UN Oil for Food vs. US Iraq Reconstruction

I have always been a little bit curious about the way many Americans disparage the UN and look at it as a totally useless organization. One of their main targets has been the Oil for Food Program that ran in Iraq between 1995 and 2003, the program that allowed Iraq to sell a limited amount of its oil on the world market and in return receive humanitarian supplies (food/medicine) for its people. The most interesting thing about these criticisms is that a lot of them have been leveled at the same time as the gross malfeasance involved in the US Iraqi reconstruction effort. Let’s look at the two situations in context.

The Oil for Food program ran for eight years, a total of $64 billion in Iraqi oil was sold under its auspices and roughly $46 billion of this was used to provide humanitarian supplies for Iraq. Around $16 billion was used to pay reparations for Iraqi acts in their invasion of Kuwait and the rest of the money went to UN overhead (2.2%) and the cost of the UN weapons inspections in Iraq. Different investigations have claimed that Hussein was able to dupe the system through kickbacks and "surcharges" for somewhere between $1.5 billion (Volcker report), $1.8 billion (UN investigation result) and $4.4 billion (U.S.G.A.O. report). Additionally, Hussein was able to circumvent the system and sell more than $6 billion dollars worth of oil on the black market. That’s a lot of money and the kickbacks and other devices used by Hussein were made possible because of the lax oversight by the UN (and there was apparently fraud by some of the UN managers as well). According to the UN report, a total of over 2,200 different companies, including corporations in the US, France, Germany and Russia paid the kickbacks to Hussein.

The malfeasance in the US reconstruction of Iraq is still clouded by the fog of war and incompetent book-keeping, but it is already becoming clear that much of the aid to Iraq has been thrown away with little to no oversight. In recent testimony, members of the Bush administration told lawmakers that up to $3 billion of the $22-25 billion earmarked for Iraqi reconstruction has been lost through fraud and abuse by private contractors (as reported on Voice of America). I want it to be clear that I’m using this number as the best one I could find—much of the investigations are ongoing and due to the nature of the spending (“bricks” of $100 bills being passed out to contractors for security at the Baghdad airport, for instance) an exact accounting of the waste will probably never be known. But even compared to the highest figure for Hussein’s abuses under Oil for Food ($4.4 billion out of $64 billion), the fraud in Iraq is much, much worse.

As a percentage of the Oil for Food program, 5/64ths (using the highest figure, rounding up and in billions) of the funds were fraudulently obtained by Hussein, or somwehere under 10% (again, rounding up liberally). If the lower Volcker figure of $1.5 billion is used, the waste is in the 3% range. In the US program in Iraq, if we take the $3 billion dollar figure and generously accept that $25 billion has been spent, then the fraud in Iraq has been around 3/25’s of the amount spent, or somewhere over 12%. And that doesn't even include the fact that anywhere between 12-40% of reconstruction costs were security--money that does no reconstruction at all!

So where is the outcry from the right? As I mentioned before, many Americans dislike the UN but the most vocal critics come from the Heritage Foundation and other right-leaning organizations that have pounded the UN for its mismanagement and fraud in various programs. And yet there is little to no demand from these organizations for more oversight and more investigations of the more substantial graft and corruption in US programs in Iraq. I’m not saying that the UN is blameless—it’s obvious from the above that some of the people running the program were involved in fraud and many were just negligent in their oversight of the oil for food program. But for those who crow about the efficiencies of the marketplace and the superiority of private corporations over the public sector, I think this is a pretty clear showing that even a UN program riddled with fraud can outperform US corporations in Iraqi reconstruction and aid.