Annan claims U.S., Britain could have stopped illegal oil-for-food program

UNITED NATIONS -- U.N. Secretary-General Kofi Annan said Thursday that the United States and Britain are partly to blame for Saddam Hussein's regime making billions of dollars in illicit money from smuggling oil.

Annan said the Americans and the British could have stopped the smuggling but did not, and most of the money Saddam Hussein made illegally when his country was under U.N. sanctions in the 1990s was from smuggling oil, not from kickbacks under the U.N. oil-for-food program.

"They were the ones who had interdiction, possibly they were also the ones who knew exactly what was going on, and the countries themselves decided to close their eyes to smuggling to Turkey and Jordan because they were allies," Annan said.

The United States had ships in the Persian Gulf to intercept smugglers, and allegations have swirled for years that Washington looked the other way while some of Iraq's neighbors made substantial profits from oil smuggled out of Iraq. Shipments to Jordan and Turkey were not concealed.

While the smuggling occurred, the administrations of Bill Clinton and George W. Bush asked Congress for waivers allowing Jordan and Turkey to continue receiving U.S. aid despite their violations.

"There is a fundamental difference between oil smuggling, which was happening without our knowledge, and the very public waiver which was granted to some countries," U.S. Mission spokesman Richard Grenell said. "We informed Congress and publicly acknowledged our desire to grant these certain countries an exemption.

"This exception was given before the oil-for-food program even began."

A spokeswoman at the British mission refused to comment.

Annan partly excused the smuggling to Turkey and Jordan, saying the U.N. Charter requires states affected by sanctions on another country to be compensated.

"We didn't have billions to compensate these countries, and some felt the oil going in was a way of compensation to them, and so it was all generally accepted," Annan said.

The secretary-general was speaking at a reunion of current and past U.N. spokesmen, and his comments were part of a vigorous defense of the United Nations against recent media attacks.

The U.N. oil-for-food program, which was endorsed by the United States and begun in 1996, permitted Iraq to sell oil despite a stiff U.N. economic embargo against Saddam's regime, provided the proceeds were used to buy food and medicine for Iraqi people suffering under the sanctions.

Beginning at least by 2000, Saddam's government, which had the power to choose who would have the right to purchase oil, demanded that those it dealt with be willing to pay kickbacks.

Estimates of how much illicit money Saddam's regime may have made from smuggling and corruption in the oil-for-food program range from $9 billion to $21 billion.

But former U.S. Federal Reserve Chairman Paul Volcker, who is conducting an independent investigation, said Saddam gained far more money from smuggling than through oil-for-food deals.

Annan himself has come under fire recently over the handling of the oil-for-food program. Volcker criticized Annan for not pressing to learn details of his son Kojo's employment by a Swiss company that won a contract under the program.

Annan said the scandal around the United Nations was largely "an American story," while people in the rest of the world "still have quite a lot of respect and enthusiasm for the U.N. and appreciate what the U.N. does."

"We are outgunned. We are outmanned," Annan said of critics of the United Nations. "And they have resources that we don't have, and they are relentless and they are organized."

Annan said he expected Volcker's report would reveal that at the end of the oil-for-food program in 2003, the United Nations gave $8 billion- $9 billion to the Coalition Provisional Authority, and the money has not been accounted for.

"When you put things in the right perspective, one should certainly realize where the bulk of the problem came out," Annan said. "But would it influence this group? I am not sure."