Testimony of Under Secretary of State Thomas R. Pickering, Committee on Foreign Relations, Committee on Energy and Natural Resources, March 17, 1999 Mr. Chairman: I met with you almost a year ago to discuss U.S. policy towards Iraq and the role the "oil for food" program plays within it. I am pleased to be here today to update you on these issues. The Administration's policy is to contain Saddam Hussein until he can be removed from power. We will contain Iraq by maintaining sanctions on Iraq, enforcing the no-fly zones in the North and South, and by maintaining a robust military presence in the regions and a readiness to use force if Iraq reconstitutes its prohibited weapons programs, threatens its neighbors, or moves against the Kurds in the north. In addition to these elements of containment, we are also working at the United Nations to build consensus in the Security Council in support of an effective disarmament and monitoring presence in Iraq. Over the long-term, however, the only way to ensure that Saddam no longer threatens either his people or his neighbors is to work for a new government Iraq - one that will maintain the territorial integrity and unity of Iraq, respect the rights of Iraq's people and Iraq's neighbors, and fulfill Iraq's international obligations. We are committed to helping Iraqis achieve this regime change or transition. There are many tools we can use to help the, including both the $8 million in Economic Support Funds Congress has appropriated for this purpose, and the Iraq Liberation Act. In the final analysis, change has to come from the Iraqi people themselves. We cannot impose ideas or initiatives on them. In the meantime, U.N. sanctions of Iraq are critical to our efforts to contain Saddam. The sanctions deprive Saddam of the revenue he would otherwise use to reconstitute weapons of mass destruction. That is why Saddam has set the lifting of sanctions among his highest priorities. He actually declared publicly that 1998 would be the year sanctions were lifted. I'm please to report to you in March 1999 that he did not achieve his goal, nor will he short of unconditional compliance with all his Security Council obligations. It is also essential that we address the humanitarian needs of the Iraqi people. Doing so is right in itself, and crucial to maintaining Security Council and regional regime change. It is also consistent with our message to the Iraqi people that the United States I not against the people of Iraq - only the regime that is responsible for their plight. By meeting Iraq's genuine humanitarian needs, oil-for-food allows us to maintain a tough sanctions regime against Iraq. Sanction has never prohibited the import of food or medicine to Iraq. However, the regime in Baghdad has been unwilling to take full advantage of this exemption, and, therefore, in 1991, we first proposed an oil-for-food program to meet the humanitarian needs of the Iraqi people. Iraq rejected the program. In 1995, the Security Council, with full U.S. leadership and support, adopted a revised oil-for-food program, which finally accepted at the end of 1996. The first food shipments under this program arrived in Iraq in March 1997. In February 1998, based on the Secretary General's recommendations that additional funds were needed to meet the needs of the Iraqi people, the Security Council adopted an expanded oil-for-food program. That program was renewed again in November. The current oil-for-peace program permits Iraq to sell up to %5.2 billion worth of oil every six months, two-thirds of which goes towards the purchase of food, medicine and other humanitarian goods such as water and sanitation infrastructure supplies. The remaining one-third goes to pay claims arising from Iraq's occupation of Kuwait, and to pay U.N. administrative and UNSCOM costs. All revenues from Iraq's oil sales are deposited in a U.N. escrow account to which Baghdad has no access. All contracts are reviewed by the U.N. Sanctions Committee, and funds are only distributed after the contracts have been approved, and the items received in Iraq. As a member of the Sanctions Committee, the U.S. scrutinized all contracts. Because the Committee operates by consensus, we can hold or block any contract that is inappropriate or ill-advised. Oil-for-food, the largest humanitarian program in the U.N.'s history, requires that Saddam spend his own money on the thing he cares least about -- his own people. As noted, the U.N. Sanctions Committee approves the sale of all goods; U.N. monitors on Iraq's borders and inside Iraq oversee their import and distribution. In northern Iraq, the distribution is carried out directly by U.N. personnel. Oil-for-food is not a step towards lifting sanctions, nor does it reward Saddam. In fact, it makes sanctions -- his worst enemy -- sustainable. Without an oil-for-food program, history has shown that Saddam Hussein would starve his own people to force the international community to lift sanctions. Although we could use our veto at the U.N. to prevent the lifting of sanctions, the pressure of a sympathetic international community -- absent oil-for-food -- could well lead to the de facto breakdown of the sanctions regime. The oil-for-food program has had a tremendous positive impact on conditions for the average Iraqi. Since the beginning of the program, $2.75 billion worth of supplies for such things as water, sanitation, electricity and education