US House congressional leaders earlier this month sharply criticized the United Nations' management of oil revenues under its Iraq oil-for-aid program and called for strong US involvement in controlling future oil receipts.
"I see no need to continue the United Nations' Oil-For-Food program and to allow the UN to control oil revenues that rightly belong to the Iraqi people, when the UN lacked the will to enforce its own sanctions against a tyrant and thereby liberate the Iraqi people from unspeakable atrocities," said House Energy and Commerce Committee Chairman Billy Tauzin (R-La.) at a subcommittee hearing on the subject. "Continuing the Oil-for-Food program will only guarantee to again enslave the Iraqi people by denying them the only means they have to preserve the freedom they now have."
House Subcommittee Energy and Air Quality Chairman Joe Barton (R-Tex.) said he will send a letter to the UN asking that Congress receive a "full accounting" of the current oil aid program. Barton acknowledged that Congress does not have the authority to subpoena the UN's records, "but I encourage the UN to fully explain this program that has not been externally audited."
Barton has been a frequent critic of the UN program since it was established in the late 1990s as a way to avert the humanitarian crisis that developed in the wake of Gulf War I and subsequent international sanctions.
The UN is soon expected to agree on a way to phase out the oil-for-aid program. The latest draft would have a 6-month, instead of 4-month transitional period before the current program expires June 3.The newoil fund wouldbe controlled by the US and UK, although there would be UN oversight. The draft also seeks to shield the fund from legal entanglements associated with contracts awarded under deposed President Saddam Hussein.
Contract selection reviewed
Meanwhile, House Democrats, led by Energy and Commerce ranking members Reps. John Dingell (D-Mich.) and Henry Waxman (D-Calif.) want hearings held on the Pentagon's oil services contract selection process. The Army Corps of Engineers was planning to open up for competitive bid a new round of contracts for more extensive reconstruction work but has not received instructions from the Pentagon on when to proceed.
US officials familiar with the situation say the process has been delayed because Pentagon officials are focused on sorting through a myriad of logistical problems related to widespread looting that occurred following the end of the war.
The corps is currently administering a controversial sole-source contract with Halliburton Co.'s KBR subsidiary for emergency war repairs and related environmental clean-ups.
KBR has performed about $50 million of work on a contract that could be as much as $600 million over a 2-year span. That figure could go possibly higher if the Pentagon asks KBR to expands its work scope, industry sources said.
Waxman and Dingell last month called on the General Accounting Office to determine if the Pentagon offered preferential treatment to the oil services company (OGJ Online, Apr. 15, 2003).
State Department, Pentagon comments
Another House panel, the Committee on International relations, also held a May 15 hearing on US policy in Iraq and featured representatives from the departments of State and Defense. Alan Larson, undersecretary for economic, business and agricultural affairs, said that it is Iraqis who control the day-to-day decision in the oil sector.
"That is true today and will be true for the future," Larson said.
US officials have stressed that during this interim period, neither US officials nor their Iraqi advisors will engage in new development or act on development contracts signed under Saddam Hussein's regime.
"Decisions related to future development of the sector, including the establishment of new export routes, will be left for a new Iraqi government, elected by and responsible to all Iraqis," Larson said.
The next day, Phillip Carroll, a former oil executive chosen by the Pentagon to advise Iraq's oil ministry, told the Washington Post that Iraq may want to disregard quotas set by the Organization of Petroleum Exporting Countries. "Historically, Iraq has had, let's say, an irregular participation in OPEC quota systems," Carroll said, the Post reported.
"They have from time to time, because of compelling national interest, elected to opt out of the quota system and pursue their own path. ...They may elect to do that same thing. To me, it's a very important national question," Carroll said, according to the Post report.
Carroll also suggested that Saddam-era oil contracts may be voided by a new government.
A White House spokesman later stressed that it should be a freely elected government making any decisions about OPEC's participation as well as the future organization of the Iraq's oil sector. But the timing of when that will happen continues to be unclear.
US officials say the first important step—the installation of an Iraqi transitional government—now is likely to happen by mid-July instead of in June.