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Oil-for-food was one of the programs initiated by the United Nations in the 1990s. It was the focus of the organization’s efforts to alleviate the human suffering brought about by the 1991 Gulf War and the sanctions imposed on Iraq (Traub 17). The program aimed to contain the regime of Saddam Hussein. The humanitarian needs of the Iraqi were met by imposing controls on the export of oil while allowing the import of food (Buffard et al. 16).
What this meant is that all the revenue generated from the oil export under the program was held in an escrow account. The account was controlled by the United Nations. Also, Saddam Hussein was not supposed to access the funds in this account. The program was initiated in December 1996 and came to a close in March 2003. Many observers agree that the efforts taken by the UN may have eased the human suffering experienced in Iraq. However, the plan did not eliminate all the problems faced by the citizenry.
In this paper, the author analyzes the international law issues associated with the program. The paper outlines the legal elements that should be addressed by an Australian group involved in international trade. The group has been subjected to a recent oil-for-food program. The program is under the auspices of a resolution by the United Nations Security Council. This paper aims to help the group conduct future transactions.
A Critique of the Oil-for-Food Program
The Australian group needs to understand the opinions held by the international community to the oil-for-food program. The program was criticized by analysts from different fields. Some of the critics claimed that the US was using it to maintain indefinite sanctions over Iraq during the war. It was seen as a form of control over Saddam Hussein’s regime (Gardiner 4). The suffering of the ordinary person in the country attracted global sympathy.
As a result, some of the sanctions were relaxed. For instance, the UN and the US were aware that Iraq was selling oil to its neighbors. The sale was a violation of the UN sanctions. However, the international community did not punish the countries that were dealing in the illicit trade with Saddam’s regime. Also, the US Congress exempted Jordan and Turkey from unilateral sanctions for violating the UN oil embargo imposed on Iraq (Gardiner and Phillips 12).
The American authorities supported the continued implementation of the UN sanctions. According to the authorities, relaxing the regulations would have helped the Iraqi government amass weapons of mass destruction. In 2002, the government of the United States of America asserted that the sanctions were not stringent enough. The authorities were concerned that the measures put in place were not adequate to counter the threat from the Iraqi regime. Consequently, it was resolved that the only way to address the threat was to overthrow the regime (Gardiner and Phillips 14).
The oil-for-food program was terminated after the fall of the Saddam regime (“Oil-for-Food” 4). An interim government was put in place to maintain the sovereignty of the Arab nation. Also, most of the sanctions put in place by the UN were lifted. However, even after the fall of Saddam Hussein, the oil-for-food program continued. According to Katzman and Blanchard, critics continue to argue that the program is being mismanaged by the new government (9).
Some people claimed that the interim government was still influenced by Saddam Hussein. In extension, the influence of the dethroned ruler persisted even after his fall. It was claimed that some UN officials, contractors, and business entities from various countries were influenced by leaders loyal to the dictator (Gardiner 3). Focus now shifted to the sale of oil to neighboring countries, Jordan and Turkey. Previously, some of these nations were not under the watch of the UN (Gardiner 29).
There have been allegations of corruption on the part of the UN officials involved in the management and implementation of the program. Questions have also been raised regarding the lack of action by the UN Sanctions Committee to act on these allegations. Besides, the US has failed to stop the sale of Iraqi oil outside the program.
The International Focus and the Rule of Law
The global focus on the administration of the rule of law ensures that the actions carried out by people from different countries are addressed in the context of the international criminal jurisprudence (Buffard et al. 3). Consequently, political instruments, good governance, and accountability have increasingly become important indicators of the effectiveness of the administration of nations.
They also make sure that states and other actors in the international arena, such as multi-national corporations, operate in a transparent manner (Traub 16). The transparency is especially to the problems that may be beyond their obvious legal obligations (Gardiner 29). Individual accountability, failure to take responsibility, and bad governance were at the center of the investigations carried out in the wake of the allegations of mismanagement of the United Nations-sponsored oil-for-food program in Iraq.
The program was a project that had been conceived to ease the suffering of the Iraqi population due to the sanctions that had been imposed by the United Nations Security Council on Saddam Hussein’s regime (Katzman and Blanchard 19). Although there have been several investigations into the allegations of corruption, none has uncovered any wrongdoing among the top UN officials. However, the reports from the investigators exposed a culture of irresponsibility and lack of accountability in the management of the program. Also, their oversight of the plan has been ineffective.
Investigating the Mismanagement of the Program
The reports from investigators have addressed several issues related to international law. The Australian group needs to take note of the recommendations made by the auditors. Familiarization with the report will help the organization to operate in an environment controlled by UN-sanctioned (Gardiner 8).
The investigators concluded that the oil-for-food program was driven by a genuine need to help the Iraqi people. However, the UN failed to clearly define some of the issues governing the project. Such issues include practical parameters, administrative accountability, and policies. The program designers allowed the Iraqi regime to control most of the initiatives at the design and implementation level. It appears that neither the Security Council nor the secretariat leadership was in command (Katzman and Blanchard 19).