projects, has been delivered to Iraq. The average daily food ration has increased from 1275 calories per day in 1996 to 2100 calories per day now. However, problems remain. Although malnutrition rates have declined, they are still too high. Significant work on the sanitation and water, electrical, education, agriculture and other sectors is still required. The U.S. will continue to work to improve the oil-for-food program, and to ensure that it serves its intended purpose. In February, the U.N. Secretary General reported that there are $275 million worth of medicine sitting in Iraqi warehouses undistributed. This is unacceptable, and we will work to change it We will continue to scrutinize every contract for goods under the oil-for-food program and can veto any contract that we judge to be inappropriate or ill-advised. Given the absence of UNSCOM and IAEA, which have a role in monitoring dual-use goods, we have tightened our standards for contract approval. In January, the Security Council formed three panels to examine disarmament, humanitarian and Kuwait-related issues. We expect that the humanitarian panel's report, due in mid-April, will suggest additional changes that may enhance the program's effectiveness. We also have proposed that the Security Council consider lifting the ceiling on oil sales permitted under the oil-for-food program. In the short run, Iraq would be unable to expand oil exports. To increase oil exports, Iraq first would have to repair its energy infrastructure, which will take many months. But, over time, allowing increased Iraqi oil exports would address concerns regarding the shortfall in revenues needed for humanitarian purchases. Saddam would not benefit from these increase oil export revenues. The revenues would be put in an escrow account and released only for the purchase of humanitarian goods. Lifting the ceiling also would serve to counter growing calls from Arab states and Security Council members to lift sanctions outright. By removing the root cause of calls for lifting sanctions, we free our allies in the Arab world and elsewhere to support our broader Iraq policy objectives. We also draw Security Council support away from more radical French and Russian proposals to lift sanctions altogether. All contracts would continue to be reviewed by the Sanctions Committee. The U.S., through its participation in the Sanctions Committee, would continue to scrutinize all contracts, and could hold or block any contracts we determine to be inappropriate or ill-advised. We also understand the concerns raised about the current oil market situation. As Secretary Richardson noted, Iraq is only one among several factions which has adversely impacted oil prices over the last year. Our Iraq sanctions policy, however, has never been linked to the price of oil on world markets. This was true in the early 1990s when Iraqi oil was completely off the world market, putting upward pressure on oil prices, and it remains the case today. Allowing oil price considerations to drive our sanctions decisions, or seeking to use sanctions to target oil prices, would undermine our ability to provide for the humanitarian needs of the Iraqi people as well as to maintain an international consensus aimed at containing Saddam Hussein. Were international support for effective U.N. sanctions regimes to erode, Saddam Hussein would be a much greater threat to the world community. He would quickly regain the free use of ten to fifteen billion dollars per year to put into his WMD programs. Even if his revenue were monitored, having unrestricted access to such enormous revenues would allow him to evade monitoring easily. Moreover, the prospect of Iraq without U.N. sanctions would also have a much greater negative impact on oil prices. We remain concerned about the illegal traffic of oil and petroleum products out of Iraq -- to Turkey, Jordan, Syria and the Persian Gulf. Each of these avenues presents unique problems, and we are addressing each of them differently. We continue to work with Turkey to find a way to bring illicit trade over the Turkish border within the framework of the oil-for-food program. We believe a similar approach should also be taken regarding Syria. With respect to the smuggling of Iraqi gas oil through Iranian territorial waters, we have had considerable success over the past year in combining efforts to bring third-country pressure to bear on Tehran to end the trade with more direct military actions. This has included bombing of the section of the Basra refinery devoted to this trade during Desert Fox, and the conduct of "surge operations" by the multi-national Maritime Interception Force or "MIF," in areas of the northern Gulf known to be used by the Iraqis and others as routes for smuggled cargoes. As for Jordan, although the U.N. has taken note of Jordan's trade of bartered humanitarian goods in exchange for Iraqi oil at concessionary prices, we continue to work to reduce Jordan's dependence on Iraqi oil. Although the oil-for-food program is not perfect, it is essential to our policy of containing Saddam until there is a new government in Baghdad. Without it, sanctions would be much more difficult to sustain. Saddam Hussein would once again have control over tens of billions of dollars a year to spend on weapons of mass destruction. Thank you, and I welcome any questions you may have. (End text)
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