Over the course of the Iraq war, a lot of opponents of the war have made a big noise about corruption among US contractors, the most common target being Halliburton. More recently, the pro-war blogosphere has been in an uproar over the ‘discovery’ that Saddam bribed a range of officials, including some in the UN, so that he could get kickbacks from the sale of oil, which was supposed to be used solely for the purchase of food and other essential imports. There has been a sense of baffled rage that no-one is much interested in pursuing these ‘discoveries’.
The scare quotes around ‘discovery’ reflect the fact that everyone who was paying any attention knew about this all along, and, indeed could deduce it from first principles. For example, in a piece on financing the reconstruction of Iraq written in May 2003, I observed
A return to normal output would yield gross income of around $US 20 billion per year at current prices, but most of this money was already being spent under the Food-for-oil program and most of it be needed for the same purpose in future. About 25 per cent of the money was taken to pay interest on debts associated with reparations for the 1991 War. If these were forgiven, some additional money would become available. In addition, it appears that Saddam managed to cream off $1 billion to $2 billion per year. If this were returned to the Iraqi people in general, it would make a small but positive contribution.
I didn’t bother to point it out, but it was obvious that Saddam could only get his cut by bribing those on the other side of the deal, that is, employees of the UN, the oil companies and the governments involved.
In the same piece, I made the point that the US contractors doing the work in Iraq were bound to charge a lot and deliver little, so that the cost of reconstruction would be far beyond the minuscule amounts that had then been budgeted. The appropriate response was not to complain about corruption but to accept reality and the need to spend a lot more money.
Iin both cases, it was, or ought to have been, obvious that the policy in question would produce corruption. That was why the US and UK initially tried to keep sanctions much tighter, with the result that thousands of Iraqi children died of starvation or inadequate medical treatment. Those who supported the Oil-for-Food program, knew, or ought to have known, that Saddam would take a large cut, and supported it anyway. Those who supported large-scale expenditure on reconstruction after the war knew, or ought to have known, that unscrupulous contractors would make a fortune, and supported it anywar. I’m happy to admit to supporting both policies, and to accepting corruption as one of the inevitable costs.
Having said all that, corruption is a crime and those guilty of it should be punished. But, unless you favor starving Iraqi children or doing nothing about reconstruction, trying to use either Halliburton or ‘UNSCAM’ to score points regarding the desirability or otherwise of the war is just silly.
The same points about inevitable consequences of policy can of course be made in relation to the exposure of torture at Abu Ghraib and elsewhere. The policies of the Administration (detention without trial, repudiation of the Geneva conventions, employment of mercenaries) were bound to produce this outcome. Anyone who supported the policies knew, or should have known, what the results would be. That doesn’t detract from the guilt of those who actually committed the crimes, but it does mean that we should stop focusing on particular crimes and look at the policies that produced them.
John Quiggin 
“The scare quotes around ‘discovery’ reflect the fact that everyone who was paying any attention knew about this all along, and, indeed could deduce it from first principles.”
i feel the same way about the ‘non-discovery’ of WMDs.
nice analysis. this statement is excellent:
“Having said all that, corruption is a crime and those guilty of it should be punished. But, unless you favor starving Iraqi children or doing nothing about reconstruction, trying to use either Halliburton or ‘UNSCAM’ to score points regarding the desirability or otherwise of the war is just silly.”
this is how i feel about the pre-emptive war in general. just because the war is terrible, and the reconstruction has been terrible doesnt mean we shouldnt have done something about iraq at all. (i respect those anti-war bloggers who think the costs outweighed the benefits. we just evaluated the situation differently)
well done a great post. although like quiggin i stress that we should continue to crack down on corruption and prison abuse.
I think the question isn’t that corruption was inevitable, but did the levels of corruption exceed what should be expected. Perhaps if, in both cases, there had been more transparency the corruption would have been of negliable proportions.
To me, the interesting question about oil-for-food corruption is whether the bribes influenced the anti-‘smart’-sanctions and anti-war positions of France and the USSR.
Gee dont tell Tim Blair you wrote that
“To me, the interesting question about oil-for-food corruption is whether the bribes influenced the anti-‘smart’-sanctions and anti-war positions of France and the USSR.”
Since an end to sanctions would have meant an end to bribery, I don’t think you can make this analysis work.
“Since an end to sanctions would have meant an end to bribery, I don’t think you can make this analysis work.”
One of your sillier comments, John. Bribery is to the politics of France and Russia as whoring is to Las Vegas. (I always loved Shevardnadze’s line about Soviet politics: “Of course I’m honest. I only TOOK bribes; I never GAVE any bribes”). Add oil contracts to the mix and you can be certain that kickbacks to French political parties, and million-dollar gifts to Russian pols and FSB officers, will not be far behind.
