 
countries together and especially as it relates to the war 
against terror?
    [The prepared statement of Hon. C.A. Dutch Ruppersberger 
follows:]

[GRAPHIC] [TIFF OMITTED] T2686.020

[GRAPHIC] [TIFF OMITTED] T2686.021

[GRAPHIC] [TIFF OMITTED] T2686.022

    Mr. Schweich. Congressman, yes, I do believe that the U.N. 
can be reformed. But it is a major undertaking, not only 
because the problems are so systemic and so deep with the 
oversight issue, the transparency issue, some of the things 
that we've discussed and I've alluded to in my statement, but 
also because you've got 191 countries with very differing 
interests and very different theories on what really needs to 
be reformed.
    Right now there is a major reform initiative underway. The 
Secretary General released a report called, ``Enlarge Our 
Freedom,'' which we're studying now, which contains some very 
good proposals. And things are moving in the right direction, 
but it's going to be fits and starts. Because getting consensus 
among that large of a group of people and countries is very, 
very difficult.
    Mr. Ruppersberger. Well, let's talk about some of the 
elements that need to be done. First thing, I think when you 
look at any management function, the president, CEO, whatever, 
it starts at the top. So in this situation, I believe, from 
what I know of the makeup of the United Nations, you have the 
leader, Kofi Annan, and then you also have the Security 
Council, which is the board. And they have a lot of power.
    And really, they set the tone. Now, what would you 
recommend to them needs to be done? Do we need to change 
leadership at the top? Do we need to put together a plan? 
Because whether you're a government or in the military or 
whatever, you need to have a plan.
    Now, what should our plan, based on your knowledge, before 
the U.N. to get off the bipartisan, the U.N.'s bad, the U.N.'s 
good, the U.N. shouldn't be here, whatever? Bottom line, our 
citizens want us to have a functional group, whether you call 
it the United Nations, but some group in a world economy that 
can come together, especially as we now focus on the war 
against terrorism.
    So let's get more specific. What would you recommend be 
done?
    Mr. Schweich. Well, Congressman, let me start with, the 
Secretariat has claimed that the Secretary General does not 
have CEO-type authority and needs more. Can't control 
budgeting, can't control hiring and firing, can't get rid of 
the deadwood in the organization, certain things like that. I 
think we concurred with some of that.
    Mr. Ruppersberger. I hope we can learn from that for the 
new DNI, too, Director of National Intelligence.
    Mr. Schweich. I think we concur with some of that. The 
problem is, we are somewhat reluctant to give the Secretary 
General a lot more authority unless there is a lot more 
transparency and oversight. So what we're trying to do is 
reformulate our position, and we're only in the infancy of 
formulating those positions, so I really can't give you too 
many specifics.
    But I think you will see very specific proposals coming out 
of the State Department in the coming weeks. But basically, 
balancing the idea of a Secretary that does not have enough 
ability really to influence the process, with the understanding 
that if you give somebody more authority and more power over 
hiring and firing and budget and those types of things, you're 
going to have to have a much more aggressive oversight system. 
There are whole parts of the Secretariat's operations and the 
U.N.'s operations that are not even subject to OIOS review and 
audit. There are a lot of closed meetings we don't think should 
be closed. They're going to have to open it up.
    So as we develop specific proposals, and I think we will, 
and unfortunately I'm not authorized, because they haven't been 
fully vetted yet with what those proposals are, you'll see our 
effort to balance the need for a stronger authority with 
greater oversight and greater transparency. Those are the 
objectives.
    Mr. Ruppersberger. I don't think there's any successful 
institution or entity that does not have strong leadership at 
the top. But what you need is a check and balance to make sure 
you hold that leader accountable.
    Mr. Schweich. Exactly.
    Mr. Ruppersberger. That's the format that you need.
    Let me ask you this. Do you think we can get past the Oil-
for-Food problem?
    Mr. Schweich. Yes, I do. It's going to take a long time, 
though, for several reasons. First of all, we're waiting on the 
major report of the Volcker Commission. They have released two 
reports, but they said the big report comes out in July or 
August. So we're going to have to see what that says.
    Second of all, there are numerous other investigations 
going on, several congressional committees, U.S. Attorney's 
Office, other countries have numerous investigations going on. 
So we're going to have to see how it all falls out, just how 
bad it was, how much corruption occurred. But I do believe 
there are already reforms being implemented that will hopefully 
prevent something like that from happening again, like the 
increased power of the OIOS, like better sanctions regimes, 
more targeted sanctions. I think there are lessons being 
learned from this, and I think there are actions being taken to 
improve it.
    Mr. Ruppersberger. I respect Volcker, and I think he's done 
a lot for our country, he's a very intelligent man who has a 
high degree of integrity. Do you think he's on the right track, 
based on where he is and where his investigation is?
    Mr. Schweich. I do interact frequently with the Volcker 
people, and they are obviously a very hard-working, 
conscientious group of people that have already exposed a lot 
of problems with the Oil-for-Food Program.
    One issue I raised with the chairman earlier was the issue 
of the Turkish and Jordanian protocols. And I'm interested to 
see how they treat that issue. They rightfully operate 
principally in secrecy. So how it's all going to turn out, I 
don't know. But I certainly think we were impressed with the 
first two reports.
    Mr. Shays. If the gentleman wouldn't mind, just so I 
understand they, who is ``they'' operate?
    Mr. Schweich. The Volcker Commission, they don't give press 
conferences or report on exactly what their progress is. So I 
think we really have to wait and see what the big report says 
in July.
    Mr. Ruppersberger. But my question is, right now, based on 
what you know, do you think they are focused and they are on 
the right track? One of the reasons I ask this question is 
because unfortunately, certain people who respected Volcker now 
because he made the comment, the quote that I read, are 
attacking Volcker. I want to make sure that from your 
perspective, do you feel that Volcker and his commission are on 
the right track in their focus on investigating the U.N.?
    Mr. Schweich. From what I've seen of the past, I think they 
are. I think we have expressed some concerns about their 
mandate and staying within their mandate. As long as they stay 
within the very specific mandate the Secretary General gave 
them, I think they've got a very talented group of people that 
will do an excellent job.
    Mr. Ruppersberger. OK, now, let's get back to specific 
recommendations. Because in the end, it's an end game, it's 
resolving this, it's working through this and getting where we 
need to be. First we have to deal with the corruption issue, 
and that has to move forward. But then we have to pull these 
nations together to, one of the major issues of concern to me 
is fighting the war against terrorism.
    You mentioned the authority at the top and I think that's a 
very important issue. But we also have to make sure that person 
is held accountable. Second, what do you feel needs to be done 
with respect to the Council itself, the Security Council? It 
has a lot of power.
    Mr. Schweich. Yes, and right now again, there are a whole 
series of proposals for Security Council reform that we are 
evaluating, from expanding the membership with new permanent 
members with new non-permanent members to reflect regional 
interests more accurately, from changing their working methods, 
for more transparency.
    And again, I'm in an awkward position here, because I was 
here to testify about Oil-for-Food. I will say, Congressman, 
that we are very actively considering the exact issue that you 
discussed and what proposals we are going to come out in favor 
of and which ones will be----
    Mr. Ruppersberger. What issue that I discussed?
    Mr. Schweich. About Security Council reform, which is a 
very, it's extremely active. The U.S. mission to the United 
Nations, the State Department and virtually every Member State 
is almost preoccupied in New York with Security Council reform 
and how to make it a better Security Council.
    Mr. Ruppersberger. The credibility of a union of nations, 
whatever you call it, is extremely important. And again, I'm 
going to focus on the war against terror. If we don't pull it 
together, the United States and Great Britain can't do it 
alone. We need help.
    Thank you.
    Mr. Schweich. Thank you.
    Mr. Shays. I thank the gentleman very much. Appreciate his 
being here.
    Mr. Lynch, you have the floor for 10 minutes.
    Mr. Lynch. Thank you, Mr. Chairman. I appreciate that.
    Mr. Schweich, I want to thank you for coming here to help 
this subcommittee with its work. I just returned from Iraq last 
week, and I must say that it would be enormously helpful if we 
had a competent and reliable U.N. ready at this stage to help 
this new Iraqi government with its new responsibilities.
    Let me followup on what Mr. Ruppersberger asked you. He 
asked if we could get through this Oil-for-Food Program. Let me 
ask you more pointedly, can Kofi Annan survive this Oil-for-
Food Program controversy, in your estimation?
    Mr. Schweich. In our estimation, we continue to support the 
Secretary General and his work. Obviously as Ambassador 
Danforth said several months ago, the chips have to fall where 
they may, there is more reporting to come. But at this point, 
we are supportive of the Secretary General, yes.
    Mr. Lynch. OK. I've got to tell you, I don't share your 
confidence. I really don't. I guess we'll all wait for Mr. 
Volcker's report this summer.
    In your earlier testimony you mentioned the Article 50 
waiver that was granted to, I think it was granted to Jordan 
and Turkey.
    Mr. Schweich. Turkey and Jordan requested relief under 
Article 50. It was not actually formally granted. There was a 
letter sent to Jordan basically acknowledging the situation. 
There was really no action taken on Turkey. But the waiver was 
actually granted by the U.S. Government under the Foreign 
Operations Appropriations Act.
    Mr. Lynch. To Jordan?
    Mr. Schweich. To Jordan and to Turkey.
    Mr. Lynch. And to Turkey?
    Mr. Schweich. Yes.
    Mr. Lynch. OK.
    So are there any other countries out there--so they were 
allowed to, because they claimed hardship under that article, 
they were allowed to be outside the sanctions, am I 
understanding this correctly?
    Mr. Schweich. What we did was, under the Foreign Operations 
Appropriations Act, we are not allowed to provide foreign aid 
to countries that are in violation of the sanctions. And a 
waiver to that was granted, recognizing that there was extreme 
hardship to their economies in complying.
    Mr. Lynch. OK. And you've basically said that affected 
Jordan and Turkey. Are there any other countries that requested 
waiver in some form or other?
    Mr. Schweich. Not on a large scale like that. I think there 
might have been some smaller requests. But I'm not even aware 
that there were any. I think I did read at one point that other 
countries did ask for certain targeted relief.
    But no, it was basically Jordan and Turkey.
    Mr. Lynch. OK. You're saying you heard some smaller 
requests from other countries? What other countries?
    Mr. Schweich. I've read that, and I don't know much more 
about it. If it was, it was minor, and I think it would be fair 
to say that it was Turkey and Jordan that requested the relief.
    Mr. Lynch. OK. It goes to the issue of our credibility in 
terms of asking for support for the sanctions, and then we 
have, we're granting waivers. I understand. I understand.
    But if there are other countries that have been requesting 
waivers, I need to know that.
    Mr. Schweich. Yes, I'm being advised by one of my advisors 
that there were numerous other countries that requested relief, 
but not on the scale of Turkey and Jordan.
    Mr. Lynch. I'm not worried about scale. I'm worried about 
if it's a small hole in the sanction that we're asking to be 
placed against Iraq, it doesn't matter the size. Let me ask you 
again, what other countries asked for even small relief from 
the sanctions, and what countries, no matter what size of 
relief, what other countries got relief from the sanctions?
    Mr. Schweich. I don't think any of them were actually 
officially granted relief. What I'll do, if it's OK, 
Congressman, I'll take it under advisement and send you a 
letter with the exact names of the countries. It was in 1991, 
early in the sanctions regime. I recall reading that a number 
of countries asked for some kind of relief. But these were on a 
very small scale compared to Turkey and Jordan.
    I'd be happy to get back to you on that.
    Mr. Lynch. All right, and I understand you're here for 
limited purposes, for the Iraqi Oil-for-Food Program. However, 
in previous hearings I've asked this question. We had a 
situation, and this was several months ago I asked for the 
information and I understand we're just getting some response 
now. We had some Halliburton employees who were involved with, 
I believe it was Kuwaiti businessmen who, there were some 
sizable bribes involved, and we recently were given names of 
those Halliburton employees. Am I getting this right? Yes.
    Any information that you could provide?
    Mr. Schweich. Regretfully no, Congressman. I don't know 
about that.
    Mr. Lynch. I'm sorry?
    Mr. Schweich. No, I don't know about that issue.
    Mr. Lynch. OK. All right, Mr. Chairman, I'm going to yield 
back. Thank you.
    Mr. Shays. I thank the gentleman.
    I do want to go through a few more questions and take 
advantage of your expertise. I mean, you are, no one is 
questioning your devotion to the U.N. and your devotion to our 
country and your responsibility in the U.N. We're very grateful 
for your service there, and we're grateful that you would take 
time to come down to help us understand the system. I don't 
want you to leave before we have gone through some of these 
questions.
    You've explained why the United States accepted the trade 
protocol signed between Iraq and Jordan and Turkey. You've made 
it clear that basically, Turkey and Jordan were saying that a 
huge amount of their gross domestic product was trade with 
Iraq, and now, we had these sanctions, and that they were 
asking the 661 Committee to address that; 661 wasn't addressing 
it.
    So first Jordan started to just buy oil and use that oil. 
But they told the United Nations, that's correct?
    Mr. Schweich. That's correct.
    Mr. Shays. And that eventually, the 661 Committee 
acknowledged that they had received the letter, acknowledged 
what Jordan was doing and just said, keep us informed. And we 
have basically the letters that you have provided us there. So 
we're really, one of them is Jordan first asking for Article 50 
relief. That's the first thing they did. Then this is, and then 
a year later, they notified that they were going to do that, 
and we are submitting that for the record. And then this is 
Turkey basically 5 years later notifying the U.N. that they 
were engaged in trade with Iraq as well.
    Mr. Schweich. They were requesting the same relief, right.
    Mr. Shays. Requesting the same relief. And in a sense, they 
received it.
    Mr. Schweich. There wasn't actually a letter sent back, in 
the case of Turkey, like there was with Jordan. But 
effectively, they notified that it was occurring, yes.
    Mr. Shays. But without rejection, we will put these letters 
into the record, and I appreciate your having those letters.
    [The information referred to follows:]

