Federal News Service
HEADLINE: HEARING OF THE INTERNATIONAL TRADE AND FINANCE SUBCOMMITTEE OF THE SENATE BANKING, HOUSING, AND URBAN AFFAIRS COMMITTEE
SUBJECT: FINANCIAL RECONSTRUCTION IN IRAQ
CHAIRED BY: SENATOR CHUCK HAGEL (R-NE)
WITNESSES: M. PETER MCPHERSON, FORMER DIRECTOR OF ECONOMIC DEVELOPMENT, COALITION PROVISIONAL AUTHORITY IN Iraq;
MARK MALLOCH BROWN, ADMINISTRATOR, UNITED NATIONS DEVELOPMENT PROGRAM
SEN. CHUCK HAGEL (R-NE): Good afternoon. I think the order of business is for Senator Stabenow to introduce Mr. McPherson. But in her absence I have conferred with the vice chairman of the subcommittee, Senator Bayh, and we have concluded in the interests of timeshe's here.
We just about threw you overboard here, Senator Stabenow. But allowing you an opportunity to make the presentation, if you'd like to sit there or down front, either way you want to do it.
SEN. DEBBIE STABENOW (D-MI): Well, I would be happy to sit down front.
SEN. HAGEL: Keep all these Michiganders --
SEN. STABENOW: Thank you, Mr. Chairman. I appreciate --
SEN. HAGEL: -- there together.
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SEN. HAGEL: Senator Stabenow, thank you. You certainly are welcome to stay for a while, or whatever your schedule
SEN. STABENOW: Thank you.
SEN. HAGEL: -- calls for. But we appreciate very much your introduction of Peter McPherson. This is the second hearing that this subcommittee has held on financial and economic reconstruction in Iraq. Last month Undersecretary of State Larsen, Undersecretary of Treasury Taylor, and Exim Bank Chairman Merrill discussed U.S. efforts to bring stability and growth to Iraq's economy.
Today we will hear from M. Peter McPherson, who has just been introduced and, as has been noted, is a former deputy secretary of the Treasury, current president of Michigan State University and former director of Economic Development for the Coalition Provisional Authority in Iraq, as well as Mr. Mark Malloch Brown, current administrator for the United Nations Development Program.
We welcome you both. We appreciate very much each of you making an effort to be here and, Mr. Brown, especially in your case where it is not often we have representatives of the United Nations to come before any committee of Congress. So we very much appreciate your being here. The committee will be interested in your insights, observations and analysis of Iraq's economic development based on your experience. America must continue to lead the international effort to support the economic and financial reconstruction in Iraq. This effort is directly connected to our interest in transferring authority as soon as possible to an Iraqi government that is capable of governing and is viewed as legitimate in the eyes of the Iraqi people.
Post-Saddam Iraq has the potential to be a model for economic development in the Arab world and throughout the Middle East. For success in Iraq, the Iraqis must believe that their economic future will be brighter, that there will be jobs, opportunities, growth and economic security, and they must see a quantifiable improvement in their lives. There has been substantial economic progress in Iraq over the past six months. A trade bank has been established and a new Iraqi currency is in circulation. Iraq is also in the process of establishing new and more transparent banking and investment systems.
But time is not on our side. There are major challenges ahead before Iraq can realize its potential. Iraq faces reconstruction costs of at least $56 billion over the next few years, according to the assessments of the CPA, the United Nations and the World Bank, an international debt estimated between $97 and $124 billion, as well as approximately $96 billion in war reparation claims against Iraq to be resolved through the United Nations Compensation Commission, and an unemployment rate of around 60 percent.
Iraq's economic potential has been set back by more than three decades of mismanagement and corruption by Saddam Hussein's regime. And as a result of Saddam's disastrous policies and decisions, Iraq experienced three wars and more than 12 years of international sanctions. The looting and destruction that followed Iraq's liberation intensified the problems.
