	Background and Structure of the Oil-For-Food Program

The establishment of the United Nations "oil-for-food" program (OFFP) reflected a longstanding U.N. Security Council effort to alleviate human suffering in Iraq while pressing Iraq to comply with all relevant U.N. Security Council resolutions. The U.N. Sanctions Committee administered the implementation of sanctions on Iraq and was responsible for ensuring that Iraq complied with all relevant U.N. sanctions, including the embargo on oil sales outside of the program, during the rule of Saddam Hussein. In order to ensure that only humanitarian objectives were served, the OFFP placed substantial controls on approved Iraqi oil exports and humanitarian imports under its jurisdiction. Accomplishments of the Program

There is a consensus among U.N. officials and outside observers that the OFFP eased substantially, but did not eliminate, severe economic hardship in Iraq. The smart sanctions plan was intended to defuse criticism by several governments, including permanent members of the U.N. Security Council France, Russia, and China, that the United States was using international sanctions to promote the overthrow of the Iraqi government or to punish Iraq indefinitely for the invasion of Kuwait. Iraq's neighbors maintained that enhanced border controls would harm their economies. Since then, Iraq has sold its oil unfettered: oil revenues are no longer held in a U.N.-run escrow account, and the program's oil sales monitoring infrastructure is no longer in operation. Since the handover of sovereignty to an Iraqi interim government on June 28, 2004, Iraq's Ministry of Trade has managed the receipt and distribution of residual contracts. Others said they were improperly named in the Iraqi newspaper because the paper sought to expose politicians that had been somewhat supportive of Saddam Hussein's regime. Non-Oil-For-Food Program Illicit Trade: Trade Protocols, Illicit Oil Sales, and Oil Smuggling

According to the IIC report, Saddam Hussein's regime earned $11 billion from illicit oil sales that began before the OFFP started and remained outside of the scope or authority of the U.N. OFFP and in violation of U.N. sanctions on Iraq. The United States and other members of the U.N. Sanctions Committee took note of Iraq's illicit oil sales to some of its neighbors but, for a number of reasons, chose not to take direct action to halt the sales or punish states or entities engaged in them prior to the onset of Operation Iraqi Freedom in March 2003. The United Nations did not formally approve this export route, and the United States argued that the trade was illegitimate and contrary to pledges made to the Bush Administration in early 2001. As in the case of Jordan, the Clinton and Bush Administrations annually waived unilateral U.S. sanctions on Turkey that could be imposed because of this illicit trade. Oil-For-Food Program: Allegations of Mismanagement and Abuse

Current allegations regarding the mismanagement and abuse of the U.N. OFFP fit into two broad categories: (1) allegations of mismanagement of the contracts and administration of the OFFP by contractors and U.N. staff, and (2) abuse of the U.N. program through vouchers, surcharges, and kickbacks by the regime of Saddam Hussein.
The "oil-for-food" program (OFFP) was the centerpiece of a long-standing U.N. Security Council effort to alleviate human suffering in Iraq while maintaining key elements of the 1991 Gulf war-related sanctions regime. In order to ensure that Iraq remained contained and that only humanitarian needs were served by the program, the program imposed controls on Iraqi oil exports and humanitarian imports. All Iraqi oil revenues legally earned under the program were held in a U.N.-controlled escrow account and were not accessible to the regime of Saddam Hussein.
The program was in operation from December 1996 until March 2003. Observers generally agree that the program substantially eased, but did not eliminate, human suffering in Iraq. Concerns about the program's early difficulties prompted criticism of the United States; critics asserted that the U.S. strategy was to maintain sanctions on Iraq indefinitely as a means of weakening Saddam Hussein's grip on power. At the same time, growing regional and international sympathy for the Iraqi people resulted in a pronounced relaxation of regional enforcement—or even open defiance—of the Iraq sanctions. The United States and other members of the United Nations Security Council were aware of billions of dollars in oil sales by Iraq to its neighbors in violation of the U.N. sanctions regime and outside of the OFFP, but did not take action to punish states engaged in illicit oil trading with Saddam Hussein's regime. Successive Administrations issued annual waivers to Congress exempting Turkey and Jordan from unilateral U.S. sanctions for their violations of the U.N. oil embargo on Iraq. Until 2002, the United States argued that continued U.N. sanctions were critical to preventing Iraq from acquiring equipment that could be used to reconstitute banned weapons of mass destruction (WMD) programs. In 2002, the Bush Administration asserted that sanctions were eroding, and the Administration decided that the overthrow of that regime had become necessary.
The program terminated following the fall of Saddam Hussein's regime, the assumption of sovereignty by an interim Iraqi government on June 28, 2004, and the lifting of Saddam-era U.N. sanctions. However, after the fall of the regime, there were new allegations of mismanagement and abuse of the program, including allegations that Saddam Hussein's regime manipulated the program to influence U.N. officials, contractors, and politicians and businessmen in numerous countries. New attention also has been focused on Iraq's oil sales to neighboring countries outside the control or monitoring of the U.N. OFFP. Several investigations revealed evidence of corruption and mismanagement on the part of some U.N. officials and contractors involved with the OFFP, and called into question the lack of action on the part of U.N. Sanctions Committee members, including the United States, to halt Iraq's profitable oil sales outside of the program over a ten year period.
This product will be updated as warranted by major developments. See also CRS Report RL31339, Iraq: Post-Saddam Governance and Security.