In ay case Saddam did not require the sanctions to offer exclusives to French and Russian oil companies on developing Iraqi reserves worth billions of dollars. Given the incestuous nature of the French political class’s relation to the directors of TotalFinaElf, it’s fair to assume that some portion of the profits on the W Qurna 20 bn barrels of reserves boondoggle would be sloshed back to the RPR (and in due course to the Socialists).
As to kickbacks to Russian politicians from oil deals signed with LUKoil and others, I’d recommend to talk with some private bankers in Geneva about the size of their Russian politicans’ numbered accounts. (Think eight-to-nine figures.)
Obviously, France and Russia’s opposition to US/UK policy on Iraq had everything to do with protecting an extraordinarily lucrative client relationship and nothing to do with preserving international law or security or human rights. Their UNSC votes were quite literally bought, though not entirely paid for. But then, the Russian state is well acquainted with default risk….
Finally, the silliest part of your attempted equation of Halliburton’s overcharging–which was thoroughly investigated and punished, with due recompense made and guilty parties fired by halliburton– and the African-style (or dare I say Russian-style) fiasco of UNSCAM, which is still being stonewalled by Annan, is of course SCALE.
How much did H overcharge the US govt? A few millions? And how much did Saddam and his pimps in NYC Paris and Moscow steal from the good citizens of UN member countries and from the citizens of Iraq? Tens of BILLIONS. The UN has admitted it cannot account for an additional $4.4 BILLION of aid for the Kurds that magically diappeared under Annan-Sevan’s watch.
Leave aside the farce of the UN non-audit procedures and the current coverup. Three to four orders of magnitude would also suggest a wee bit of difference between the two cases, does it not?
I mean, we know you’re an economist, but try, John, TRY.
Rgds,
Tombo
You’re good with numbers.
As far as orders of magnitude are concerned, the evidence I’ve seen suggests that the standard rate of overcharging by contractors to the CPA is between 25 and 100 per cent. Apply that to a budget that is supposed to be $20 billion, and you’ve got a number that’s well into the billions, that is, of the same order of magnitude as the Saddam-related scams. Feel free to adjust the parameters if you have evidence to support better ones.
To be clear, I’m rough on you because I generally find your thoughts worth reading. So at the risk of asking you to step in the shit again, I ask:
Are you seriously trying to equate the CPA contracts with the largest money-laundering and influence-peddling scandal in history?
Perhaps you’re just screwing around. Alternatively, you seem to think you’ve come across a daringly unconventional defense of UNSCAM. In any case I hope for the sake of your academic credibility that you don’t promote such a ridiculous equation in front of your students.
Best,
Tombo
One more thought: I persist in this because it seems that discussions in the West (if that term still has any meaning) of matters related to the Iraq war seem to have devolved into the intellectuals’ equivalent of sport. Who cares about the Iraqis or their future when you can sock it you your enemy on the other side of the great politico-cultural divide?
Forget about elections in Iraq, or the complete marginalization by every Shi’a leader of Boy Sadr and his militias, or the elections that have already taken place in much of the country and that have put moderate, non-Islamist candidates in local office. None of that matters so long as Iraq is important only as (Fouad Ajami’s scathing term) an “electoral playground” for us.
From the view of Iraq-as-sport, then sure, it makes sense to try to spin the spectacle of French and Russian pols, priests and oil executives rallying behind Saddam in exchange for billions in oil-related business as nothing more than ordinary business.
T
tombo, in this instance it’s you who wants to play this as a partisan story, and me who’s calling for the game to end. Both sides in the Iraq debate have made great play of corruption scandals while the world as a whole (including as far as I can see most Iraqis) have paid almost no attention.
You ask “Are you seriously trying to equate the CPA contracts with the largest money-laundering and influence-peddling scandal in history?” but this is pure wishful thinking. The only people for whom this is a big story are bloggers, and a handful of veteran scandalmongers like Safire.
For the rest of us, “the spectacle of [insert nationality] pols, priests and oil executives rallying behind [insert dictator] in exchange for billions in oil-related business” is indeed, “nothing more than ordinary business”, deplorable, but not surprising.
I know of course that this is frustrating for those who think it ought to be a big scandal. I feel the same about Bush’s failure to go after Zarqarwi.
John,
I would love nothing more than to drop this, but it’s disappointing that someone who considers himself progressive or liberal cannot see the moral difference between overcharging a government for contracting work and manipulating a humanitarian program.
Halliburton cost the government a few million $, and has paid it back.
The manipulation that was UNSCAM cost hundreds of thousands of Iraqis their lives.
Rgds,
T
Tombo, I’ve checked the figures on bribes associated with food-for-oil, using this anti-UN site. This has data supplied by a Chalabi associate on the recipients of vouchers to import oil from Iraq, so I don’t think there’s much danger of an underestimate.
I’m accepting the site author’s estimate that these vouchers were worth about 0.20 per barrel, giving a total value for the entire voucher issue of $811 million. (this is consistent with the entire exports from the program being around $70 billion).