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    Mr. Shays. Why didn't the U.S. support similar trade 
protocols with Syria?
    Mr. Schweich. Well, first of all, Syria never came to the 
Security Council, Mr. Chairman, saying, we would like Article 
50 relief and here's the impact on our economy. The reason they 
couldn't do that is they really didn't have substantial oil 
trade with Iraq until they started the protocol. So they didn't 
have the same hardship case.
    The second thing was Syria was actually sitting on the 
Security Council, Mr. Chairman, and denied that they were even 
getting the oil. They were confronted directly with the issue, 
``are you importing Iraqi oil,'' and they said no, and we and 
other countries said, we have evidence that pipeline is open 
and that you're doing it. They said, oh, no, no, we're just 
testing it.
    So contrary to what happened with Turkey and Jordan, where 
they came hat in hand, asked for Article 50 relief and really 
did it by the book, Syria just engaged in a massive fraud, 
denying the entire time they were ever importing any of the 
oil.
    Mr. Shays. Why did so many non-end users get passed those 
overseeing the program to purchase Iraqi oil? In other words, 
so many middlemen, how did that happen?
    Mr. Schweich. I think there was some laxness there, Mr. 
Chairman, in really investigating whether these people were 
middlemen or end users. Everyone claimed to be an end user, but 
it turned out that was quite wrong. And the oil overseers, I 
think the answer is, just weren't diligent enough in their 
investigation to make that determination.
    Mr. Shays. Why didn't the alleged participation of so many 
political and religious institutions prompt further 
investigation into participants of the Oil-for-Food Program?
    Mr. Schweich. I don't know the answer to that.
    Mr. Shays. Do you know the answer of why didn't the United 
States or other 661 Committee members put holds on this over 70 
contracts the U.N. informed the committee might be overpriced?
    Mr. Schweich. I don't know about specific contracts. I know 
we did put holds on some contracts because of pricing. But 
again, I think as DCAA pointed out, it's very, very tough to 
determine whether a contract is overpriced just by looking at 
the paper.
    Mr. Shays. I think you said you would get back to us on 
this issue?
    Mr. Schweich. Yes, I will.
    Mr. Shays. Thank you.
    Just quickly going through these, were the internal and 
external oversight mechanisms adequate for a program of this 
scope and duration?
    Mr. Schweich. No, there wasn't, as I mentioned before, the 
OIOS didn't even audit the contracts, which is where most of 
the fraud was. You can say the problem was in letting Saddam 
Hussein pick the contractors or in failing to insert, as you 
know, in DOD contracts, they have audit clauses that go well 
into the private sector contracts down several levels and 
several tiers. We think something like that should have been 
imposed if they were going to allow Saddam Hussein to negotiate 
the contracts himself.
    Mr. Shays. Why do sanctions committees act in secrecy?
    Mr. Schweich. Well, there is some validity in the same way 
that a lot of governmental and other organizations like to have 
candid and open conversations, so they do want secrecy in some 
cases. We do believe, though, I think, which might be the 
implication of your question, Mr. Chairman, that there is too 
much of that with respect to sanctions committees, and we are 
requesting that there be much less of it, that minutes be made 
available and that more meetings be open, with the 
understanding that there will be some circumstances in which 
candid discussion requires secrecy.
    Mr. Shays. So in response to this question, should all 661 
Committee minutes be made public, you would say most but not 
necessarily all?
    Mr. Schweich. I would say that the presumption should be in 
favor of making them public.
    Mr. Shays. Let me get to this last line of questioning. How 
should we measure the effectiveness of the sanctions? In other 
words, what benchmarks should we use?
    Mr. Schweich. I think the effectiveness of the sanctions 
should be, did we get the actor against whom the sanctions were 
imposed to comply with our demands. And in the case of the Oil-
for-Food Program, it was a mixed bag. Saddam Hussein did not 
comply with weapons inspectors, but we did keep him from 
getting weapons of mass destruction.
    Mr. Shays. Is there any question my colleagues would like 
to ask before we go to the next panel?
    Again, Mr. Schweich, I want to thank you for being here. I 
want to thank you for being prepared to answer the question 
that we needed to ask. I want to thank you also for your 
answering the questions directly and not giving us more detail 
than we needed.
    I'd like to ask you, is there anything that we should have 
asked that we didn't ask that you need to put on the record?
    Mr. Schweich. I can't think of anything right now, Mr. 
Chairman, but if I do come up with something, would it be OK to 
write a letter to you about that?
    Mr. Shays. Yes, that would be very helpful.
    Mr. Schweich. Thank you.
    Mr. Shays. So we're all set?
    Mr. Kucinich. I just want to thank you for your testimony?
    Mr. Shays. Thank you. Thank you so much.
    Our second panel consists of Dr. Paul Conlon, owner of 
Transjuris e.K. in Munich, Germany, who was the former Deputy 
Secretary of the U.N. Security Counsel Iraq Sanctions 
Committee; Mr. Andrew Mack, the director of the Center for 
Human Security at the University of British Columbia, who was 
the former Director of Strategic Planning, Executive Office of 
the U.N. Secretary General Annan; and Dr. C. Joy Gordon, 
associate professor of philosophy, Fairfield University.
    I thank all three, if you would remain standing, we'll 
swear you in and we'll go from there.
    [Witnesses sworn.]
    Mr. Shays. Note for the record our witnesses have responded 
in the affirmative. In the many, many years of doing this, we 
swear in all our witnesses, and we thank you very much.
    We'll start with you, Dr. Conlon, and we'll do the same 
thing, we're going to do the 5-minutes and then roll it over 
another 5 minutes if you have points that you need to make. 
We'll go to you, Mr. Mack, and then to Dr. Gordon. Thank you 
all three for being here.
    Let me make the point that your statement will be in the 
record. If you decide to respond to testimony already given and 
adjust your testimony orally, that's perfectly OK.
    Dr. Conlon.

  STATEMENTS OF PAUL CONLON, OWNER, TRANSJURIS E.K., MUNICH, 
 GERMANY, FORMER DEPUTY SECRETARY, U.N. SECURITY COUNCIL IRAQ 
 SANCTIONS COMMITTEE; ANDREW MACK, DIRECTOR, CENTER FOR HUMAN 
 SECURITY, UNIVERSITY OF BRITISH COLUMBIA, FORMER DIRECTOR OF 
STRATEGIC PLANNING, EXECUTIVE OFFICE OF U.N. SECRETARY GENERAL 
   ANNAN; C. JOY GORDON, ASSOCIATE PROFESSOR OF PHILOSOPHY, 
                      FAIRFIELD UNIVERSITY

                    STATEMENT OF PAUL CONLON

    Dr. Conlon. Thank you, Mr. Chairman.
    With the United Nations, we sometimes have a type of 
dichotomy between two sets of functions it has, and two 
mentalities that go with it. One of those is what we refer to 
as the humanitarian or the soft activities that it engages in. 
These might revolve around development, environmental 
protection, fighting against disease, those are the things that 
make it akin to a type of huge international welfare 
department, with soft goals, that it is not easy to determine 
if the goals had been obtained or not, and with soft methods.
    Normally the legislative, a lot of the legislative 
resolutions regarding these things are not binding, they are of 
an exhortatory nature, not binding. That occupies about 98 
percent of all those people working for the United Nations.
    Alongside of that, we have something else, which is more 
akin to what a police department does, and that is this 
collective security enforcement function that resides with the 
Security Council. It has a privilege of actually binding 
members, and even non-members, to do what it wants under 
certain circumstances in that regard. It has at its command an 
awful lot of options of a very unpleasant nature which it can 
use against recalcitrant governments, even non-governments 
nowadays, that are threatening peace and security or otherwise 
not complying with obligations of an important nature under the 
U.N. charter. Now, that employs about 2 percent of the United 
Nations Secretariat.
    Under these circumstances, we have this dichotomy, the good 
United Nations, the bad United Nations, and so forth. And what 
happened in the case of the sanctions against all of the target 
states of that period, not just Iraq, I should stress here, by 
the way, that we're talking about similar things happening in 
regard to the sanctions against Yugoslavia, Libya, and Haiti, 
to some extent also Angola, or against the rebel movement in 
Angola.
    What it had at that time was a confusion of two things that 
grew up basically over time. The original consensus in regard 
to sanctions against Iraq was extremely high for a very good 
reason. It had done something that was vitally threatening to 
most of the members, with the exception of a very few. There 
was a great deal of consensus and cooperation, greater than 
ever before or ever since.
    Now, after April 1991, the main goal of the original U.N. 
action against Saddam Hussein's regime having been achieved, 
the residual goals that emerged largely from Resolution 687, 
had much less acceptance and things began to go awry. In 
addition, the target state gradually gathered itself and began 
to assess its position and think of ways in which it could 
respond to the challenge of being under sanction.
    At this point, confusion ensued, in that the committee 
which originally had been created almost entirely with 
enforcement functions began to get involved in humanitarian 
mitigation functions. And there is, in this matter, a tradeoff 
that has to be, in case of any future sanctions regime as well, 
be truly looked at. The tougher the enforcements, the more you 
risk collateral damage to unintended targets, and that could 
include civilian populations. So there is a need for some 
attempts to structure the sanctions so they don't have that 
effect, or to mitigate their functions.
    However, the fact that these two things were essentially 
the domain of two distinct constituencies in the U.N. 
organization itself, I'm talking now about the Secretariat to a 
certain extent, but also the political constituency of states 
that are active in the various bodies, they're not the same 
ones. Because these things were mixed up after about 1991 in 
this sanctions regime, and most others as well, you started to 
have problems with the one activity working against the other 
activity and the constituency engaged in the one activity 
working against the constituency engaged in the other one.
    Now, the sizes, the magnitudes that I initially spoke of 
being very disproportionate to say the least, it's clear that 
when this happened, enforcement is not going to be very 
successful, and mitigation, or at least interference with 
enforcement for humanitarian mitigation purposes, is going to 
be very significant.
    If one is looking for insights as to what has to be done in 
the future under this basis, one of the things I suggested in 
my book, to which I can refer almost whatever questions you 
ask, it is probably answered there already, I suggested that in 
the future, a stronger Security Council, if it's going to be a 
centerpiece or center of collective security enforcement, 
should have greater independence from the general Secretariat 
of the United Nations, possibly having its own secretariat and 
should be as independent as possible from the influence of the 
Secretary General.
    This has gone into a statement I made, which I have given 
to another subcommittee. Two Secretary Generals, one the 
predecessor of Boutros-Ghali, under whom I served most of these 
years, were loyal to the Security Council. As from what I 
understand, Kofi Annan also has been. But Boutros Boutros-Ghali 
eventually came into conflict with the Security Council, and 
the constituency of states that were playing a dominant role 
there at the time, that's the P3, and it includes the United 
States. And he eventually began to do what he could do to 
sabotage sanctions enforcement against Iraq, against Yugoslavia 
as well, by the way.
    What he could do was, his leeway for doing this is narrow. 
He is basically a servant of the Security Council, and can't do 
that very much. But he was able to do something, and he did 
that. So we had the problem that you had a U.N. system of 
outlying agencies which had goals that were more or less at 
variance with the goals of the Security Council. They 
occasionally did what they could to sabotage, but on other 
issues they did cooperate with us as well.
    And you had then, at least from about 1993 or so forward, 
1993 forward, let us say, a Secretary General that was becoming 
increasingly uncooperative with sanctions, particularly against 
Iraq. This is one of the reasons why things began to go awry.
    At the same time, the target states, the original target 
state, Iraq and later other target states, particularly central 
Yugoslavia, which was, the state of Yugoslavia that was left, 
adopted certain tactics using humanitarian mitigation arguments 
and mechanisms to strengthen their position under sanctions. 
These have not been entirely analyzed afterwards, and are not 
entirely known.
    But they did involve what the representative from the State 
Department has referred to as swamping the committee that began 
very early, began in our case around, I would say, by the end 
of 1991, swamping the committee with requests for humanitarian 
mitigation which in my book I refer to as waiver actions or 
waiver clearance actions. Most of these were not used. In the 
case of my committee, it was 10 percent that were used, and in 
the case of the Yugoslavia committee it was 2 percent.
    So you had a body which operates in many ways in a manner 
similar to a regulatory agency or regulatory body in a national 
government, granting humanitarian waiver clearances 90 to 98 
percent of which were never utilized. It was also unclear where 
the money was coming from or should have been coming from to 
finance all of this pseudo-trade that the clearances referred 
to.
    This, it assumed after the fact that much of this had to do 
with unfreezing frozen assets. In the case of Iraq, I in later 
years also suspect that the family of the dictator, which at 
that time was one of the world's richest families, had the 
problem that its assets had to be kept relatively hidden and 
that moving assets out of the hidden sphere into the open 
market was a dangerous act, because that could tip off, Iraq's 
claimants were numerous by this time, as to where the rest was 
hidden, and that some of this activity may have been related to 
money laundering in that sense, ways of getting the money out 
of the hidden sources into the open market.
    But that explanation would not be that valid for 
Yugoslavia, which was doing the same thing to an even greater 
extent as far as volume was concerned.
    These things, by the way, were all vastly enhanced by the 
lack of transparency with which the committee operated. That 
was also one of the points on which I directed a good deal of 
criticism and analysis in internal memoranda, I think many of 
which have now been photocopied out of the archive at the 
University of Iowa and been given to the subcommittee.
    So a lack of transparency was responsible for this and was 
responsible for many of the other problems we had, some of 
which had to do with the fact that even our own internal 
recording, registration of what we were doing was very 
primitive and lacking, because we had no obligations of 
accountability to the outside.
    Since we didn't have to explain to anyone what we were 
doing, we ultimately did not bother to keep very good track of 
it ourselves. The book gives examples of all sorts of things 
that happened as a result of this poor management, which is, by 
the way, management of the committee with its decisionmakers 
who were not staff members but delegates of their countries.
    [The prepared statement of Dr. Conlon follows:]

