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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)