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October 12, 2004

Cheney's Oil-for-Food Switcheroo


by Jason Leopold

When the Iraqi Survey Group released its long-awaited report last week that said Iraq eliminated its weapons programs in the 1990s, President George W. Bush quickly changed his stance on why he authorized an invasion of Iraq. While he campaigned for a second term in office, Bush justified the war by saying that Saddam Hussein was manipulating the United Nations' oil-for-food program, siphoning off billions of dollars from the venture that he intended to use to fund a weapons program.

The report on Iraq's nonexistent weapons of mass destruction, prepared by Charles Duelfer, a former UN weapons inspector and head of the Iraqi Survey Group, said Saddam Hussein used revenue from the oil-for-food program and "created a web of front companies and used shadowy deals with foreign governments, corporations, and officials to amass $11 billion in illicit revenue in the decade before the U.S.-led invasion last year," reports The New York Times.

"Through secret government-to-government trade agreements, Saddam Hussein's government earned more than $7.5 billion," the report says. "At the same time, by demanding kickbacks from foreign companies that received oil or that supplied consumer goods, Iraq received at least $2 billion more to spend on weapons or on Saddam's extravagant palaces."

The oil-for-food program was supervised by the UN and ran from 1996 until the war started in Iraq last year. It was designed to alleviate the effects sanctions had on Iraqi citizens by allowing limited quantities of oil to be sold to buy food and medicine.

But the one company that helped Saddam exploit the oil-for-food program in the mid-1990s that wasn't identified in Duelfer's report was Halliburton, and the person at the helm of Halliburton at the time of the scheme was Dick Cheney. Halliburton and its subsidiaries were one of several American and foreign oil supply companies that helped Iraq increase its crude exports from $4 billion in 1997 to nearly $18 billion in 2000 by skirting U.S. laws and selling Iraq spare parts so it could repair its oil fields and pump more oil. Since the oil-for-food program began, Iraq has sold $40 billion worth of oil. U.S. and European officials have long argued that the increase in Iraq's oil production also expanded Saddam's ability to use some of that money for weapons, luxury goods and palaces. Security Council diplomats estimate that Iraq was skimming off as much as 10 percent of the proceeds from the oil-for-food program thanks to companies like Halliburton and former executives such as Cheney.

UN documents show that Halliburton's affiliates have had controversial dealings with the Iraqi regime during Cheney's tenure at the company and played a part in helping Saddam Hussein illegally pocket billions of dollars under the UN's oil-for-food program. The Clinton administration blocked one deal Halliburton was trying to push through because it was "not authorized under the oil-for-food deal," according to UN documents. That deal, between Halliburton subsidiary Ingersoll Dresser Pump Co. and Iraq, included agreements by the firm to sell nearly $1 million in spare parts, compressors and firefighting equipment to refurbish an offshore oil terminal, Khor al-Amaya. Still, Halliburton used one of its foreign subsidiaries to sell Iraq the equipment it needed so the country could pump more oil, according to a report in the Washington Post in June 2001.

The Halliburton subsidiaries, Dresser-Rand and Ingersoll Dresser Pump Co., sold water and sewage treatment pumps, spare parts for oil facilities and pipeline equipment to Baghdad through French affiliates from the first half of 1997 to the summer of 2000, UN records show. Ingersoll Dresser Pump also signed contracts – later blocked by the United States, according to the Post – to help repair an Iraqi oil terminal that U.S.-led military forces destroyed in the Gulf War years earlier.

Cheney's hardline stance against Iraq on the campaign trail is hypocritical considering that during his tenure as chief executive of Halliburton, Cheney pushed the UN Security Council to end an 11-year embargo on sales of civilian goods, including oil-related equipment, to Iraq. Cheney has said sanctions against countries like Iraq unfairly punish U.S. companies.

During the 2000 presidential campaign, Cheney adamantly denied that under his leadership Halliburton did business with Iraq. While he acknowledged that his company did business with Libya and Iran through foreign subsidiaries, Cheney said, "Iraq's different." He claimed that he imposed a "firm policy" prohibiting any unit of Halliburton trading with Iraq.

"I had a firm policy that we wouldn't do anything in Iraq, even arrangements that were supposedly legal," Cheney said on the ABC-TV news program This Week on July 30, 2000. "We've not done any business in Iraq since UN sanctions were imposed on Iraq in 1990, and I had a standing policy that I wouldn't do that."

But Cheney's denials don't hold up. Halliburton played a major role in helping Iraq repair its oil fields during the mid-1990s that allowed Saddam to siphon off funds from the oil-for-food program to fund a weapons program, as Cheney and President Bush insist was the case.

As secretary of defense in the first Bush administration, Cheney helped to lead a multinational coalition against Iraq in the Persian Gulf War and to devise a comprehensive economic embargo to isolate Saddam Hussein's government. After Cheney was named chief executive of Halliburton in 1995, he promised to maintain a hard line against Baghdad.

But that changed when it appeared that Halliburton was headed for a financial crisis in the mid-1990s. Cheney said sanctions against countries like Iraq were hurting corporations such as Halliburton.

"We seem to be sanction-happy as a government," Cheney said at an energy conference in April 1996, reported in the oil industry publication Petroleum Finance Week.

"The problem is that the good Lord didn't see fit to always put oil and gas resources where there are democratic governments," he observed during his conference presentation.

Sanctions make U.S. businesses "the bystander who gets hit when a train wreck occurs," Cheney told Petroleum Finance Week. "While virtually every other country sees the need for sanctions against Iraq and Saddam Hussein's regime there, Cheney sees general agreement that the measures have not been very effective despite their having most of the international community's support. An individual country's embargo, such as that of the United States against Iran, has virtually no effect since the target country simply signs a contract with a non-U.S. business," the publication reported.


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  • Jason Leopold is the former Los Angeles bureau chief of Dow Jones Newswires. He spent two years covering the Enron bankruptcy and the California energy crisis. He just finished writing a book on the energy crisis, due out in December through Rowman & Littlefield.

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