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    Mr. Shays. Thank you very much.
    Mr. Mack.

                    STATEMENT OF ANDREW MACK

    Mr. Mack. Thank you very much, Mr. Chairman and members of 
the subcommittee, for this opportunity.
    I should say that I'm coming here today not as an expert in 
any sense on Oil-for-Food. I was the Secretary General's 
director of strategic planning for 3 years, and if anybody 
spent much time in and around the United Nations, you know that 
strategic planning is in some sense an oxymoron in the U.N. 
It's very, very difficult to have strategic planning when you 
have a board of directors which is the General Assembly with 
190 plus members.
    Mr. Shays. So is your board of directors the entire 
Assembly or is it the Security Council?
    Mr. Mack. The General Assembly deals with budgets, and that 
is absolutely critical in the U.N. The General Assembly doesn't 
have the same sorts of powers that the Council does. But that 
particular power is an incredibly important one, when it comes 
to U.N. reform. If you ask the question, why is it the U.N. has 
nearly twice as many people dealing with public information as 
is the case, as working in the Department of Political Affairs 
and peacekeeping operations, in a sense the Defense Ministry 
and the Foreign Ministry, the answer is the General Assembly, 
the fifth committee.
    That's why it's so difficult, as somebody said before, for 
the Secretary General to in fact implement reforms in the U.N. 
You have to be able to persuade this large, factious body that 
something is in their interests as well as the interests of the 
Secretariat.
    Mr. Shays. Very interesting, thank you.
    Mr. Mack. So Mr. Chairman, I simply want to say that I'm 
here really speaking as an academic and somebody who has an 
interest both in the U.N. and in sanctions regimes in their 
general efficacy.
    I think I'm going to speak to the second part of the agenda 
today, which is one of the implications of Iraq sanctions for 
the future. First of all, it seems to me that it is quite 
clearly the case that we are never, ever going to have another 
sanctions regime like that imposed on Iraq. Comprehensive 
sanctions are out as far as the U.N. is concerned.
    And there are several reasons for this. First, you are 
never going to persuade the French, the Russians and the 
Chinese to go along with another resolution like 661. Second, 
the humanitarian side of the house would be up in arms, and I 
think that the point made earlier, that there is a fundamental 
tension in the institution between the humanitarian side of the 
house and the security side of the house is a very important 
one. That tension runs right throughout the Secretariat. It's 
not just a case that it's for the Secretariat versus the 
Council.
    So what we're going to see, I think, in future, is that the 
U.N. is only going to be imposing so-called smart or targeted 
sanctions, and the idea behind smart and targeted sanctions, 
they focus on leaders and not on peoples.
    The second question I think we need to ask, if you look 
into the future, is how successful have sanctions been in the 
past and what is it we need to do to make them more successful 
in the future. If you ask the question, how successful have 
sanctions been in the past, the answer is not very. The classic 
study was done by the International Institute of Economics some 
years ago, with a followup study. They found that about 25 
percent of sanctions regimes were ``partially successful.'' 
What that in fact means is, what success means is something 
which varies according to whom you speak.
    A more recent Canadian study found only 14 percent of 
sanctions regimes have been successful, and that 85 percent of 
those were directed against democracies. What that suggests is 
that the probability of economic sanctions regimes being 
successful against non-democracies is in fact extremely low.
    Now, in a sense, many of those sanctions regimes that have 
been studied were unilateral sanctions regimes. And in 
principle, multi-lateral sanctions regimes ought to be more 
successful. And studies by George Lopez and David Cortright 
have written I think now three books on U.N. sanctions. They 
figured about a third of U.N. sanctions regimes succeed.
    Now, this isn't very good, but it's actually quite a bit 
better than the track record for coercive diplomacy more 
generally. A recent study by the U.S. Institute of Peace found 
only 25 percent of exercises of coercive diplomacy have been 
successful.
    So why is it that two-thirds of U.N. sanctions regimes 
fail? First I think they fail because trying to impose 
sanctions regimes on authoritarian states fails because there's 
a fundamental flaw in sanctions theory. What sanctions theory 
says essentially is that if you impose economic pain on a 
population, the population will bring pressure to bear on their 
leaders to change the policies that led to the institution of 
the pain in the first place.
    Now, the problem with that, as far as an authoritarian 
regime is concerned, is that the people that feel the pain have 
no power, and the people that have the power feel no pain. 
Plus, and this has been very well documented in the case of 
Iraq, but also in the case of Haiti and other places, once you 
impose comprehensive sanctions, one of the very first things 
that begins to happen economically in the targeted country is 
that you create a black market. And in Iraq and elsewhere, it's 
been the regime that has controlled the black markets, so you 
have an extraordinary situation where members of the regime 
whose behavior you're trying to change through sanctions 
actually have a perverse interest in the continuation of 
sanctions.
    And third, comprehensive sanctions cannot only enrich 
regime members, they can actually enhance the control that the 
regime has over its own population. We saw that very, very 
clearly in the case of Oil-for-Food, where the regime to a 
large degree controlled the flow of food and medicines to 
various sectors of the Iraqi community, and that gave it of 
course political leverage.
    But we should also point out that many U.N. sanctions have 
failed, not because of anything that's in any inherent flaw in 
sanctions per se, but because the Security Council made little 
or no attempt to enforce them. If you're looking at the 
sanctions that were placed on Africa, for example, the 
sanctions committee rarely met and they accomplished very 
little when they did meet, and the United States, by the way, 
was just as complicit in doing nothing there as anyone else.
    Many of these sanctions regimes were imposed because the 
Council wanted to be seen as doing something, but didn't want, 
for example, to get into the business of military intervention. 
And ironically, the Iraq sanctions were monitored far more 
closely than any other sanctions regime in the U.N.'s history.
    But I think it's fair to say that the overriding concern of 
both the United States and the United Kingdom here was 
strategic; that is to say, it was about controlling the 
potential dual use items and not so much checking for scans. 
Plus the fact that you have within the Secretariat, there was 
no professional expertise available to help the sanctions 
committees do their job more effectively. Numerous reports have 
called for greater expertise on behalf of the Secretariat 
there, and no cases of funding being available to provide that 
expertise.
    You see that very, very occasionally, as you saw for 
example, in the case of Angola. You had the expert panels that 
were set up, and there for the very first time you actually had 
people with real expertise. And the reports that came out of 
sanctions busting in Angola and Sierra Leone, the whole blood 
diamonds issue there, there for the first time you could see 
what a huge difference it makes if you can have people with 
really good expertise.
    But the funding for that was provided independently by 
Member States who did not come from the General Assembly. And 
of course part of the problem with the Assembly now is that the 
Assembly has been so, there is so much animus in the Assembly 
because of perceived humanitarian costs of sanctions. There is 
a great deal of unwillingness to do anything that is going to 
help implement sanctions more effectively.
    But I think it's quite important, and I think this was one 
of the points made by the State Department representative, the 
sanctions do more, they're about more than simply bringing 
countries into compliance with U.N. resolutions. Sanctions are 
also about stigmatizing a country. This is an important 
function. Sanctions are most importantly about containment.
    And I think it's reasonable to say that as far as the U.N. 
sanctions on Iraq were concerned, notwithstanding the fact 
there was a large amount of leakage. They prevented Saddam from 
rearming. Had there not been a sanctions regime in place, 
Saddam could have replaced $40 billion, $50 billion, $60 
billion, $80 billion worth of material. He could have brought 
in modern tanks, he could have brought in modern strike 
aircraft and so forth. He did not. He didn't do that and 
couldn't do that.
    And third, sanctions can be used to build support for the 
use of force by showing that all military alternatives have 
been exhausted, have been tried and failed.
    And finally, and I think this is one of the reasons why 
sanctions have been imposed so frequently, they can respond to 
the political imperative that the Council feels to be seen to 
be doing something when they don't want to do anything more 
than sanctions.
    So finally, I just want to say a few words about smart 
sanctions. Smart sanctions, like smart weapons, are supposed to 
be precision targeted. They are intended to reduce collateral 
damage. They are designed to coerce regimes, without imposing 
major harm on citizens. As we have heard this morning, that can 
include a whole range of things, freezing of overseas financial 
assets, specific trade embargoes on arms, on luxury goods, 
flight and travel bans, political sanctions designed to 
stigmatize the target regime, denial of travel and so on and so 
forth.
    The point I think about smart sanctions, this is the way 
forward for the United Nations, they are morally appropriate 
when directed against authoritarian states. It's the regime 
that feels whatever pain there is, not the people. They 
minimize humanitarian costs, which isn't only desirable in 
itself, but it prevents the regime, as Iraq did very 
effectively, from using the pain inflicted on its citizens as a 
way of generating support, even though it was Saddam Hussein 
that was fundamentally responsible for the pain in the first 
place.
    And minimizing, they also reduce incentives for sanction 
busting, which means that Article 50 doesn't have to be 
invoked, although when it is invoked, nothing normally happens, 
so you wouldn't have to have the same exclusions that you 
needed to have for Jordan and Turkey. And they reduce 
opportunities for regimes of profit from black marketeering.
    But I think we should be very, very clear that smart 
sanctions are not a very powerful weapon. They should be seen 
as one tool and one tool only in the tool kit that policymakers 
have. They are something I think nearly everybody who studied 
sanctions, everybody who knows the U.N. says sanctions are an 
important tool, they are something that lie between simply 
verbal condemnation, exhortation on the one hand and military 
intervention on the other.
    What is very, very clear is that the sanctions regimes are 
in need of major reform, of much more resources. But it would 
be very foolish to throw out the baby with the bathwater.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Mack follows:]

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    Mr. Shays. Thank you, Mr. Mack.
    Dr. Gordon, I was just questioning your invitation, given 
that my counsel graduated from Fairfield University. But he did 
point out that you have written ``A Peaceful, Silent Deadly 
Remedy: The Ethics of Economic Sanctions,'' and that's why you 
were invited. I thought it might be because of your graduating 
from Brandeis, Boston University, Yale University and then 
getting a doctorate from Yale University.
    Welcome.

