IRAQ: Waste, Fraud and War

MUNICH -- United Nations officials conspire with Iraq's Baathist regime to split oil rake-offs. U.S. officials stuff millions of dollars into gunnysacks to pay bills they cannot possibly substantiate. Contractors pocket other millions and then argue in a U.S. court that they cannot be prosecuted: The money was Iraqi, not American.

The picture that emerges from multiple, overlapping inquiries into the world's management of Iraq's people and oil wealth since 1991 is appalling. It is a portrait inhabited by crooks, inept managers and ostensibly well-meaning diplomats and security experts with hidden agendas.

One constant unites this group: Selfish priorities always outranked the true needs of the Iraqi people. In separate and unequal measure, greed, ideology, cronyism and political imperatives in a U.S. election year came first in the man-made hell of Iraq.

The wholesale theft and tyranny of Saddam Hussein's regime long ago ceased to surprise Iraqis. But fresh outrage stirs as the shoddy handling of the U.N. oil-for-food program is exposed, and as a stench rises over the cavalier fashion in which billions of Iraqi dollars were used -- misused? -- by the overwhelmed or oblivious U.S. occupation authorities who have run Iraq since 2003.

This outrage has bearing on the makeup and the policies of the Iraqi transitional government elected on Jan. 30. It is no accident that Ahmed Chalabi -- the Iraqi politician who has done the most to bring to light both the U.N. scandal and the questionable financial practices of the Coalition Provisional Authority under Paul Bremer -- has emerged as a leader in the victorious, predominantly Shiite coalition.

Chalabi is a polarizing figure, in part because of a deep, unmasked anger over the way he feels Iraq's population was mistreated in turn by the Baathists, by the United Nations after it took responsibility for enforcing the cease-fire that ended the Persian Gulf War in 1991, and by Bremer and his administrators.

Chalabi's related -- and relentless -- campaigns to force full accounting for the use of Iraqi funds by the United Nations and by Bremer were among the reasons the former Iraqi exile was targeted for marginalization by the Bush White House last year as Washington was wooing the United Nations to take on greater political responsibility in Iraq. Some injudicious and politically embarrassing press remarks by Chalabi that infuriated Bush were also a factor.

But Chalabi's anger over squandered billions in Iraqi oil revenue, which was supposed to be under international supervision, is a political plus in post-election Iraq. It helps explain his enhanced standing among Shiite decision makers.

U.S. congressional inquiries, press accounts and Paul Volcker's interim oil-for-food report to U.N. Secretary General Kofi Annan have all relied heavily on documents provided by Chalabi's Iraqi National Congress. Chalabi also was instrumental in publicizing and partially blocking a suspicious $300 million arms deal brokered by the Iraqi defense minister in the Bremer-blessed interim administration.

Ironically, Chalabi's work on the financial chaos of Bremer's authority and on the sanctions-busting smuggling of oil to Syria, Turkey and Jordan -- Chalabi was convicted of fraud by a rigged military court in Jordan -- helps provide U.N. officials with a defense against the oil-for-food accusations: They claim that Washington was complicit in whatever happened before the invasion and has since done no better than they did.

This "so's your old man" retort falls short on Capitol Hill. Sen. Lindsey Graham (R-S.C.) and others have introduced legislation to cut U.S. funding for the United Nations if the oil-for-food matter is not cleared up. The administration does not actively oppose the legislation.

Graham was here last weekend for the Munich Conference on Security Policy. So was Annan, who has given Volcker a free hand and promised thorough change. That response has stemmed earlier calls for his resignation.

"Resigning is not the issue," Graham told me after listening to Annan. "The issue is that the United Nations had no vision of what oil-for-food was supposed to accomplish, which was to weaken the dictator, not provide opportunities for self-dealing. Change must come at the vision level."

Graham frames the big issue well. An exaggerated concern for the "sovereignty" of a regime that had been branded an outlaw and put under U.N. responsibility enabled the Baathists -- and corruption -- to flourish under sanctions.

Iraqis will have little sympathy for the U.N. defense, or for the one mounted by lawyers for the Custer Battles LLC security firm, which is being prosecuted on fraud charges for work done in Iraq under Pentagon contract. Custer's lawyers have urged a Virginia judge to dismiss the charges because payment came from "Iraqi funds, not U.S. funds."

Marie Antoinette would no doubt have added: The people? Let them drink oil.

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