'Kofigate' threatens US aims in Iraq

The UN oil-for-food program in Iraq, started in 1996, was supposed to be a humanitarian effort. Profits from Iraqi oil sales were to be used exclusively to buy food and medicine for the people of Iraq. The program was stopped in November of 2003.

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Russia, one of the nations that is alleged to have profited the most from the oil-for-food scheme, last week was reluctant to agree to such a resolution. But The New York Times reports that last weekend Mr. Annan personally phoned Sergey Lavrov, the Russian foreign minister, who until last month was the country's ambassador to the United Nations. On Monday, Russia changed its position.

The US Congress is also investigating the allegations. The Guardian reported Wednesday Bush administration officials who were involved in the UN program told a House subcommittee "there had been a widespread system of kickbacks benefiting officials within Iraq, including Saddam [Hussein]." But they also said there was no " corroborated evidence so far" suggesting UN officials had been part of the scam.

The allegations originally arose in January, when Al Mada, an independent Iraqi newspaper, first, reported that " presidents, reporters and business people" had received millions of dollars in bribes from Iraq. Al Mada, which had obtained documents from the former Iraqi oil ministry, listed 240 people, political parties and countries that received kickbacks for either their support of the Hussein regime or their silence about the plan.

The Daily Telegraph reported Thursday on how the kickback scheme allegedly worked.

The scam worked on two levels. Not only did Iraqi oil purchasers benefit from being able to resell at huge profit but also Saddam distributed "oil vouchers" to corporations, political parties and individuals whom he favored. Instead of alleviating the hardships of Iraqis under the oil-for-food program, the organizations and individuals favored by Hussein allegedly feathered their own nests. Hussein would also hand out oil vouchers instead of cash for goods imported illegally into Iraq in violation of United Nations sanctions. The recipient, or middleman, would hand the vouchers for Iraqi oil over to a range of firms operating in a neighbouring Arab countries. Those firms then paid the middleman commissions of anything between five cents and 30 cents per barrel, depending on market conditions.

Washington Post columnist Jim Hoagland writes that it is a " perilous hour" for Annan.

Clearing up what is becoming known as the oil-for-fraud fiasco is essential to Annan's larger task of rebuilding the shattered trust between his organization and its most important partner, the United States. The burden of finding a new balance in global cooperation does not lie only with the Bush administration or its successor. It takes at least two to multilateral.

The Christian Science Monitor writes that the timing couldn't be worse for a UN scandal, especially for the US and its plans in Iraq. Just as US President Bush and UK Prime Minister Tony Blair announced their support for a UN plan to guide the transition to democracy in Iraq, the UN is investigated for corruption.

But The Washington Post writes that even with the scandal hanging over it, the UN has one remaining asset in Iraq – and it's a powerful one.

It is not the United States, and so it has a better chance of overseeing the creation of a new Iraqi government without provoking a nationalist backlash. Key leaders who won't agree even to meet with US administrator L. Paul Bremer, such as Shiite Grand Ayatollah Ali Sistani, have talked to [UN special envoy] Mr. Brahimi and even invited his intervention.

Fanning the embers of distrust is the US's failure to acknowledge that the constituencies of key Governing Council members "are not based on ideology, but rather on the muscle of their respective personal militias and the patronage which we allow them to bestow," according to the memo's author. Using the Kurds as an example, he reveals that "we have bestowed approximately $600 million upon the Kurdish leadership, in addition to the salaries we pay, in addition to the USAID projects, in addition to the taxes which we have allowed them to collect illegally." To underscore the point, the author adds that he recently spent an evening with a Kurdish contact watching The Godfather trilogy, and notes that "the entire evening was spent discussing which Iraqi Kurdish politicians represented which [Godfather] character."

Also...
• Anxious Poland may follow Spain's lead ( Jordan Times/Reuters)
• America's Arab allies feel the strain ( BBC)
• The enemy within – Wolfowitz's obsession with proving a linkg between Iraq and Al Qaeda ( MSNBC)
• Lawyer believes Army chaplain cleared of spy charges is being silenced ( ABC News)

• Feedback appreciated. E-mail Tom Regan .