                   STATEMENT OF C. JOY GORDON

    Dr. Gordon. It's a pleasure to be here. I do want to say 
that regretfully I am actually not one of your constituents, 
Congressman.
    Mr. Shays. Oh, you're not?
    Dr. Gordon. My university is, but I live in New Haven. So 
my representative is Rosa DeLauro. I hope that despite that, 
you won't actually retract my invitation.
    Mr. Shays. No, no. It's nice to have you here.
    Dr. Gordon. My field is political philosophy and law. I 
have been doing research on economic sanctions for about 7 
years. Over the last 5 years, I have published articles on the 
economic sanctions in a variety of venues: The Yale Journal of 
Human Rights Law; Ethics and International Affairs; Mideast 
Report; Limone Diplomatique; Harper's Magazine. I am currently 
completing a book on the topic for Harvard University Press.
    I'd like to address the things that I think specifically 
have not gotten explored by the series of congressional 
hearings that have happened to date. I am excluding today, 
because I think today's hearings really is going into issues 
that we are just starting to see the significance of. I think 
it's an important contribution of this subcommittee to be doing 
that.
    I'd like to look at issues of transparency and oversight in 
a somewhat different way than they have been framed to date, 
and the U.S. role in a somewhat different way. Then, because 
the consensus decisionmaking rules come up a number of times, 
I'd like to look at that specifically.
    In terms of transparency and oversight, Dr. Conlon has 
described how the 661 Committee operated. That was true 
throughout its history, the meetings were closed and the 
minutes were restricted. I think it's important to understand 
that the OIP and Oil-for-Food Program did not operate in the 
same way. That was an entirely separate system. The 661 
Committee was granting waivers under a different system to 
Iraq. And the Oil-for-Food Program, once it started, had an 
entirely different system with an entirely different structure 
of oversight.
    So what's true of the Oil-for-Food Program that was not 
true of the 661 in its waiver system is the following, so that 
there were, by my count, seven levels of oversight and 
monitoring with Oil-for-Food not found in the waiver system. 
I'll just go through them briefly.
    One is the distribution plan. Before Iraq could begin to 
negotiate any contract, it had to submit a distribution plan 
identifying literally every single item, how it would be used, 
where it would be used. All the U.N. agencies went over those 
and determined if they were appropriate humanitarian goods. 
Sometimes they required it to be modified before that would be 
approved.
    So that was certainly not true of the 661 process. And in 
terms of transparency, the distribution plans are and have 
always been posted on the Web site. They are enormous, anyone 
can read them, you can see the rationale and so forth.
    Second level is the OIP review, the OIP staff then look at 
the contract, see if it conforms to a distribution plan, and 
essentially is the information collecting body, the processing 
body. They don't make policy. The Oil-for-Food staff do not 
make policy. The 661 Committee and the Security Council make 
policy.
    So what information had to be provided, for example, or 
whether a contract should be approved, that was never in the 
hands of OIP. Everyone is familiar with OIP, it is the agency 
within the U.N. that was created to house Oil-for-Food plus the 
U.N.'s other Iraq programs. But what OIP then did do was to 
confirm that every contract conformed with the distribution 
list.
    Then we have a review by UNSCOM and then later UNMOVIC to 
see if there were things that were on the 1051 list or were 
objectionable for some other reason. The 661 Committee then 
reviewed or had access to every single contract. Every member 
had access to every single contract. There was a point part-way 
through, I think it was Security Council resolution 1409, that 
created a green list, and that certain items were 
uncontroversial, then bypassed the committee. Although even 
then, there was a way that if there were improprieties, they 
arrived at the committee.
    But keep in mind that it's been mentioned that the United 
States had 60 staff, and that's from a prior hearing, examining 
every aspect of every contract. It's true that other than the 
United States and the U.K., other countries gave a fairly 
cursory review. The United States and U.K. gave very thorough 
ones, and on the basis of that, the United States in 
particular, had a very, very free hand in blocking contracts. 
And that's important to understand.
    There was not a consensus that was needed to block 
contracts. The consensus cuts the other direction. The way the 
consensus rule works is, if everyone doesn't agree to the 
contract, it's blocked. So that was how it was that the United 
States unilaterally, using the consensus rule, was able to 
block massive, massive quantities of goods that increased over 
the course of time. It was $150 million worth of contracts that 
were on hold in November 1998. By July 2002, it was $5 billion 
on hold by the United States and the United States alone. The 
U.K. sometimes blocked things. Typically 3 to 5 percent of the 
holds were the U.K. All the rest were the United States and the 
United States alone.
    So it's simply not correct to say the United States was 
prevented from exercising its will or exercising its oversight 
in preventing problematic contracts from getting through. There 
was no such structure that prevented it. The process absolutely 
cut in the opposite direction.
    The next level of oversight is that all the funds in the 
program by the structure went through the escrow account. No 
funds by the structure of the program were ever in the hands of 
the Iraqi government. All proceeds from oil----
    Mr. Shays. Can I just ask a question here? I apologize to 
my colleague, but this is kind of like basic. If I don't get 
beyond this point, whatever you say afterwards I'll still be 
wrestling with.
    I thought the testimony before this subcommittee was that 
one member didn't have veto power. You're saying with the Oil-
for-Food Program that it was unanimous consent and if one 
country objected it didn't move forward?
    Dr. Gordon. That's correct. Every member had veto power. 
Every member had veto power over everything. Over any 
procedural decision, over who would be invited to speak to the 
committee, over whether a letter would be written, over every 
single contract. Every member had veto power.
    Mr. Shays. Do you both agree with that, Mr. Mack or Dr. 
Conlon?
    Dr. Conlon. That is one way of explaining it. In the 
Council itself, there are five members that have a veto. In the 
subsidiary organs of this type, the committees, there are all 
members, 15 members, that have similar----
    Mr. Shays. So the difference, I said earlier that in effect 
the 661 Committee was the same committee as the Security 
Council. But just like in our House, when we go from the full 
House in the chamber to the committee of the whole, we play by 
different rules. And the different rules with the 661 Committee 
was that now everybody had veto power, in effect.
    Dr. Gordon. What may be confusing you is that Mr. Schweich 
framed it somewhat differently. He said, I think he said it 
wasn't a veto power, it was the withholding of consent or 
something like that.
    Mr. Shays. I didn't pick up the subtlety. I appreciate 
that.
    Dr. Gordon. I don't see a distinction in practice at all.
    Mr. Shays. No, there isn't. And I mean, in essence it's 
unanimous consent. It's if one member objects on a bill that we 
bring under suspension to say, not having a unanimous consent 
that passes, one member stands out, then we're going to have a 
vote.
    Dr. Gordon. That's right.
    Mr. Shays. I thank the gentleman.
    Dr. Gordon. So then there was the escrow account, so by the 
structure, by the design of the program, in fact, no money ever 
went into the hands of the Iraqi government. And that was true 
even though the Iraqi government, to run the country, in fact 
needed a certain amount of cash simply to run the country, 
because there was no generation of cash. Huge fights over the 
issue of a cash component, and that never took place. So Iraq 
was allowed to sell oil to buy goods, but not, for example, to 
hire consultants or to hire labor.
    But in any case, that was a very, very strict position, no 
cash under the program, even with high supervision, was ever 
formally permitted to go into the hands of the Iraqi 
government.
    The next level were the onsite inspectors. You've heard 
about Cotecna and Lloyd's Register. Their job was to be at the 
ports and as the goods arrived, to confirm that these were the 
goods and confirm that they conformed to the quantity of the 
contract. It was only an inspection for purposes of releasing 
payment to the contractor.
    Then the last level was the entire U.N. humanitarian staff. 
So there were the nine agencies, I think it was the nine 
agencies in the south center. They made thousands, thousands of 
site visits and spot checks of food distribution points, of 
health supplies, were the health supplies being distributed in 
the rural communities. So their job was to ensure, the criteria 
were equity, efficiency and adequacy of the program.
    So that entire structure was not present in, I think it's 
correct to say, any form, I'd have to check, but I believe any 
form with the 661 process. And by the way, under the Coalition 
Provisional Authority, under Security Council resolution 1483, 
all of these measures that were in place to try to ensure that 
the human needs were served, that the money was handled 
properly, every one of these is eliminated under the Coalition 
Authority. The oil overseers are eliminated, the humanitarian 
monitors are pulled, just one by one, all gone.
    I think we can't be too surprised that if you are concerned 
about how much corruption happened when there were seven levels 
of oversight, you can't be too surprised to see what would 
happen when those levels are absent.
    Let me mention in terms of transparency what kinds of 
things were not only available to every member of the Security 
Council and every member of the United Nations, but everyone in 
the world with access to the Internet. And that was every page 
of every distribution plan. Actually I think they only 
currently post distribution plans 5 through 13. So you would be 
limited and not be able to see distribution plans 1 through 4.
    The 90 day reports, very detailed reports on every sector 
of the Iraqi economy, all the problems, all the successes with 
every category of goods that were being imported, all the 
problems, all the successes in terms of the oil liftings. 
Weekly updates then, a certain batch of liftings were stopped 
or a certain batch of goods were on hold, then the weekly 
updates provide that. There were charts showing the status by 
category of the processing of every contract in every sector.
    I can tell you that reading all of these documents is 
probably more than most human beings want to do. When I hear 
these references to how little transparency and how secretive 
and mysterious it was, I can tell you I would have spent a lot 
fewer hours reading things if it were a little more secretive 
and mysterious. But as it is, I spent a lot of hours on this.
    Mr. Shays. We will definitely want to pursue that issue. 
Can you kind of close up?
    Dr. Gordon. OK. In terms of the U.S. role, I think it's 
common to hear now this notion that the United States was 
stymied as it tried to achieve compliance, and particularly 
that France and Russia were blocking these attempts. Again, the 
consensus rule cuts the other direction, that the United States 
was not stymied in ever exercising its decision to block goods.
    Mr. Shays. You could say no, but you couldn't get a yes.
    Dr. Gordon. Say it again, please?
    Mr. Shays. You could say no and have power, but you could 
never get a yes.
    Dr. Gordon. That's right. Anyone could deny a contract. It 
required everyone's agreement to approve a contract.
    If on every occasion, when the United States had any 
suspicion about a contract, it did not need to get the approval 
of any other members to investigate that. It could have simply 
said no. Simply said no for any reason or no reason, as it did 
on depending on which point in time you're talking about, but 
at $1.5 billion of contracts on hold.
    I was interested to hear Mr. Schweich say he thinks there 
are some instances where contracts were blocked by the United 
States for reasons of improprieties and not for security. I 
would be most interested in hearing what those are. Everyone I 
have talked to, no one can recall a single instance where that 
was done.
    By contrast, there were more than 70 occasions on which OIP 
staff went to the committee and said, here's a contract where 
there is a clear pricing irregularity that's suspicious, do you 
want to block it for that reason. And on none of those 
occasions did any member, including the United States, choose 
to block it.
    So I think the reality is, the United States was singularly 
preoccupied with security concerns. There was little interest 
in stopping illicit funds. And on the occasions where the 
United States had the opportunity to do so, it did not. I do 
think that the U.N. staff did a good job. Their job was to 
provide the information to the members, and it was the job of 
the members to block or to approve a contract. They provided 
the information, where there were signs of kickbacks. They 
provided the information where there were oil surcharges.
    And I think I would actually like to, if I could, raise one 
issue that Mr. Schweich said that you were interested in, 
Congressman, where he was talking about how Turkey came to the 
committee and asked for Article 50 relief and that it was 
blocked because of the consensus rule. I'm somewhat familiar 
with that because of the number of people I have interviewed 
and the documents I have read. My recollection is that on all 
of those occasions, it was the United States that blocked 
Turkey's appeal for Article 50 relief. So that might be 
something you might care to look into.
    [The prepared statement of Dr. Gordon follows:]

