VOLCKER REPORT

PIERCING THE VEIL

Defending The Iraqi People Was Not A Crime

Prakash Karat

THE inquiry committee headed by Paul Volcker into the UN Oil for Food Programme in Iraq has led to a major political controversy in India. The report in one of its annexures has listed Natwar Singh, former foreign minister and the Congress Party as non-contractual beneficiaries. A host of Indian companies have also figured as having paid surcharges or levies for the purchase of Iraqi oil or for supplying goods under the Oil For Food Programme.

Before we proceed to the report and its implications, what needs to be emphasised is that the Volcker committee report has brought Iraq and the UN sanctions back into limelight. The sanctions imposed on Iraq by the United Nations Security Council lasted for twelve years. The sanctions were imposed in 1990 before the first attack on Iraq by the US-led coalition, and continued throughout the 1990s upto the US-British invasion of Iraq in March 2003.  These were the most brutal sanctions imposed on a sovereign country. Iraq was prohibited from selling its oil or trading in goods or purchasing medicines and other essential commodities. No-fly zones were enforced and Iraq was subjected to continuous aerial bombing by the US and British air forces. The Iraqi people were being punished.

The horrific effects of the sanctions on the Iraqi people are well documented. More than 1.5 million Iraqis died due to the effects of the sanctions. The worst affected were children. According to a UNICEF study, 500,000 children died needlessly between 1991 and 1998. According to the Ramsay Clarke report to the UN Security Council, the annual number of deaths of children under the age of five grew more than ten-fold from 1989 to 1999. The total deaths of children under age five from selected diseases such as diaorrhea, gastroenteritis, respiratory infections and malnutrition alone during 1990 to November 1999 was 502,492.

Sanctions were imposed not to punish Iraq for its occupation of Kuwait, it was as president George Bush (Sr) said in May 20, 1991: “At this juncture my view is that we do not want to lift the sanctions as long as Saddam Hussein is in power”. The aim was clear.  Iraq had to undergo a regime change and sanctions were a weapon for it.

OIL FOR FOOD PROGRAMME

While the United States and Britain insisted on the maintenance of strict sanctions which even prohibited the import of medicines, the sufferings of the Iraqi people caused worldwide outrage. It is due to the pressure of world opinion that finally the United Nations Security Council adopted a resolution in April 1995 allowing the sale of oil to finance the import of humanitarian goods. The Oil For Food Programme (OFFP) was actually implemented only from December 1996. The UN Office for Iraq would decide how much oil would be sold every six months and two-thirds of that amount was to be used for Iraq’s humanitarian needs. The OFFP fund was the money of the Iraqi people. There were no foreign funds whatsoever. The money from the sale of oil did not go to the Iraqi government but to a UN designated account. Even out of these funds, the US and its allies made claims for reparation for the 1991 war and received billions of dollars. Out of the total oil sales of $65 billion in the period when the programme was implemented only $46 billion went for the OFFP.

The OFFP provided a tenuous lifeline for the Iraqi people. From 1998, the terms were relaxed further to allow more sale of oil and in December 1999 the ceiling on export of oil was removed by the Security Council. But every contract to buy humanitarian goods was scrutinised by a committee which had Security Council members and each single contract was approved by representatives of the United States and Britain. The OFFP was thus a paltry step to alleviate the sufferings of the Iraqi people.

But even this programme came under attack from the rightwing circles in the United States. They targetted the UN for this programme and demanded that it should be stopped. Allegations of corruption and malpractices were leveled. The rightwing critics alleged that Saddam Hussein had made anything from $10 billion to $20 billion out of this programme. While constantly sniping at the OFFP, the United States administration was complicit in allowing Jordan, its key ally, from benefiting most from the oil trade. Jordan earned a revenue totaling $4.5 billion and this was the largest income outside the OFFP programme. Saddam Hussein’s government tried various means to beat the sanctions and circumvent the humiliating terms and conditions. The Iraqi government approached a number of companies and organisations in various countries who were well disposed to Iraq and were prepared to cooperate with it. It is not surprising that most of the oil contracts and the orders for goods which Iraq needed went to countries which had good relations with Iraq.

Here it needs to be once again emphasised:

1.  The Oil For Food Programme was financed by Iraqi money.

2. Saddam Hussein and the government of Iraq had no access to these funds. All the money from the sale of Iraqi oil went into an escrow account set up by the UN. Each contract for the humanitarian goods bought had to be approved by the UN.

3. The Iraqi government tried to generate revenue by levying surcharges on the oil contracts and by levying inland transport tax and after sale service tax on the goods supplied to it. For those who opposed the sanctions, Iraq had every right to do so. For those who supported this outrageous assault on Iraqi sovereignty and the Iraqi people, these were “kickbacks”. The Volcker committee takes the latter view.

The CPI(M) and all other progressive forces in India viewed the sanctions imposed on Iraq as unjust and illegal. They stood with the Iraqi people and supported the efforts to protect its sovereignty and control over its economic resources. The CPI(M) had consistently opposed the attacks on Iraq through the sanctions and by brutal military aggression. The CPI(M) is proud that it raised funds for sending medicines and other material to Iraq alongwith the trade unions, students, youth and other organisations.

