Memo to: Paul Volcker
As if you don't have enough trouble in preparing your final report to UN General
Secretary Kofi Annan on the so-called "Oil-for-Food Scandal," now the U.S. Justice
Department has jumped the gun and indicted Houston oilman David Bay Chalmers
Jr. and his Bayoil USA company. For what? For paying "illegal kickbacks" to
Saddam Hussein in order to get permission from Saddam to export Iraqi oil in
the oil-for-food program. Clearly what is going on here, Paul, is the White
House has encouraged the U.S. attorney general to get out of the gate before
you do. The idea is to establish in the public mind that the United Nations
presided over a corrupt mechanism that lined the pockets of Saddam and his cronies
in the American oil industry at the expense of the poor people of Iraq. And
Kofi should hit the road.
Our press corps of course does not help by writing story after story that funds
paid to the Iraqi government, roughly 2.5 percent of that charged to companies
like Bayoil, were "kickbacks" and not legitimate "fees." If they didn't pay
the fees, they wouldn't have gotten the oil. I've been waiting for your final
report to be published and make it clear that Iraq not only had every legal
right to charge fees for the taking of the oil, it charged the fees to every
company in the world that was engaged in the program. After all, Paul, do
not forget that the oil belonged to the government of Iraq in custody for its
people. That's the way it works throughout the world.
In addition, every last barrel that came out of its oilfields could not have
been lifted without the cooperation and assistance of the Iraqi government that
delivered it to the Iraqi pipelines that, in turn, delivered it to the companies
that held permits. I'm surprised Saddam only asked 2.5 percent.
Indeed, the neocon team is brazenly acting as if Saddam did something wrong
in selling Iraqi oil in violation of the United Nations embargo that we insisted
be kept on for a dozen years after the 1991 Gulf War. The UN resolution did
not prohibit Baghdad's sale of oil!!! It prohibited its purchase by UN members.
When it came to the problems associated with the embargo that affected Jordan
and Turkey, both of which depend on Iraqi oil, by now every member of Congress
knows that both the Clinton and Bush administrations turned a blind eye to the
so-called "illegal sales," or they would have had to come up with the oil from
The record is also clear, and getting more embarrassing with time, that our
government knew in 1991 that Iraq had abandoned its programs to develop weapons
of mass destruction. The UNSCOM inspectors quickly made those discoveries, and
the events since have confirmed that Iraq fully complied with that 1991 UN resolution
before the year was out. But when the other members of the UN Security Council
urged a lifting of the embargo, we insisted they remain in place until the Baghdad
regime of Saddam was replaced by one friendly to the U.S. (and to Israel).
All this brings further shame on our government, now using every trick in the
book to cover up the fact that it has waged an "illegal" war, to use Kofi Annan's
term. This, after spending a dozen years starving the people of Iraq by isolating
it in the world through our clout at the Security Council. By UN estimates,
in those dozen years 1.5 million Iraqi civilians, including 500,000 children,
died as a result of the embargo. Our former Secretary of State Madeleine Albright
famously told Leslie Stahl on 60 Minutes that this loss of life was "worth
it" to keep Saddam bottled up. In the same interview, she let the cat out of
the bag that the Clinton administration had no intention of lifting the sanctions
as long as Saddam was in power.
If you think about it this way, Paul, you will have to acknowledge that with
what we know now, there should never have been an oil-for-food program. Once
it had been determined that Iraq was in compliance, they could have resumed
oil sales, using the funds to import the food and chemicals needed to repair
the water and sanitation facilities bombed out in the Gulf War. As I wrote earlier
this year in "Who's
Behind the Oil-for-Food Scandal":
"By rough reckoning, I find that if the sanctions had been lifted
in 1991 (when they should have been lifted), Iraq would have earned enormous
amounts of money from the sale of their oil. At an average of $10 a barrel of
oil (bbl) over 14 years, they would have collected $126 billion.
"At a more reasonable average over the period of $15 to $20, the Iraqi
government would have been able to pay all its creditors and at the same time
enable the Iraqi people to return to the high living standards they enjoyed
before the Iran-Iraq war (during which, I repeat, the U.S. supported Iraq)."
You should not be surprised that the lawyer for Houston oilman Chalmers is
quoted as saying he will "vigorously dispute" the criminal charges. The indictment
Also note that Chalmers had been doing business with Iraq going back to 1980,
was well known to the government, and would certainly be given a spot near the
front of the line when Saddam's oil ministry began handing out the tickets for
oil sales. Our newspapers, including the NY Times, continue to report
as if the Iraqi oil belongs to the United Nations and companies friendly to
Baghdad should have been shut out.
To tell you the truth, Paul, it's hard for me to see how you will wiggle out
of the spot this latest move by the administration has put you in. The indictment
of Bayoil by the New York feds is of course being celebrated by The Wall
Street Journal as proof, PROOF, that Kofi Annan presided over a corrupt
oil-for-food program and should step down! If your report says otherwise, the
neocons will have no choice but to attack you for being in cahoots with Kofi.
It would be nice if you could put on the record your interviews with Saddam's
oil ministers, who could clear all this up, I'm sure. But like Saddam, they
are being held under lock and key by our puppet government in Baghdad, still
denied lawyers after almost two years in detention. Our government did permit
you and your team to interview the ministers, didn't it? There is a scandal,
but I'm afraid it isn't in Baghdad. Good luck.