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    Mr. Shays. Thank you very much.
    You all are wonderful witnesses. This is a little more 
academic, it's not the kind of thing where we're making news 
here, but I'm learning a lot and I appreciate it tremendously.
    Mr. Lynch, you have the floor.
    Mr. Lynch. Thank you.
    Dr. Conlon, you described a situation where you felt that 
in some cases, with most sanctions, if that humanitarian aspect 
of the situation is not addressed that there is a wearing away 
or a gradual deterioration of the sanction itself through 
various other channels. It doesn't appear, based on what I've 
heard, that the Iraq situation fits that mold. This doesn't 
seem like a gradual deterioration or a wearing away or an 
undermining of the sanctions. This in my opinion appears to be 
a total and sudden collapse, almost a looting that occurred.
    And I'm wondering, in your opinion, was it a situation 
where this was bigger than anything that the U.N. had been 
asked to do previously in terms of the complexity of this and 
the staff that would have been required or as it was there, 
just a total disconnect as Dr. Gordon has suggested, between 
what the 661 Committee is doing and what the Oil-for-Food staff 
and the folks at the U.N. there are doing.
    Dr. Conlon. I'm not sure what timeframe your question 
refers to. I was there until a point in 1995, which is before 
the Oil-for-Food Program went into effect. And I'm not quite 
sure what I said, whether you understood it, what was being 
eroded was sympathy support and willingness to cooperate with 
sanctions over the years as time went on. That refers to what 
governments and delegates in the United Nations were willing to 
do to accept or to promote.
    Mr. Lynch. But looking at this situation----
    Dr. Conlon. With the Oil-for-Food?
    Mr. Lynch. Yes.
    Dr. Conlon. I was not involved in that, so I don't want to 
be too authoritative. But even at that point in time, the 
ultimate authority rested with the 661 Committee as a 
subsidiary organ of the Council or with the Council. With the 
passage of time, and because there were introduced a number of 
improvements in regard to transparency. But the committee 
itself was at no time, even up to the end, transparent in its 
practices.
    Mr. Lynch. I realize the difficulty in what I am trying to 
get you to answer. Perhaps I should wait for Mr. Volcker's 
report in July. I'm just trying to get some help on that.
    Dr. Gordon, your testimony is troubling in the sense that 
it seems that organizationally, at least what you've described 
that there are people doing what they are supposed to be doing, 
and there is transparency, and there seems to be some order, 
and yet we have these massive problems. Is it the disconnect 
between, and you sort of imply that there's a whole framework 
set up, and seven levels of oversight in one framework and one 
organization and then there seems to be a disconnect between 
what the 661 Committee is doing?
    Dr. Gordon. Well, when you talk about massive problems, the 
ones that we know of is really the smuggling. The smuggling has 
nothing to do with the Oil-for-Food Program. Smuggling happened 
in the beginning of the 1990's, with Jordan starting in 1990. 
It happened prior to Oil-for-Food, it happened outside Oil-for-
Food. It was just a separate thing. Oil-for-Food was then 
involved in smuggling interdiction. The two sources of 
smuggling, overland and maritime, we've heard a lot about the 
overland smuggling, Turkey-Jordan, Syria-Egypt.
    If you want to know who was responsible for the maritime 
smuggling, there was something called a multinational 
interception force. It was created by, I think, Security 
Council Resolution 665. It essentially invited Member States, 
if they had naval forces in the area, to interdict smuggling if 
they chose to. That gave rise to the MIF.
    So we have this notion that the U.N. let all of these 
vessels illegally smuggle oil in and out, right? The MIF 
consisted almost in its entirety, at every point in time, of 
the U.S. Fifth Fleet. The United States is under command, at 
every point in time, of someone from the Fifth Fleet. The 
British generally provided the deputy commander, they provided 
a relatively small number of ships. So as of 2000, I think the 
United States had 90 vessels, the British had 4. A handful of 
other countries contributed one or two vessels for a couple of 
months.
    But essentially, one of the things we see that we're 
blaming ``the U.N.'' for is these massive problems, and you're 
right to say it, this is our view, there are these massive 
problems and the U.N. did nothing. But if in fact, we look at 
who allowed what to happen, the smuggling was not under the 
auspices of the Oil-for-Food Program. It was subject to 
enforcement only by Member States at their will, and it turns 
out to have been the U.S. Navy.
    I'm not saying the U.S. Navy did a poor job, there's no 
sign of that. But if you want to say on whose watch did the 
maritime smuggling take place, the answer is the U.S. Fifth 
Fleet.
    Mr. Lynch. If I accept your testimony as true, what you are 
telling me today and what I've heard everything you say, there 
is no blame with the United Nations, this is the U.S. Navy's 
problem?
    Dr. Gordon. For the MIF?
    Mr. Lynch. For basically everything. If the U.N. folks did 
nothing wrong, did nothing wrong, did everything they were 
supposed to do, and that's basically what your testimony is 
here this morning, they did nothing wrong, they did nothing 
wrong, they did exactly what they were supposed to do, and all 
this corruption and everything else, there's just no blame 
there for anybody within the U.N. I find that hard to believe, 
I've got to tell you. I find that really hard to believe, based 
on all the other testimony we've heard from other people, 
including people within Iraq that are very upset about how 
resources that should have been reserved for that population 
are now gone and unaccounted for.
    Dr. Gordon. With all due respect, sir, I did not say that 
no one in the U.N. or the Secretariat did nothing wrong.
    Mr. Lynch. I must have missed it, because I didn't hear it 
at all.
    Dr. Gordon. What I did say, and what I want to reiterate 
is, it is not accurate to say that there was no oversight or 
monitoring. There were multiple levels of oversight and 
monitoring.
    Second, the fundamental flaws in the program, having to do 
with the basic decisions for how it was structured, the 
decisions were made at the level of the Security Council. 
Implementation happened at the level of the Secretariat. The 
crucial decision to allow Iraq to choose its trading partners 
was not a failure of the part of Secretariat staff, it was a 
decision made by the Security Council, of which we are a 
member. We supported that decision.
    Mr. Lynch. Why did Russia and France go along with the 661 
Committee structure in the first place? Can you answer that?
    Dr. Gordon. What do you mean, go along with the structure?
    Mr. Lynch. Well, there was a vote to basically endorse this 
whole framework.
    Dr. Gordon. The Oil-for-Food Program?
    Mr. Lynch. Yes.
    Dr. Gordon. So you're saying why did France and Russia 
support Security Council Resolution 986? Is that your question?
    Mr. Lynch. Well, there was a framework that the Security 
Council approved regarding Oil-for-Food and the way this would 
be handled. And yet the implication here is that somehow there 
was a disconnect during all of this that while the U.N. did 
nothing wrong, there seemed to be abuses and you can call it 
smuggling or whatever characteristic you want to place upon it, 
there seems to be an unwillingness of some who had the power 
not to use it.
    Dr. Gordon. I'm afraid I am completely confused. Can you 
tell me concretely if there is an instance where you're 
saying--what are you asking exactly? Why France and Russia did 
not use their power? Why they objected to the United States 
using it?
    Mr. Lynch. Well, it just seems that if it was a failing on 
our part because we were so obsessed with the security 
situation, from the U.S. standpoint, if that was part of our 
failing, why then, why then would that affect France and 
Russia, who had no concern with the security situation? What 
was their reason for not paying attention? Does that explain it 
better?
    Dr. Gordon. I think I'm starting to understand it. There 
was a fundamental tension, which I'm sure you're completely 
familiar with, between the United States and U.K. on the one 
hand and France and Russia explicitly on the other, and China 
somewhat more quietly. The basic way the tension played out 
over the course of the sanctions regime was partly about 
security issues but heavily about humanitarian issues.
    So in fact, the issue that was most controversial, that 
there were the most vigorous fights about, were how to limit 
the humanitarian goods and what the circumstances for that 
would be. And there were tremendous opposition on those from 
the very beginning, everything from, well, in the first 
resolution, the only thing that Iraq was allowed to import was 
medicine and food ``in humanitarian circumstances.'' Dr. Conlon 
writes about this in his book.
    Then the next thing that happens, of course, is a dispute: 
what does ``in humanitarian circumstances'' mean. When does 
this mean Iraq is permitted to import food? So you have a 
country that is very heavily import-dependent on its food prior 
to the war, whatever agricultural capacity it has has really 
been compromised by the Persian Gulf war. When will it be 
allowed to start importing food, is the question. Huge fight 
over that.
    The U.S. position, correct me if I'm wrong, Dr. Conlon, was 
in humanitarian circumstances means essentially once something 
close to famine sets in will be the point at which Iraq will be 
permitted to start importing food. The position of, I think it 
was Yemen and Cuba, was if a single child at night goes to bed 
hungry, that is when Iraq will be allowed to import food.
    That's the kind of issue you see a thousand times. As well 
as on security issues, real concerns about the tenuousness of 
the U.S. claims.
    So in the early days, there was a point where the United 
States blocked, I think it was glue for textbooks. You see 
other countries saying, what is your reason for blocking the 
glue for textbooks. And the United States doesn't give one and 
the issue is raised again and again. And finally, as I recall, 
the U.S. delegate says, it's because we care about the horses, 
a reference to the old adage about horses going to the glue 
factory, something which doesn't seem like a plausible 
justification.
    An analyst from DOD, I was told, came to a 661 Committee 
meeting----
    Mr. Lynch. If you don't mind me saying it, we've run far 
afield from the question that I originally asked. Far afield.
    Let me just ask, and I'll leave it at this, there are media 
allegations that France, Russia and China aided in a way 
Saddam's evasion of sanctions in order to gain advantage on 
lucrative contracts for Iraqi crude oil. That's the perception 
that's been put out there in the press. Do you agree with that 
perception?
    Dr. Gordon. That France and Russia aided Iraq's evasion? I 
don't know what was going on in secret. I do know in terms of 
the Oil-for-Food structure, it's certainly the case that France 
and Russia opposed the United States on what kinds of goods 
were allowed into Iraq. Typically the United States would be, 
and sometimes the U.K., but the United States would be opposed 
or would define dual-use goods that it would block as anything 
relating to infrastructure. France and Russia generally opposed 
that on the grounds that infrastructure was necessary for the 
functioning of the economy.
    If you also want to say that the goods that finally arrived 
in Iraq supported the regime, I think if there are absolutely 
nothing that came to the--the question is, as Mr. Mack was 
saying, do you want to take the position that, if the situation 
is horrendous enough, people out of sheer desperation will 
overthrow the regime, then I guess you could say indirectly, 
the program, the whole Oil-for-Food Program and the goods 
arriving made it possible for the regime to stay in power. I'm 
not sure of that, but I don't really know how to answer that.
    Mr. Lynch. OK, thank you.
    Mr. Shays. I'd like to ask some general questions first, 
and I thank the gentleman. I'd like to be clear, because at the 
end it was mostly Dr. Gordon responding to questions. All three 
of you have written about the Oil-for-Food Program, is that 
correct, on the sanctions?
    Mr. Mack. No. Sanctions I've written on, but not Oil-for-
Food Program.
    Mr. Shays. Oh, you've written about sanctions in general, 
and you have written about----
    Dr. Conlon. I wrote about the management of sanctions up 
through 1995, which was prior to the Oil-for-Food Program.
    Mr. Shays. OK. But all of you are truly experts on the 
issue of sanctions. I'd like to just be clear where the lines 
of demarcation are, whether there is agreement here. You've 
heard the previous panelists, you've heard your fellow 
panelists here make statements. I'd like to know, Dr. Conlon, 
where you if at all disagree that anything that has been said 
from that desk today by another panelist. I'm not looking for 
this debate as much as understanding your perspectives of where 
you're coming from. So are there things that have been said 
today by other panelists that you disagree with?
    Dr. Conlon. Yes, and that also include the representative 
of the State Department and his description----
    Mr. Shays. Yes, right, the previous panelists also.
    Dr. Conlon. His description of the decision taken in 1991 
to allow or at least acquiesce in Jordanian imports of oil. I 
don't agree that smart sanctions will, first of all, this is a 
very undeveloped field, but I don't agree that it will bring 
any change, because in many ways the Oil-for-Food Program was 
an exercise in smart sanctions. It was supposed to affect the 
regime, keep the regime under pressure of sanctions but allow 
the civilian population to get what it needed in the area of 
vital goods. And in that sense, it failed.
    Also in our other sanctions endeavors up to 1995, as long 
as I was there, control of financial flows was the big weakness 
in what we were doing. We were able to control and inhibit 
flows of goods to some extent. We had no control whatsoever 
over financial flows. That is essentially what one of the main 
points behind smart sanctions is supposed to control the 
elite's finances.
    So in that sense, I don't expect anything from smart 
sanctions. But I do agree with my neighbor here to the extent 
that there will be no more major sanctions exercises in the 
Security Council in the area of the Security Council's 
responsibility against major targets or serious targets.
    Mr. Shays. These are significant, if true, this is quite 
significant. Because I mean, if you're right, I know you're 
speaking what you believe to be true. But if you're right, I 
view sanctions as a step that enables you not to go to war. And 
if you're saying that instrument is not, and Mr. Mack, you 
started it by saying, the era of comprehensive sanctions has 
ended.
    My recollection of our sanctions against South Africa were 
that they ultimately achieved their objective. I think it was 
