Oil-for-food report urges reforms at UN

A report probing the United Nations' oil-for-food program in Iraq has concluded that either the UN must address the management flaws that allowed shortcomings to fester, or the world's premier international organization could lose what legitimacy it has in addressing global security challenges.

The findings, which were issued Wednesday, follow more than a year's investigation into the ambitious UN effort to aid the Iraqi people and stifle the regime of Saddam Hussein. The report sets out a list of reforms - such as creating a position of chief operating officer and a strong new independent auditing board - to avoid the kind of corruption and big-bureaucracy inefficiencies that marked the $64 billion program.

What remains in the balance now is whether the oil-for-food spotlight will shine the way to necessary changes or make an already difficult road impossible. In addition, the report casts a shadow over UN Secretary-General Kofi Annan as he has sought a broad vision of UN reform, and it raises doubts over whether he will be able to hold on through his term, which ends in December 2006.

"Reform is needed, and is needed now," said Paul Volcker, chairman of the UN-named Independent Inquiry Committee, at a press conference Wednesday. "It's not just one program.... One has to look at the whole organization."

Wednesday's presentation is the fourth and most comprehensive by the committee headed by Mr. Volcker, a former Federal Reserve chairman. Another report, due out in a month, is expected to list specific companies, including American ones, that participated in the corruption by providing kickbacks to Iraqi and program officials.

The current report comes just as the 191 member countries of the UN are debating a set of reforms to be taken up at an unprecedented international summit at the UN next week. While that might seem like fortuitous timing, experts say that it may only further muddy an already turbulent situation.

"All this is going to do is underscore the folly of those UN officials, starting with Kofi Annan, who want to change the topic from the UN's performance and reform to the objective of solving global poverty," says Joshua Muravchek, an expert in the UN at the American Enterprise Institute in Washington. "That strategy is elegant and intelligent, because who's in favor of poverty? But I don't think it's going to wash."

Indeed, the report, which contains five parts and totals more than 1,000 pages, lays partial blame on Secretary-General Annan for poor management of the program. Perhaps his shortcoming - and one reflective of the UN's overall problems - is that he didn't understand the depth of need for management reform, UN analysts say.

"One more time, the secretary-general is out to lunch. He doesn't seem to understand the process," says Edward Luck, a longtime UN expert at Columbia University in New York. Noting that it was Annan who "loaded up" the reform process with a long list of issues unrelated to the management problem, Mr. Luck says, "There are real questions about whether or not he remains in office."

But the report has criticism for others, too. It cites past UN officials and Security Council members, including Russia and France, for allowing conditions that permitted corruption to deepen over the program's seven-year life span.

While critical of those directly involved in corruption, the report does not let the United States off the hook. It faults the US for overlooking the smuggling of Iraqi oil into Iraq's neighboring countries, including Jordan.

Still, the report does not link Annan to a contract awarded to a Swiss company that employed his son Kojo - one of the key unanswered elements that critics have been watching.

The inquiry has also yielded positive findings. It concludes that the oil-for-food program largely achieved its two goals: to feed the Iraqi people with Iraq's own oil money and to prevent Mr. Hussein from rebuilding a military that could threaten the region.

"The fact is that the US government and others were well aware the program had these weaknesses, yet [they] retained it because it continued to serve its basic purpose," says James Dobbins, an international security expert at the RAND Corp. in Arlington, Va., who has served in both the Bush and Clinton administrations.

Mr. Dobbins says there is "definitely room for improvement in UN management." But he also says that the virulent American criticism of the UN incited by the oil-for-food problems overlooks the fact that neither US nor UN money was lost in the fraud.

"It's important we remember it was all Iraqi money," Dobbins says. He also maintains that the extent of fraud and corruption was relatively limited, given the mammoth size of the program.

Still, some members of Congress have already called on Annan to resign. And the House of Representatives has voted to cut US funding for the UN in half if certain management reforms are not accomplished.

The Bush administration has not favored either Annan's resignation or the funding cut, but most analysts see US pressure on the UN rising - with uncertain consequences for the international institution. The UN requires US leadership in order to function, experts say, but at the same time, America's traditional disregard of the organization may doom its ability to reform.

As for such reforms, Mr. Muravchek of the American Enterprise Institute doubts that the creation of a chief operating officer position, for example, would have much impact. "We've seen that kind of thing before," he says, citing the creation - at US insistence - of an assistant secretary-general for management in the 1990s.

That didn't solve the problem, he says, arguing, "I don't see why this new position would."