I’ve taken the view that any issue of a voucher to an individual or political party/group is, on the face of it, a bribe, but that vouchers issued to oil companies or governments are, on the face of it, legitimate (after all, somebody had to buy the oil). My rough estimate is that the total value of presumptive bribes was $180 million. That’s quite a lot of money, but not world-class as these things go. For comparison, Halliburton made is alleged to have made $150 million in the fuel deal alone.
The vouchers aren’t even the half of it. Start with $4.4 BILLION in disappeared funds that the UN General Secretariat itself has admitted it cannot account for. This alone makes a mockery of your comparison, but it gets worse.
Add to this hard figure of $4.4B–again, the UN has ADMITTED that this aid for the Kurds has simply vanished– other massive sums that simply disappeared due to phantom non-oil purchases, the extraordinary overcharging for non-humanitarian purchases (cars, a stadium, equipment for ministries) and you arrive at still more BILLIONS that Saddam and his charming sons have salted away in offshore accounts.
Again, it seems bizarre that I need to point this out to a left-liberal academic, but since you, perversely, seem so determined to ignore it, I’ll remind you that the massive UNSCAM theft was directly related to a mass murderer’s willingness to starve and deny medicine to hundreds of thousands of his own people.
UNSCAM was, quite literally, a blood-for-oil windfall. There is no Halliburton comparison to UNSCAM that is not either fatuous or morally repellent, or both.
T
tombo, we seem to be back at my original post. Everyone knew Saddam was creaming off billions for his own use, and (nearly) everyone accepted that this was an inevitable cost of feeding Iraqi children. This is not a scandal, unless you only found out recently that Saddam was (and I suppose still is) an evil man.
If you want to go on about this you should clarify whether, given the knowledge of Saddam’s rake-offs, you think the program should have been stopped. If not, what is your point?
The scandal is the bribes paid to other parties. As I’ve pointed out, these were significant, but a long way from being the scandal of the century (and the century is only four years old). As I’ve pointed out the Halliburton ripoff was comparable in magnitude, not to mention Enron, Worldcom etc.
“Everyone knew Saddam was creaming off billions for his own use, and (nearly) everyone accepted that this was an inevitable cost of feeding Iraqi children. This is not a scandal, unless you only found out recently that Saddam was (and I suppose still is) an evil man.”
(sigh) How obtuse can you be? The whole point of this scandal was that Saddam was deliberately preventing food from reaching Iraqi children! The refusal of Sevan and Annan to properly manage the program directly contributed to Saddam’s diversion of funds away from humanitarian purposes. This is what distinguishes this blood-for-oil contracts scandal. That a left-lib cannot see this is unsettling.
“If you want to go on about this you should clarify whether, given the knowledge of Saddam’s rake-offs, you think the program should have been stopped. If not, what is your point?”
YES. The program should have been stopped, and the international “community”, such as it is, should have recognized that this program’s colossal failure indicated that containment itself was a failure.
A moral failure, because of the starvation of thousands of Iraqi children each month, and a strategic failure, because surely if Saddam could so easily skim billions under the UN’s nose from willing intermediaries all over the globe–including senior government officials from nuclear powers such as Russia and France– then surely Saddam could also easily acquire chem or bio or other WMD weapons capabilities.
So the only alternatives to a failed containment policy were either to overthrow Saddam by external force, or (the oilmen’s and French and Russian favorite) to do business with Saddam.
Which is why, again, the war to overthrow Saddam–contrary to the oil and Franco-Russian pimps’ preferred policy– was the least bad option, and certainly the morally superior option.
tombo, even with the money skimmed off by Saddam, the program worked well enough that deaths from malnutrition and disease dropped to a fraction of the rates prevailing before it was introduced. Here’s a report of a UK government press release.
Of course, it was undesirable that Saddam should be allowed to steal $5 billion or so, but this scarcely counts as a motive for a war that has cost over $100 billion and tens of thousands of lives.
And as regards the line that Saddam was using this money to acquire WMDs, have you read the most recent NYT?
So the Blair government’s PR machine, so recently accused of shamelessly manipulating facts regarding the war, is now your authoritative source for the number of sanctions-related deaths in Iraq?!
You’re in the shit up to your knees now, John.
Let’s try a slightly more reliable source, shall we? UNICEF, perhaps? According to Fareed Zakaria:
“UNICEF estimated that the containment of Iraq was killing about 36,000 Iraqis a year, 24,000 of them children under the age of 5. In other words, a month of sanctions was killing far more Iraqis than a week of the war did.”
Zakaria makes my point: Containment FAILED. OF all the bad options we had regarding the Saddam-Uday-Qusay’s slaughterhouse, the least bad option, by far, was to overthrow it by force– and overthrow necessarily meant via US troops.
Zakaria:
“This humanitarian catastrophe was being broadcast nightly across the Arab world. Policy on Iraq was broken. We had to move one way or the other. Either we could lift sanctions and welcome Saddam back into the community of nations, or we could rid Iraq and the world of one of the most evil dictatorships of modern times.”