not only what came in and came out, but South Africans weren't 
able to travel. They couldn't come to the United States, they 
couldn't go to some places in Europe. They began to realize 
their lifestyle was going to be significantly impacted and 
their capability to grow their GNP and so on. I view that as a 
huge success. I think Nelson Mandela was let out of prison 
because of ultimate sanctions.
    So it seemed to me our alternative to sanctions on Iraq was 
just to end the regime in 1991. And if you're saying now that 
what this may prove to us is one, sanctions can't work and two, 
even if they could work, there's not the will on the part of 
the body to vote for them, it's a huge conclusion that we're 
arriving at today. Maybe you could speak to that, and I'll have 
others.
    But at any rate, you disagree, Dr. Conlon, you are making a 
point, you think, like Mr. Mack, that comprehensive sanctions 
are not going to be an option of the U.N. And I don't mean 
option, are not going to be, it's unlikely the U.N. will ratify 
and endorse comprehensive sanctions.
    Dr. Conlon. No, I think it has shown that these cannot 
succeed within a reasonable degree of, not succeed with a 
reasonable degree of effectiveness.
    Mr. Shays. You don't think they can be effective?
    Dr. Conlon. Effectiveness, so that to a certain extent the 
events of April 2003 is where the future will be, if we have 
any at all, that the Security Council will be bypassed. This 
happened in 1991, sanctions which did begin to have some effect 
on what Iraq was doing, and also had positive effects in other 
respects in regard to Kuwait and its assets, which were saved 
from Saddam Hussein's grasp at that time, thanks to the same 
sanctions regime and same legal construction. It did not bring 
about the evacuation from Kuwait, which had to be done with 
military means. Ultimately, the sanctions regime against Iraq 
ended when the regime was defeated militarily. The same thing 
happened largely in Yugoslavia.
    Of course, in all of these cases, those regimes were 
weakened by the effects of sanctions. And that contributed to 
their downfall, but it certainly was not decisive.
    Mr. Shays. So even poorly, sanctions had an impact, but 
sanctions are not going to be airtight, not even close to 
airtight and so on?
    Dr. Conlon. No. Therefore, there will be resort to military 
means in very serious cases, particularly in case of major 
adversaries that have to be dealt with, such as Iraq in 1991.
    Mr. Shays. Thank you.
    Mr. Mack, we haven't heard much from you in the response to 
questions. But you were the most provocative to me in the 
beginning by just simply saying, sanctions are, I interpret 
what you are saying is, at least as it comes to the United 
Nations, sanctions are a thing of the past with the U.N. Excuse 
me, comprehensive sanctions.
    Mr. Mack. Comprehensive sanctions. I think that's going to 
be the case. In fact, you don't even hear the U.N. talking 
about comprehensive sanctions any more. Look at Darfour at the 
moment, the talk there is a gain on targeted sanctions, it's a 
focusing on the regime.
    Then we come back into that question of real politic 
cynicism, the economic interests, why the Chinese and the 
Russians are opposed to sanctions on Saddam. Well, in part, 
they can say, we've always been opposed on a matter of 
principle to something that causes humanitarian harm. But the 
sanctions that are being talked about won't cause a lot of 
humanitarian harm, they're directed at the regime. And the real 
reason of course is the Chinese have really important oil 
interests there and the Russians want to sell arms.
    I think that to come back to the point that Mr. Lynch 
raised previously, it is very, very--I'm not at all sure the 
Russians and the French acted in such a way as to positively 
undermine the sanctions, but they were very, very clear, right 
way through, about their adamant opposition to them. And of 
course, one of the other reasons----
    Mr. Shays. Even during the cease-fire?
    Mr. Mack. Which cease-fire? Not back in--remember that 
sanctions, most people thought, I totally supported sanctions 
back at the end of the first Gulf war. Nearly everybody I knew 
supported them. This was a better alternative than marching on 
Baghdad.
    Now, the reality was, everybody thought that this was going 
to be over with in a year. It took 10 years. And that's when as 
the humanitarian costs began to mount, and the humanitarian 
costs mounted primarily of course because Saddam Hussein 
refused to agree to any version of Oil-for-Food before it was 
formally called that. But once they were in place, then within 
the humanitarian community in and around the U.N. and 
elsewhere, people were saying, well, wait a minute. We know 
that Saddam Hussein is ultimately responsible for this, because 
if he was in compliance, the sanctions would cease to exist.
    But once it's the case that the Council knows that you have 
a regime which is so ruthless it doesn't care about its kids 
starving to death, then the Council itself has to bear some 
responsibility. That's where that tension between the security 
side of the house and the humanitarian side of the House comes 
in.
    Mr. Shays. Saddam learned how to beat the sanctions from 
previous experiences of others. And if he was willing to see 
his people starve, there was no way ultimately we were going to 
see the sanctions discontinue without some way, I mean, that's 
pretty clear.
    Mr. Mack. It was bound to break down, and if not just 
Saddam, the countries that were around there. It's one thing 
for a set of countries to say, we're going to impose sanctions, 
they're going to be there for a year, and these are your major 
trading partners. But when everybody is under sanctions for 
such a long period of time, and yes, of course, there was some 
leakage to Turkey and there was some leakage to Jordan, but 
they didn't have anything like the full trade relationships 
they had previously. And this was a regime whose GDP was only a 
fraction of what it was previously.
    So for a whole variety of reasons, things were beginning to 
break down. And the great irony, in a sense, is the 
humanitarian outcry against sanctions was actually highest when 
the situation was getting better. Because remember, Oil-for-
Food didn't come in until--they started stuff going in 1996. 
That's why you began to see an improvement.
    And this is why I would take slight issue with your point, 
the sanctions being a non-violent alternative to war. Because 
if you look at the research that was done in Columbia, at least 
240,000, the most conservative estimate, under 5 year olds 
died, who wouldn't have died had there not been a war and the 
sanctions----
    Mr. Shays. In Iraq or Colombia?
    Dr. Gordon. Columbia University.
    Mr. Mack. Columbia University.
    Mr. Shays. That's what I was wondering, what sanctions we 
had in Colombia. [Laughter.]
    Mr. Mack. No, no, Columbia University study. If you compare 
that with the numbers of people that were killed in the war, it 
is much, much greater. And remember, when the first Gulf war 
took place, it was mostly competents that were killed. The 
240,000 minimum kids that died were innocent by any measure. 
That's why there has been so much opposition, I think, in the 
humanitarian community. It's the cost of these types of 
sanctions to the innocent. And the fact that the regime, of 
course, used this brilliantly politically to try and gain 
sympathy. It was Saddam's responsibility, but somehow or other 
he managed to use it----
    Mr. Shays. It's an interesting concept, of using it 
brilliantly. You literally had a leader who was willing to see 
a quarter of a million of his kids die. When all that was being 
asked of him was to----
    Mr. Mack. Come into compliance.
    Mr. Shays. Yes. And his complaint about loss of sovereignty 
was, guess what, you could have been annihilated. And the 
military force of the world stepped back.
    Mr. Mack. It seems to me the true irony of this whole 
situation of why Saddam Hussein was ultimately so stupid was, 
if it really was the case that he didn't have weapons of mass 
destruction, as now appears to be the case, then why on Earth 
didn't he say, come in, search my palaces, go anywhere you'd 
like, knowing that once they had a clean bill of health, then 
it would have been incredibly difficult for the international 
community to maintain any serious level of monitoring and he 
could have started all over again.
    Mr. Shays. I went with one of my staff to Stockholm to ask 
that specific question of Hans Blix, why did Saddam want us to 
think he had weapons of mass destruction. Because he wanted us 
to believe he had them. It was an interesting 2-hour 
discussion.
    Before we go to you, Dr. Gordon, because you've really made 
this point--well, you didn't say what you disagreed with about 
other panelists. Mr. Mack, any comment that you would make?
    Mr. Mack. It's just a small point with the statement from 
the representative from the State Department. By and large, I 
think an excellent presentation. But somehow or other, this 
notion that here was the United States, who was standing firm 
on sanctions, doing the right thing all the time, if you look 
at all of this, I think 16 sanctions regimes being imposed by 
the United Nations, the United States was basically utterly 
uninterested in most of those. It was interested in Libya, it 
was interested in the Balkans, it was obviously deeply 
concerned about Iraq.
    But as far as the rest of them are concerned, the United 
States was just as bad as other countries.
    Mr. Shays. Give me an example of one where we might have 
been better.
    Mr. Mack. Liberia.
    Mr. Shays. OK.
    Mr. Mack. Angola initially. And Liberia, of course, you 
have another example where the cynicism of the great powers, 
where for a long time, one of the things we knew was that 
Charles Taylor was being bankrolled by the, literally 
bankrolled by logs. And the French were absolutely opposed to 
any sort of sanctions on log experts, because most of their----
    Mr. Shays. What exports?
    Mr. Mack. Log exports, exports of timber.
    Mr. Shays. Right.
    Mr. Mack. Because most of those go into France. Eventually, 
even the French were persuaded, and that actually made a 
difference. It was one of those things where denying access to 
funds helped bring down that regime.
    Mr. Shays. I'm just going to go to you, Dr. Gordon, then 
I'm going to come back. I would like us both maybe to jointly 
pursue this issue of transparency. But anything you disagree--I 
think one thing you've already stated, you disagree with the 
concept that there, I view there was no transparency, I've 
never had anyone say there was, you're saying there was a 
significant transparency, a lot of information available.
    But beside that, let's put that aside, anything that was 
said that you want to highlight disagreement with, either Dr. 
Conlon or Mr. Mack or the State Department?
    Dr. Gordon. First of all, I agree and have enormous respect 
not only for what both of them have said today but at least 
their, or at least Dr. Conlon's publications, which I think I 
read and memorized his entire book.
    Mr. Shays. And did not plagiarize? [Laughter.]
    Dr. Gordon. No, just memorized it, that's all.
    I think Mr. Schweich is in a difficult position. I think 
the State Department is clearly embarrassed about acknowledging 
the extent of the U.S. role. The extent of the U.S.' 
indifference to the amount of cash going into the Saddam 
Hussein regime. So we're looking at some backpedaling, we're 
looking at some spinning.
    So when he says, the United States tried to get other 
countries, other members to do something about the contracts 
where there were kickbacks, but they demanded excessive levels 
of evidence, again, if the United States had any evidence, it 
simply had the possibility of blocking that contract. It did 
not need to persuade anybody else to do that. When he says 
other countries resisted----
    Mr. Shays. And neither of you disagree with that point, 
there was unanimous consent, therefore they had veto power? Dr. 
Conlon, Mr. Mack, you agree that they could stop? You're 
nodding your head, Mr. Mack, for the record, and Dr. Conlon? 
Did they have the ability to stop a contract?
    Dr. Conlon. Yes, but it's very difficult to be the one 
blocker, the one veto exerciser time and again, meeting after 
meeting. Pressure mounts.
    Mr. Shays. OK. That's kind of like the Senate deciding not 
to have a vote on Schiavo because the one member who would have 
blocked unanimous consent in sending to the House would have 
forced all the Senators to come back to Washington. I'm just 
trying to relate it to something I can identify with.
    Dr. Gordon. Yes. Although with all due respect, in fact on 
the holds, I don't know about in every single committee 
meeting, but on the holds, the United States was the sole 
blocker. The U.K. had a much more limited role, and no one else 
for years and years blocked any goods.
    Mr. Shays. You know, a difference of having two or three 
more people helping you would have been significant.
    Anything else on that? I want to get to transparency, and I 
want to go back to Mr. Lynch if he has something.
    Dr. Gordon. I think just generally the notion, he said, we 
did what we could, if we couldn't show a smoking gun the 
committee chose not to act. Again, I think that simply 
misrepresents the basic procedure of how choices were made, how 
decisions were made, who had what authority. In general, I want 
to say that the literature on sanctions is exactly as my 
colleagues have said, overwhelming says sanctions tend to be 
ineffectual, sanctions tend to result in greater legitimacy for 
the state. South Africa is an anomaly, it's not at all typical.
    Mr. Shays. You're telling me what you agree with. Right now 
I just want to know disagreements. I'd like to come back at the 
end, before we go, but I want to give Mr. Lynch some more time.
    Dr. Gordon. Actually if I could say, Mr. Mack says it was 
Saddam Hussein's fault and you echoed this language, that he 
decided to allow the kids to starve. It was more complicated 
than that. There was a minimum level that the Saddam Hussein 
needed to maintain for its political legitimacy. On the issue 
of starvation, it was Iraq, it was weeks, it was in early 
September, it was about 4 weeks after sanctions were imposed 
that a ration system was created by Saddam Hussein's 
government.
    I think you will see any, Red Cross, any NGO's over the 
course of the 1990's saying, it was the governmental rationing 
system that was the reason that there was not widespread 
famine. If you look at effective attempts by the Iraqi 
government to get services back up within weeks after the 
Persian Gulf war, you see literally what I've heard is, every 
engineer up to nuclear physicist was sent out to build bridges. 
Every electrical generator that could be up and running was. 
Every water and sewage treatment plant, through cannibalized 
parts that could be up and running was.
    Mr. Shays. That's a little bit different, what you're 
talking about there. We're talking about the idea of kids 
starving. That's ultimately what forced a change in policy in 
the United Nations, to allow more flexibility and more 
oversight, to give Saddam the ability to make some key 
decisions that we didn't want him to make.