UN UNDER ATTACK

It is only the craven apologists for the United States who justify the economic warfare waged against the Iraqi state and people by the United States and other imperialist powers. After the invasion and occupation of Iraq in 2003, a crescendo of attacks on the United Nations was orchestrated by the neo-conservatives in the United States. Kofi Annan, the secretary general of the UN and his predecessor Bourtros Ghali were brought within the ambit of the charges. It is in response to these attacks that the secretary general appointed a three-member committee to look into the charges of corruption and malpractices in the OFFP. Paul Volcker who headed the committee is a former chairman of the Federal Reserve Board, which functions as the central bank.

The ruling circles who mounted the attack on the United Nations and the OFFP are totally silent about the loot of Iraq and its occupation by the US corporations. It is under US occupation that the Security Council ended sanctions against Iraq and proposed to set up the Development Fund for Iraq (DFI). The OFFP was wound up and $9.978 billion was transferred to the DFI in 2003 which was to be administered by the “Coalition Provisional Authority” that was set up by the US occupation forces. The US got its hands on this development fund which then grew to $20 billion in 2004. US companies like Halliburton and Bechtel have made a killing through contracts for the reconstruction programme. This is a scandal of huge proportions which the United Nations will not have the courage to enquire into.

The United States and the British governments have been keen to tarnish all those who supported Iraq and opposed the sanctions and the war on Iraq. Whether it be George Galloway, the British MP who opposed the Labour government’s heinous role in Iraq or the politicians and organisations that opposed the war and cooperated with Iraq –– all are being sought to be put in the dock for indulging in corruption. The Galloway case is instructive. He was accused of having received allocations of oil and money from Saddam Hussein. Last year, the Daily Telegraph and other newspapers had to pay damages for defamation, when it was proved in court that the documents produced from Iraqi sources under US occupation were forgeries.

The Iraqi government did levy surcharges on the oil that it sold and also fix fees and taxes. It is from the records of the Iraqi government that the Volcker committee has documented these payments. Those who opposed the sanctions could not find anything wrong in Iraq resorting to these methods to augment its revenue.

The Volcker committee report cannot therefore be taken at its face value. Already the Russian foreign minister Sergey Lavrov has announced that certain documents produced before the Russian government by the committee turned out to be forgeries. The South African government has also refuted the claim that they were involved in any malpractices regarding the OFFP and has stated that it was working to end the sanctions. A whole host of Indian companies which did business with Iraq through the UN office of the Iraq programme cannot be legally charged of any wrongdoing as the government of a sovereign country asked them to pay levies and taxes on the goods they sold which are recorded. It is the American game to portray all this as lining the pockets of Saddam Hussein.

The 129 companies who got contracts to supply goods to Iraq, paid the inland transport tax and similar levies which are recorded in the books. Can all these payments be considered “kickbacks”? There are some exceptions in the oil contracts which need investigation.

CONGRESS NEED NOT BE APOLOGETIC

As for the mention of Natwar Singh and the Congress Party in the annexure of the report, these belong to a different category. Natwar Singh was a leader of the Congress Party at that time and the Congress was the main opposition party. The Congress Party and Natwar Singh as chairman of the Foreign Affairs cell of the AICC maintained relations with Iraq and the Baathist party during the entire period when sanctions were imposed and the attacks on Iraq were continuing. Natwar Singh had rightly defended his views opposing the sanctions on Iraq and the war in Iraq. The Congress Party need not be apologetic or defensive about its ties with Iraq and other third world countries and organisations which were intent upon defending their national sovereignty. Much of the attack directed on the UPA government and the Congress party by the BJP and the rightwing media stems from their ideological affinity with the US and its designs on West Asia. Much of the drivel being put out in the media is taken straight from the western media.

Unfortunately, the Manmohan Singh government does not seem keen to remember this past with their new found dependence on the United States and its willingness to collaborate with the US. The government may now find

Natwar Singh’s assertion that the US is intent upon targetting individuals and organisations, which do not share its hegemonic views, uncomfortable.

The CPI(M) had announced after the publication of the final report of the Volcker committee that the allegations against Natwar Singh and the Congress party and a host of Indian companies should be investigated by the government so that the actual facts and evidence are collected. Only then can proper conclusions be drawn. It has become clear that despite Volcker’s claim that all individuals and parties were given notice to explain their association, none of the political entities nor most of the companies in India were issued such notices.

The link between Hamdan Export, Masefield AG and their alleged connection with the “non-contractual beneficiaries” can be uncovered. The issue must be clarified – is it the case of an illegal deal through political patronage, or a business transaction which is like the other contracts entered into by Indian business enterprises?

The government has announced two inquiries. One by Virender Dayal, a former under secretary general of the UN and the other by Justice R S Pathak to look into the charges in the Volcker committee report. This is a correct step. Natwar Singh has stepped down during the pendancy of the inquiries. This should help facilitate an impartial enquiry. But, it should be noted that Natwar Singh is being targetted for leading a Congress Party delegation to Iraq in 2002 and opposing the sanctions and the invasion of Iraq. For the Congress and Natwar Singh, an impartial inquiry would help to counter the charges terming them as beneficiaries in the oil deal.

In the recent period the UPA government has taken a series of steps which are a violation of the independent foreign policy that it promised to pursue. The Indo-US defence framework agreement, the Indo-US joint statement of July 18 and the vote in the IAEA on the Iran nuclear issue are such instances.

The CPI(M) is concerned about how foreign policy will be conducted by the government. There is a strong pro-US lobby in the country which hopes that the exit of Natwar Singh will help consolidate the pro-US direction in foreign policy. The CPI(M) and the Left are determined to see that the government adheres to an independent foreign policy. In the coming days the CPI(M) will give the highest priority to this issue.