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Consequently, the lack of clear leadership led to the dilution of the authority of the secretariat. Also, it eroded personal responsibility across the board. Problems arose as a result of the conflict between political objectives and the need for administrative effectiveness. When this happened, the officials in charge bungled the operations of the program. Besides, they delayed or simply avoided making the necessary decisions (Gardiner 32).
The administrative structures of the secretariat lacked the personnel required to deal with an extraordinary phenomenon and challenges that were presented by the program. The various reports reveal many instances of unethical, illicit, and corrupt behavior by the people tasked with the responsibility of monitoring and ensuring that the program was run professionally to attain its objectives (Katzman and Blanchard 22). However, a critical analysis of the issue from the international law perspective reveals that corrupt behavior was not largely from the UN officials. On the contrary, it was from individuals working for private companies (Traub 5).
The individuals were manipulated by the Iraqi government and corrupted by their pursuit of profits. The companies that were registered by the national government to carry out business under the program made illegal payments to some people in the public sector. Also, the UN had some level of corruption at critical management points.
Oil-for-Food, International Law, and Operation of Multinationals
When the Iraqi government agreed to participate in the program, the Sanction Committee drafted and approved the rule to govern the review of the humanitarian contracts that would be under the program. The regulation is important to the understanding of international laws and how the government subverted the program by soliciting illegal payments from corporations. Some of the payments were made by companies operating outside the official UN escrow account (Katzman and Blanchard 23).
If the Australian group wants to buy oil, it is required to enter into a contract with the Iraq Oil Marketing Company. The corporation is owned by the state (“Oil-for-Food” 6). The oil buying company would then seek approval from the United Nations. The permission is sought through the Ministry of Foreign Affairs. The next step is to secure the approval of the expert oil overseers. The regulators work in collaboration with the UN (Gardiner 4).
They are charged with the responsibility of negotiating for fair pricing of the country’s oil in the international market (Gardiner 36). After the pricing negotiation, the overseers would submit their recommendation to the Sanction Committee. The recommendation is used to seek approval of the pricing mechanism used. After the sanction committee had approved the pricing methodology, two overseers will then approve the contract between the Australian group and the Iraq Oil Company.
The requirements include the pricing mechanism, confirmed letter of credit, and the right quantity of oil. The oil requirement should not exceed the dollar limitation capped by the UN. The oil will then be loaded from the authorized port terminals. The first is Ceyhan in Turkey. The second is the Mina al-Bakr. The latter is on the Persian Gulf. The Australian company is expected to pay the full contractual amount into the UN escrow account (Katzman and Blanchard 22).
Critics argue that some of the Iraqi ministries dealing with contracts for the supply of humanitarian oil-for-food supplies are ordered by the government to collect illegal payments on all approved sale arrangements. The charges are often referred to as ‘after-sales service fees’ (Buffard et al. 5). The official position is that the money is used to meet the cost of administering the program. However, there is no proof that the funds are ever spent on such purposes.
Besides, it is important to note that the payments are made directly to the Iraqi government. They are not captured under the authorized escrow account (Gardiner 38). Companies that refuse to make these payments are unable to conduct any business in the oil sector. The fee is usually capped at ten percent of the value of the contract. For those who agree to pay, the contract price would be manipulated and the price hiked before presentation to the UN for authorization. The aim is to ensure that suppliers maintain their profit margins.
Information that came to light after the fall of Saddam Hussein reveals an intricate network of corruption at the international level. The practice involved politicians and businesses across the globe. They benefited from the program and, ultimately, helped keep Saddam in power (Gardiner 38). The Iraqi oil ministry claimed that there were over 270 individuals and organizations that benefited from the corruption surrounding the oil-for-food program (“Oil-for-Food” 4).
Australian Companies Participating in the Scam
There were some Australian companies implicated in the scam. A case in point is Mabey and Johnstone. The company was fined two million pounds (Buffard et al. 3). The management was accused of irregularly paying 422,264 Euros. The payment was made to secure a contract worth 4.2 million Euros. Since the crime is corruption, the prosecution should consider the Australian laws that govern business conduct both in Australia and in the international arena. There is a strong case for prosecution since the Australian government does not publicly condone the crime.
The oil-for-food contracts can be viewed as official corruption perpetrated by the government of Iraq. There is a need to ensure that offenses, such as breaching the agreements and resolutions made by the United Nations, do not occur. The 10% surcharge on humanitarian products delivered to the country is illegal. As such, companies engaging in such activities should be dealt with within the context of international law.
Buffard, Isabelle, James Crawford, Alain Pellet and Stephen Wittich. International Law between Universalism and Fragmentation: Festschrift in Honour of Gerhard Hafner. New York: Brill, 2009. Print.
Gardiner, Nile. The Final Volcker Oil for Food Report: An Assessment. Web.
Gardiner, Nile and James Phillips. Investigate the United Nations Oil-for-Food Fraud. Web.
Katzman, Kenneth and Christopher Blanchard. Iraq: Oil-For-Food Program, Illicit Trade, and Investigations. Web.
Traub, James. “Off-Target.” New Republic 232.6 (2005): 14-17. Print.