    But you did kind of surprise me about this issue of 
transparency. This is my view, and tell me if I'm wrong. I 
believe that Benon Sevan never thought that people knew that he 
was a player with the vouchers. And he never thought he would 
be known because the U.N. wouldn't tell and Iraq wouldn't tell. 
So it was an easy way to pick up literally hundreds of 
thousands, if not a million plus dollars. And I believe other 
people thought the same thing.
    The only reason this became a discussion was, you had, and 
I love it, because people don't realize that Iraq and the 
Iraqis are learning things that are very basic in a democracy 
in general, a government leak and a free press. A government 
official leaked information about Benon Sevan and others to an 
Iraqi free press, it was published in a newspaper and 
eventually the western media picked it up and the rest is 
history.
    So tell me how, we're not getting the minutes of the 661 
Committee, we're not getting those minutes. We didn't get the 
list from them of who was getting vouchers. How is that 
transparency?
    Dr. Gordon. Well, OK.
    Mr. Shays. I want the short answer, not the long answer.
    Dr. Gordon. The vouchers, as I understand it, OK, so under 
986 and under the memorandum of understanding, which is the 
basic document----
    Mr. Shays. Before you answer, think for a second what 
you're going to say. I just want to know, Dr. Conlon and Mr. 
Mack, do you believe there is transparency at the U.N.? Do you 
believe that information is made available upon demand by the 
Member States and the institutions of those Member States, like 
Congress, for instance, in the United States?
    Dr. Conlon. No. There is a very low level of transparency 
in the terms of the normal world outside.
    Mr. Mack. I agree with that. It's not a very transparent 
institution. I think the Secretary General, Kofi Annan, has 
been trying to make it a more transparent institution. But it 
is a big bureaucracy, and like all big bureaucracies, people 
keep control over information as a way of having power.
    Mr. Shays. OK. Now, that's kind of my view. I'm wondering 
if you are trying to give us a difference without a distinction 
here. What I think I'm hearing you say, Dr. Gordon, is that 
there is information available, if you're willing to work at 
it, you can find it. So there is some information that you've 
found, I mean, the information that we found from Dr. Conlon 
was, you left some of the minutes of the 661 at Iowa 
University, which is a story that I'd like you to write a book 
about. And then they become public.
    But at any rate, sort this out. I don't get your point 
about transparency.
    Dr. Gordon. OK. I'm not making a generalization about 
transparency at the United Nations.
    Mr. Shays. OK.
    Dr. Gordon. I don't know enough about how the other 
functions of the U.N. work to say with any kind of competence, 
in general here's where you see greater or lesser transparency 
throughout the U.N. system.
    But what I do know a lot about is this program. You're 
saying you may be able to find some after some effort, and I'm 
not saying that at all. I am saying, it's on the Web, it's on 
Google. You don't have to go to the University of Iowa, you 
don't have to go to Dresden. You go to Google, you type in Iraq 
distribution plan. You see every item that Iraq was approved to 
buy.
    Mr. Shays. You're saying the distribution plan was public.
    Dr. Gordon. Yes.
    Mr. Shays. OK, so that's public.
    Dr. Gordon. Every 90 days, detailed report on the impact of 
the program, the problems with the program. Charts, I think 
they were the current chart for each phase. I don't think you 
would find prior charts from prior phases, because it was a 
spreadsheet of the current status. So it would say, for the 
electricity sector, how many contracts were on hold, how many 
were approved but in transit, how many had been delivered, 
weekly updates as well on particular issues that were 
controversial. These holds on these items have been lifted, 
there have been this number of liftings of oil, these spare 
parts have arrived.
    It's an enormous amount of information.
    Mr. Shays. But is it the information that we needed?
    Dr. Gordon. I'll tell you what obviously wasn't there, the 
auditing of the contracts between Iraq and its suppliers. There 
is controversy, well, the Volcker report is highly critical. We 
know what the reasoning is regarding that. First, the----
    Mr. Shays. I don't need to get into that part now.
    Dr. Gordon. Well, let me tell you this much, which is, 
Security Council resolution 986 was the one that said, here's 
what the auditing structure should be, external audit for 
those, not internal audit. I don't want to be framed as saying 
I'm defending the sloppiness of the Secretariat, but you have 
to say, it was the Security Council that chose these 
parameters.
    Mr. Shays. Well, I'm going to tell you what I'm taking from 
what you say. There is a lot more information out there than 
people realize. And I accept that. To say the U.N. is 
transparent, to me is something that I don't even come close to 
believing, from our experience and the information we've tried 
to get.
    Dr. Gordon. What is correct is that this program was in 
many, many regards transparent. This program in many, many 
regards had multiple levels of oversight by interested parties, 
by disinterested parties, by persons with expertise at every 
level.
    Mr. Shays. OK, let me go to Mr. Lynch.
    Mr. Lynch. OK, thank you, Mr. Chairman.
    Mr. Mack, we talked a little earlier about a reason why 
Saddam Hussein, if he didn't have the weapons of mass 
destruction, why didn't he just invite people in. And it would 
have cut the legs out from under a lot of people who wanted to 
take military action there.
    And we surmised about possible reasons that he might not do 
that. But he wanted to make the United States believe that he 
had those weapons.
    Might I suggest, and I just want to get your opinion on 
this, given the fact that he had used chemical weapons against 
the Kurds in the north, he had used chemical weapons in his war 
against Iran, and at the very root of his power was his 
ruthlessness and his ability to strike fear into the people of 
Iraq, and that's based on my own observations. I was among the 
first congressional delegation into Iraq after the invasion on 
March 19, 2003, into there about 60 days later.
    Isn't that a plausible reason that he would want to 
maintain his own right? I remember Tariq Aziz responding that, 
this was in the run-up to the invasion, that just like every 
other country, Iraq maintained its right to possess weapons of 
mass destruction. Is that a plausible explanation?
    Put on that as well the fact of these mass graves that our 
folks dug up in the weeks and months after the invasion in 
2003. So he wasn't just going around building bridges and 
feeding kids.
    Mr. Mack. I think that on that issue, two things. First, in 
the first Gulf war, he had chemical weapons, he didn't use 
them. It's one thing to use chemical weapons against civilians, 
it's another thing to use chemical weapons against the 
Iranians. Using chemical weapons or biological weapons against 
the United States is a huge risk for someone like that.
    Saddam Hussein has done a lot of stupid things, but when it 
came to confronting the United Nations, it seems more that he 
was stupid than reckless. If it was the case that he really 
believed, really believed that the Americans thought that he 
had enough weapons of mass destruction, which, I mean, the 
Americans were really only talking about chemical weapons and 
perhaps some biological weapons at that time, then if he 
thought that was going to deter the Americans from striking, 
then he was fundamentally foolish.
    If had he managed to persuade the Americans that he had 
nuclear weapons, that would have been very different. The 
United States has made it very, very clear that the solution to 
the problem with North Korea is a diplomatic one. I think the 
primary reason for that is a very sensible one, is that the 
United States believes, almost certainly correctly, the North 
Koreans have now admitted they actually have nuclear weapons 
capability. They can't deliver it against the United States, 
but they could almost certainly deliver it against South Korea.
    So I've also heard, we talked to Hans Blix, he was over in 
our institute recently, he said that part of the answer may be 
this was Saddam trying to persuade his generals. That didn't 
seem to be very particularly persuasive, either.
    I have to say, I come out of this thinking that basically 
this is a guy who wasn't terribly bright when it came to major 
strategic thinking. Had he given up, had he opened the place 
up, go wherever you like, it would have been politically 
impossible for the United States to have maintained a sanctions 
regime. Search, go into the toilets of any one of my palaces, 
do whatever you like, open the place up, don't try to obstruct 
them as they did with UNSCOM. It would have been something 
which I would have thought politically obvious, brilliant. He 
never even thought about it.
    Mr. Lynch. I just have one last question. And that is this. 
I know this is close to home. You were actually director for 
Kofi Annan, is that correct?
    Mr. Mack. I ran Kofi Annan's strategic planning unit, which 
was essentially a small think tank for the Secretary General. 
He would worry about a particular question. One of the things, 
when we first came to the United Nations, that I asked was, do 
we know if our sanctions regimes work? What is the success rate 
of our peace-building operations? Nobody knew, because there 
are certainly not the resources inside. General Assembly has 
rejected the idea of trying to have any sort of internal 
analytic unit in the U.N. that can answer these sorts of 
questions.
    Mr. Lynch. I just wanted to get a sense of your association 
with Kofi Annan. Based on the size of his problem, and let's 
forget about the smuggling, he has a $2 billion to $4 billion 
problem within Oil-for-Food. And I know there might be numbers 
on the Web site, but we're looking for between $2 billion and 
$4 billion that went missing in that program. That's the size 
of his problem.
    Do you have, within the United Nations, do you have a sense 
on whether or not he had enough support to survive this and 
should we be looking to him as someone who might be part of the 
solution here as opposed to a major part of the problem?
    Mr. Mack. I think this is a Secretary General who has 
demonstrated more than any other Secretary General in recent 
history a real commitment to the idea of reform in the U.N. But 
remember, reforming the U.N. is incredibly difficult. To reform 
the United Nations, you have to have the General Assembly on 
your side. Because if you don't have the General Assembly on 
side, it's the General Assembly that controls budgets.
    Mr. Lynch. Yes.
    Mr. Mack. The United States is the dominant player in the 
Council. The United States is not a dominant player in the 
General Assembly. Part of the difficulty in getting support for 
reform in the U.N. is that may countries in the General 
Assembly quite incorrectly believe that the U.S. support for 
reform is actually support of bringing the institution down, 
for weakening the institution.
    So if there is a commitment to reforming the United 
Nations, then the United States has to be seen as a country 
which is committed to the U.N. as an institution. And I think 
that is going to be a fundamental problem.
    The Secretary General has enormous difficulties in trying 
to push forward. One of the things he's called for in a high 
level panel report, and his subsequent report based on the high 
level panel report, is to be able to get rid of deadwood in the 
institution. Everybody knows that, any big bureaucracy has 
them. But it's incredibly difficult to do that. Politically 
incredibly difficult to do that.
    Mr. Lynch. Right. As a new Member and a Democratic Member 
of the Congress, I can relate to his difficulties.
    That means a lot, that you would take that position with 
respect to Kofi Annan. So thank you.
    Mr. Shays. I just have to say, I'm really learning a lot. 
I'm surprised by some things that I didn't know and some things 
that I assumed. I have more sympathy for Kofi Annan by this one 
statistic that the budget is controlled by the Member States 
and that he does not have any real, I'm leaving believing that 
he has no real control over the budget. That's what I'm being 
told.
    Mr. Mack. He has the ability to persuade.
    Mr. Shays. Does he submit a budget? It's his budget that he 
submits.
    Mr. Mack. Yes, but the decisions on what goes through is 
essentially the fifth committee, that's the critical committee, 
it's the budget committee of the U.N. That's essentially 
controlled by, it's a General Assembly committee. And the voice 
of the south is a very strong one there.
    Mr. Shays. Let me see if counsel has any particular 
question that he would like to ask that we need to put on the 
record.
    Mr. Halloran. Thank you. Let me ask each of you, based on 
your experience and writings in the field, was it or should it 
have been known that the Oil-for-Food Program would be 
vulnerable to the many abuses we heard before, that the 
sanctions program, the 661 Committee and its progeny, Oil-for-
Food, was vulnerable to those abuses based on the experience of 
the 661 Committee from its inception until the OFF was started? 
How knowable was that by those inside or outside?
    Dr. Conlon. It was completely knowable, because it comes 
out in my book, we had all of the background conditions for 
things like this happening. The people who actually negotiated 
for years with Iraq about Oil-for-Food, the first program and 
then even the later ones, the bulk of that expertise was found 
in the legal department which was privy to all of the things 
that we know about, or that I knew about, and was also privy to 
all of the things that went on in the committee. They were on 
the mailing list, they could come to the meetings, they 
occasionally did, and they got copies of all the memos that I 
wrote.
    So they knew that many of these sanctions busting 
mechanisms and tactics were being used very successfully in the 
course of many years. They knew essentially how the adversary 
had been manipulating humanitarian waiver actions to perform 
certain functions clearly of a financial nature, never entirely 
clarified exactly how.
    And I also think that at that point in time, when the 
decisionmakers outside of the Secretariat, such as the U.S. 
Government, the other powerful voices in the Security Council, 
that they agreed to a new Oil-for-Food Program, on better 
terms, more on Saddam Hussein's terms, that they knew that they 
were going to have problems.
    Mr. Halloran. Mr. Mack.
    Mr. Mack. I think it was the point made this morning by the 
State Department that it was very, very difficult for the 
international community not to agree to an Oil-for-Food Program 
because concern about the humanitarian costs were growing so 
intense.
    Mr. Halloran. Let me stop you there. By their terms, U.N. 
sanctions don't include food and medicine ever, by any terms, 
is that correct?
    Mr. Mack. It depends. This was an across-the-board trade 
embargo. So it included everything, until you brought in the 
