The Volcker Report

In general, I'm opposed to economic sanctions on the grounds that the people, rather than the rulers, of the country are the ones injured. Now, with the report by the Independent Inquiry Committee led by Paul Volcker we see that not only are the rulers not injured, but they can also make a good dollar from a sanctions program, such as the Iraq Oil for Food program.

While it took a while for Saddam and his boys to catch on, they were able to earn at least $1.8 billion in a couple of years. The money came from two sources: those who bought oil from Iraq (139 companies paid $229 milion to Saddam) and those who supplied food and other necessities (2,253 companies paid $1.55 billion to Saddam). Note that just about two-thirds of those companies supplying Iraq paid bribes. That's a pretty high rate of ethically-challenged people. I say 'people' because the report emphasizes that a particular company may really not have known what their employer or agent was doing and may not have benefited from the crime.

Companies, organizations and individuals named in the report include: Volvo, Siemens, Daewoo, Daimler Chrysler, Weir, AWB, Orthodox Church of Russia, Palestine Liberation Front, BNP, France's Interior Minister. Oscar Wyatt, a noted American oilman, was indicted last week on charges of making illegal payments to Saddam.

The design of the program was flawed in that Iraq was allowed to choose both the buyers of its oil and those who sold Iraq the food. Thus, Iraq had leverage in both sides of the transaction. It used that leverage to try to influence nations, such as Russia and France, that were reasonably friendly toward it and also to make money for Saddam. Further, the escrow bank, BNP, was allowed to issue letters of credit that financed purchases of oil. Finally, there are questions as to the effectiveness of the companies hired to monitor the program.

All in all not very pleasant reading.