The Telegraph
Since 1st March, 1999
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- Compared to Mitrokhin's revelations, Volcker's are peanuts

What goes on in the Middle East is an interplay of forces between Jews, Arabs, Persians. In the six-day war in 1967, Israel defeated the Arabs and seized Sinai and Gaza from Egypt, the West Bank (of the Jordan River) from Jordan (once called Transjordan) and the Golan Heights from Syria. In the Yom Kippur war of 1973, Israel outflanked and cut off the Egyptian army, and Egypt had to sue for peace to save it. It thus ended forever Arabs' hopes of defeating it militarily. Their immediate response was to cut oil supplies by 5 per cent; that led to the first oil crisis of 1973. The longer-term consequences are still working out.

Iraq had sent its army to fight in both the wars. In the first, it had 10 killed and 30 wounded. In the second, its Syrian allies held back, so neither fought. But Iraq cut off diplomatic relations with the United States of America in 1967, and gave asylum to Abu Nidal, a lieutenant of the Palestine Liberation Army, in the Seventies. So it was a natural candidate when the US compiled its first list of states sponsoring terrorism in 1979.

Iraq had squabbled with Iran over borders ever since it was created out of the ruins of the Ottoman Empire after World War I. So when Ayatollah Khomeini got into trouble with the Shah of Iran in the Sixties, it gave him asylum. He lived an eventless life in Najaf, the holiest city of the Shias. But in 1975, Iraq signed a peace agreement with Iran. In a friendly overture to Iran, it asked the Ayatollah to leave. He went to Paris in 1977. Two years later, he returned in triumph to Teheran when Islamist revolutionaries overthrew the Shah. The Shah had been a prot'g' of the US since he dismissed his nationalist prime minister, Mohammed Mossadeq, in 1953. So the Iranian rebels were no friends of the US. They made it their enemy when they took the staff of the US embassy hostage in 1979.

So when Iraq attacked Iran in 1980, the US did not have to take sides between its two enemies. But the war created a market for arms and material which it did not want to leave to the British and the French. And Iran was an evangelical state; if it won, it would take over Iraq, and threaten the rickety monarchy of Saudi Arabia, whose oil was vital to the US. So in 1982, it removed Iraq from the list of terrorist-sponsoring countries. In 1983, President Ronald Reagan called Donald Rumsfeld, who had been President Ford's defence secretary, and sent him to meet Saddam Hussein. The reconciliation paid off. Saudi Arabia and Kuwait, both American client countries, gave Saddam generous loans to fight the war. In December 2002, Iraq was made to declare its arms. Washington deleted 8,000 pages from it. Tageszeitung, a German daily, got hold of them; they mentioned 24 US corporations, 55 US subsidiaries of non-US corporations, and several US government agencies that helped Iraq in the Seventies and Eighties.

So when the Iran-Iraq war ended in 1988, Saddam could well have thought that the US was benign; that if it could tolerate his use of anthrax, tabun and mustard gas against the Iranians and Kurds, it would forgive some further minor infractions.

So he sought to solve two problems with one shot. First, Iraq had borrowed heavily from Kuwait. Second, Iraq's opening to the sea is narrow; a small force can bottle it up by occupying the 50 miles of coastline between Iran and Kuwait. When World War I broke out, an Indian expeditionary force of 5,000 men had closed this chicken's neck and taken Basra within a fortnight. Iran attacked ships approaching Basra during the Iran-Iraq war, and severely hampered Iraq's maritime links. So in 1990, Saddam decided to widen the opening. He invaded Kuwait on August 2, 1990, and took it in three days.

However, he had not reckoned on the US interest in Saudi Arabia. Its Hama oilfields lay within a couple of days' march from Kuwait. The US moved troops to Saudi Arabia on August 7. It mobilized the United Nations security council, which imposed sanctions and an embargo on Iraq under Resolution 661 of August 2, 1990. In the next four months, the US massed half a million troops and persuaded 34 other countries to send another 160,000 men under the UN flag. On January 17, 1991 it launched Operation Desert Storm, carrying out 1,000 sorties on the first day. Within a month, it had taken Kuwait and destroyed the bulk of Iraq's army. It lost 239 soldiers; its allies lost another 50. Iraq lost 56,000 according to one estimate. Bombs destroyed two-thirds of Iraq's power generating capacity and crippled water treatment facilities in most cities and irrigation in rural areas.

Worse was to come, for Iraq produced little beyond oil, and the sanctions hurt it badly. Since that war did not extinguish the government of Iraq, it should have ended with some peace agreement. But the victor was not a country, but a committee of selected member states of UN security council, which derived its mandate from a string of UN resolutions. These resolutions outlined as early as August 1991 the elements of what later became the oil-for-food programme. But such was the distrust of Iraq and the unwieldiness of UN bureaucracy, that civilian distress mounted in Iraq. An American demographer estimated an increase in deaths of 111,000 in 1991, 70,000 of them children. By 1995, some half a million children had died who could have lived in the absence of sanctions.

Children's deaths and dysfunctional hospitals made news in the West, and pushed its governments towards a relaxation of the embargo, embodied in UN resolution 986 of 1995. Negotiations between Iraq and the UN took 16 months. At their end, an arrangement was worked out by which Iraq would issue coupons to allocate oil amongst buyers, who were to make payments for it into an escrow account. This account would be used first to pay reparations to Kuwait, next to pay the expenses of the UN policing operation, and finally, out of what remained, to allow Iraq to buy specified 'humanitarian' goods. Nothing would go to the Iraqi government, which had always depended on its oil revenue.

That is why the Iraqi government found means to make a deal with buyers of its oil and sellers of 'humanitarian' goods to it whereby they shared their profits with it. It also arranged to have some of those profits paid to its friends.

It is amongst the latter that the name of Natwar Singh figures. Masefield AG, a Swiss-registered company, was allotted 4 million barrels, of which it lifted 1.936 million; the cut may have amounted to Rs 80-100 million. The Congress lifted another 1 million barrels, and made perhaps Rs 40-50 million. That would be peanuts for it, and probably even for Natwar Singh. By comparison, Megawati Sukarnoputri of Indonesia was allocated 10 million barrels and lifted 5.797 million barrels; the Communist Party of Russia took 106 million barrels. After we swallowed the camel of Mitrokhin's revelations, Volcker's are a mere gnat.

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