exceptions.
    Dr. Conlon. That's not quite true. Medicines in the very 
narrowest sense cannot be included in sanctions measures 
because of provisions in the protocol to the fourth Geneva 
Convention. So in the very strict sense, medicine may never be 
prohibited. It however is legitimate to control its sale or 
transport in the sense of requiring notification. That is a 
weak form of control.
    Food was much less clear. In 1990, that was the first and 
only time that a sanctions program of such comprehensive nature 
was agreed as to include food stuffs. Even at that time, there 
were serious difficulties with this, particularly in the west, 
but also in the Islamic countries, because it had been argued 
that Christianity and Islam do not allow deprivation of food as 
an acceptable form of coercion.
    The food embargo was lifted in 1991 and turned into a 
requirement for notification. But it could no longer be 
prohibited. And I think there was a general agreement at that 
time that it would never be tried again because of the very 
serious implications it might have. So in that sense, food is 
out.
    Other than that, one has the distinction between a 
comprehensive sanctions program, such as in the case of Iraq 
and Yugoslavia, from which exceptions can be made, from a more 
selective approach in the case of Libya, where trade was 
regarded as legitimate, as such, except for certain categories 
of items which were then banned. One is called all-inclusive or 
comprehensive, the other is referred to as a selective, I 
think, sanctions regime.
    Mr. Mack. I'm sorry, to go back to the major point, and I 
think that Saddam Hussein had quite a powerful card when he was 
negotiating over Oil-for-Food. That was the huge amount of 
concern in the international community about humanitarian costs 
of sanctions. And they were very high.
    So he said, Iraqi sovereignty, and that was his bargaining. 
And that's what enabled him to get the deal which subsequently 
created all of the problems, and that is that he gets to choose 
the buyers and sellers. I think that is absolutely crucial.
    I think the other thing is that if you actually look back 
right at the very beginning when sanctions were imposed, nobody 
had any idea that it was going to last as long as it did. 
Therefore, there weren't the sort of concerns that came up 
later, because people thought, in a year he's bound to give in. 
This was 90 percent of all of Iraq's exports. It was an 
enormous amount of leverage. No sanctions regime in history has 
ever had that sort of leverage. It reduced Iraqi GDP by some 
accounts to about a third of what it was previously.
    If anything, if economic sanctions could ever have worked, 
they should have worked there. But they didn't.
    Dr. Gordon. I agree. I think what was unknown is what would 
happen if you actually had globally comprehensive sanctions. 
Remember, it had been politically impossible for this to occur 
at any time in history before. Since World War II, sanctions 
were imposed by one block against the other. Whoever was being 
sanctioned by the United States or by the Soviet block could 
trade with the other.
    This is literally the first time in human history that 
there is the possibility of every nation in the world 
participating in the blocking off of goods for a country that 
has one source of revenue and one source of goods. I'm 
overstating it, but overwhelmingly dependent on exports for 
cash, overwhelmingly dependent on imports for goods. So it was 
comprehensive in every possible regard. And it was an 
experiment that way.
    All the literature of that time made it look as though this 
was the ideal circumstance for sanctions to succeed. The 
literature said, if sanctions were comprehensive, if they were 
immediate, if they were multi-lateral, those were the 
circumstances most likely to bring about regime change or 
whatever the target was. So I think the expectation was they 
would work and they would work quickly.
    And there really, I think was not thought about what would 
happen once the long term erosion of different sorts happened. 
And I also think that no one cared about the smuggling. That no 
one cared. The issue was always the tension between security 
interests and humanitarian interests, back and forth and back 
and forth between those two. The leakage around the edges, $2 
billion to $4 billion sounds like a lot of money to us. The 
numbers I have on Iraq's GDP is that the GDP dropped from $60 
billion to $13 billion.
    So $2 billion to $4 billion over any period of time is 
really an insignificant change in Iraq's economy. I don't want 
to be on the record as saying I don't think $4 billion is a lot 
of money. But no one cared about that. The economy was done. 
The infrastructure was done, it was shot. Iraq would not be 
able to rebuild a significant military capacity with no 
functioning industrial capacity.
    The specific issue of the trade partners I think is where 
we see the most clear instance that everyone knew what was 
going on with this. Not necessarily that this would allow the 
kickbacks to happen, but it clearly gave Iraq political 
leverage through the use of contracting. Everyone saw that, it 
was completely on the table.
    Mr. Halloran. All right. In previous testimony at previous 
hearings, we had the U.N. contractors, inspectors for the oil 
and commodities and the banking house that did the letters of 
credit. They testified that they lacked capacity, the power to 
really see the extent of the transactions that they thought 
they should to be able to provide any assurance that the Oil-
for-Food Program was achieving what it was meant to achieve and 
not more or less for the regime.
    We also had testimony that the distribution plans were not 
regularly followed, that they would overlap and you would lose 
track of what was filled and what wasn't over time as things 
kind of slopped over from phase to phase. So there were some 
weaknesses in these, which the Volcker Commission has pointed 
out as well, in the safeguards that you, and the oversight 
mechanisms that you listed, that differentiated the sanctions 
program from Oil-for-Food.
    So I guess my question is, what are the implications of 
that in terms of sanctions regimes that if a program on which 
all these layers of oversight and safeguards were put in place, 
and yet it still appears the program leaked badly or was 
manipulated by the target regime to its benefit, what does that 
say about future sanctions regimes?
    Dr. Gordon. Well, to me comprehensive sanctions don't make 
sense for all of the reasons that everyone has said today. 
Politically they don't make sense, from a basic position of 
international humanitarian law, they don't make sense. So the 
leakage is really about that. If you say we want to blockade, 
we want to choke off the entire economy, and then you say, 
well, there's leakage, I can't imagine a circumstance where 
there will be the political tolerance to do something similar 
to that.
    I think the only avenue is smart sanctions. That's the only 
thing that makes sense to me.
    Mr. Shays. Is what? I'm sorry.
    Dr. Gordon. Smart sanctions.
    Mr. Shays. Define smart sanctions again, quickly.
    Dr. Gordon. I think you suspect that academics are 
incapable of speaking briefly.
    It just means targeted. So normally, the kinds of sanctions 
we generally talk about, they are on the economy or on a sector 
of the economy as a whole. Smart sanctions typically include 
things that affect the particular leaders or goods, such as 
arms embargoes.
    Mr. Shays. I get it.
    Dr. Gordon. That's the only thing that makes sense to me in 
terms of efficiency, in terms of moral legitimacy. To me it 
just makes no sense at all, if you look at the entire history 
of sanctions, the more you harm a civilian population of 
another state, the more that state consolidates power, the more 
resistance there is to the outside pressure, the outside 
coercion from the civilian population, the less they are 
inclined to do what you see is your goal, which is their 
putting pressure on their state and so on.
    Mr. Shays. Let me wrap up here. Just to complete the 
comment on what was Saddam thinking, when I was meeting with 
Hans Blix, he was pretty convinced that Saddam never thought we 
would come in. So it was almost irrelevant whether he wanted to 
convince us he had it or not. He could have us think he had it, 
but he still didn't think we would come in. The reason why that 
was verified was that Tariq Aziz told us that when the attack 
began, Saddam didn't believe it and wanted it verified, that he 
was pretty shocked about it.
    The other information that we learned from Tariq Aziz 
through Duelfer was that in the Duelfer Report, people point 
out that Duelfer said no weapons of mass destruction. They 
don't focus on the other parts in which he said it was the 
purpose of Saddam to reward particular nations under the Oil-
for-Food Program who had veto power in the Security Council, 
particularly France, Russia and China. So he was pretty 
convinced that if those three countries didn't accept our 
coming in, we wouldn't come in. He just didn't understand how 
willing the President, President Bush was to do that in spite 
of that, in other words, go in in spite of the opposition of 
three key Security Council members.
    I think that we've covered a lot. I'd like to know, is 
there anything, Dr. Conlon or Mr. Mack or Dr. Gordon, that we 
should have asked you that we didn't? Is there anything that 
you would have liked to have commented about that we didn't ask 
you about? Any closing comment, in other words?
    Dr. Conlon. First of all, the description given by the 
State Department about this oil exemption for Jordan has been 
dealt with by myself in an article which was published in, 
among other places, the Florida State University Journal of 
Transnational Law some time in the late 1990's. That goes into 
some detail about the legal ramifications and circumstances.
    The second one is that the idea presented by my two co-
panelists today about how sanctions are supposed to work by 
imposing burdens and discomfort on the civilian population to 
such an extent that they then get their government to stop 
doing what it's doing is actually not the way sanctions are 
thought of. This objection is equally applicable to military 
action as it is to sanctions, the same thing applies. You can 
say that military action does not bother the elite, it bothers 
the common people who have to suffer.
    So the purpose of sanctions is to apply pressure on the 
system, just as the purpose of military action is that. They 
have functions, the function of trying to get the economy to 
slow down or to fail in some of its vital functions. This is 
irrespective of whether the people suffering from that have the 
ability to openly try to influence the government or not, if 
the effects of these disruptive activities are such that the 
system cannot function, it doesn't matter that the vast 
majority of the population has no voice as such in 
decisionmaking.
    Mr. Shays. Let me just say, I think that it's important, 
it's helpful for me to have you make this final point. I was 
thinking in essence you were saying sanctions don't work. When 
you were saying comprehensive sanctions, I was thinking of 
comprehensive in the context that everyone around the world is 
on board. You're talking about the comprehensive sanctions of 
food, etc., in other words, comprehensive in terms of nothing 
gets into the country.
    And I'm reminded of a conversation in one of my travels to 
the Middle East with a member of King Hussein's family. He said 
to me, you Americans don't get it, this was around 1994. He 
said, in your country, when times are bad your people turn 
against your leaders. He said, in the Middle East, when times 
are bad, we turn to our leaders, which is kind of reinforcing, 
Mr. Mack, your comment that we made Saddam's people turn to him 
to get anything they needed and wanted. We made him in a sense 
almost more important and valuable to his country. And if this 
leader was right, they weren't turning against him, as we would 
think intuitively in our own society.
    Any closing comment you'd like to make?
    Mr. Mack. Just one very quick one. We're just finishing 
something called the Human Security Report, which is analogous 
to, modeled on the U.N.'s Human Development Report. One of the 
things that we find out of this, particularly when you're 
talking about the U.N. and your whole concern here, I think, is 
not just this particular issue, but the future of U.N. reform 
generally, is that when you look at the evidence, there has 
been a huge explosion of international activism following the 
end of the cold war. The U.N. certainly liberated to do all 
sorts of things it couldn't do previously, massive increase in 
the number of peace operations, disarmament, demobilization, 
post-conflict reconstruction and sanctions, they all go up 400, 
500, 600 percent.
    In the same period, the number of armed conflicts declined 
by 40 percent. And we argue that even though all of these U.N. 
exercises aren't individually particularly successful, a 30 
percent to 45 percent success rate seems to be about the norm, 
which isn't very good. About 30 to 45 percent when prior to 
1990 there was nothing at all. And that appears to have made a 
major difference. Not just for the United Nations, it's the 
United Nations, the Bank, the major donor states and all the 
rest of it. That's all.
    Mr. Shays. Thank you.
    Mr. Mack. But sanctions is part of a much broader package 
and should be seen in that sense.
    Mr. Shays. Thank you.
    Dr. Gordon. Actually, I just want to say how impressive I 
think it is that this subcommittee has taken something that 
really threatened to become something like a feeding frenzy 
over the last year, and it's really very complicated. The 
United States is not always on the right on this issue, and the 
Secretariat and the U.N. as a whole are not always in the wrong 
on this issue.
    I just think it's so important to the work of this 
subcommittee in figuring out at a very detailed level, maybe 
more detailed than you want to hear, but how it's worked and 
who has done what, rather than I think the much more pat 
responses we've seen for months now that really are just 
accusations that are choosing to not see the reality of the 
complexities of how this is really operated.
    Mr. Shays. I thank you for that comment. It is interesting 
to me that in the total amount of dollars that we were looking 
at smuggling and the Oil-for-Food Program, we were at one time 
thinking the Oil-for-Food Program, that the amount of dollars 
that Saddam was getting was closer to $4 billion. We now think 
that number is closer to $1.7 billion, and that the smuggling, 
which we thought was around $5 billion, is closer to $10 
billion.
    That takes us out of the news when we say that. But it gets 
us to understand really the reality of what is truthful about 
what's going on. So thank you all very much. Appreciate your 
being here. It was a very interesting hearing. We will now 
adjourn the hearing.
    We do thank our transcriber and I do thank my staff that 
has worked so hard on this issue. They even went to Iowa. 
[Laughter.]
    [Whereupon, at 2:25 p.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
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