While Iraq has an educated and professional middle class and the second largest proven oil reserves in the world, Iraq's economy faces many obstacles and challenges. Iraq's oil revenues alone will not be able to meet the demands of governance, reconstruction and debt servicing over the next few years. At best, Iraqi oil revenues might be able to cover the recurring costs of running the Iraqi government, but probably not much more than that over the next few years.
We therefore should not expect that Iraqi oil revenues will be available for reconstruction or debt repayment any time soon. The United States has committed $18.6 billion in grants to help rebuild Iraq. Pledges from the international donors in Madrid last month include between $3 and $4 billion in grants and as much as $14 billion in loans and credits.
The infusion of approximately $22 billion in grants will have a significant impact on Iraq's economy, but there is still a long way to go. Providing debt relief must be another urgent priority in Iraq and cannot be disconnected from reconstruction initiatives. A substantial debt and reparations burden will hinder Iraq's economic development no matter how much oil Iraq has in the ground. The Iraqi people should not be burdened with debt incurred by Saddam Hussein's regime. Iraq needs significant debt relief as soon as possible, but Iraq's debt must be renegotiated through international institutions such as the United Nations, the World Bank and the Paris Club.
Inside Iraq we must support macroeconomic policies that expand opportunities and education and, most importantly, increase jobs. Iraqi politics cannot stabilize with more than half of Iraq's workforce unemployed. We must work with our Iraqi and international partners to strengthen and expand the Iraqi private sector and those industries that offer the best comparative advantage. The oil sector in Iraq is capital intensive, not labor intensive, and provides jobs for less than 1 percent of Iraq's population. We need to look beyond oil to provide jobs and opportunities for all Iraqis.
Iraq's economic and political development will depend upon an improvement in security in Iraq. If security in Iraq continues to deteriorate and the problems spread outside the so-called Sunni Triangle, economic development will be very difficult. Security in Iraq is not the subject of today's hearing but it is critical to any prospect for economic stability and growth.
We very much appreciate both of your testimony, your observations today, and we look forward to your testimony. I would now ask the ranking minority member of the subcommittee, Senator Bayh from Indiana, if he would like to add his comments.
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SEN. HAGEL: Senator Bayh, thank you.
Senator Stabenow, would you like to add any comments?
Well, thank you again. And I would add I have known Peter McPherson for not quite 30 years, but close to that. And he is one of the genuine public servants of our time. And again, we appreciate the time that he invested in helping this country once again over the last few months, and look forward to his words as well as Mr. Malloch Brown's words after we hear from Mr. McPherson.
So, Mr. McPherson, please begin your testimony. You both can either paraphrase it, work from notes or read it. We will assure you that your full testimony will be included in the record. Thank you.
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SEN. HAGEL: Mr. Malloch Brown, thank you.
Senator Bayh, why don't I begin the questions and we will go back and forth, maybe seven minutes each, and that way they won't get bored with either one of us.
SEN. BAYH: Let's hope.
SEN. HAGEL: Let's hope.
MR. McPHERSON: Yes, sir.
SEN. HAGEL: You mentioned the CPA decision making process and the critical nature of that in your testimony and you went into some detail as to how it affected what you were doing and how you are part of that. And you mentioned the governing council and you noted the diversity of the council, among other observations. Tell us, in your opinion, how much authority is actually being exercised by the governing council in the economic sector.
What are, in fact, they doing? Are they monthly taking on more and more responsibility for the economy, decision making?
MR. McPHERSON: I am certain that the economic reform package would not have gone forth if they had not agreed. And they not only agreed but theythere were significant components of it which they either modified or they put in. The discussionthe Cabinet members, the ministers, minister of Finance, minister ofthe Central Bank president, were their decisions. I mean, Bremer approved them, acted upon them, but they were names initiated by them. They weren't names initiated by the CPA. The Trade Bank discussions, which the last couple of weeks they're doing the final bits and pieces of it to bring it operation, is very clear to me they are making the critical decisions in this final step.
And my colleague, George Wolfe, said to me today, "Peter, their role is accelerating even since you left." How do youI don't hear anybody else explaining it this way, but it feels to me like a legislative body, with the CPA being kind of an executive body, but yet it isn't quite that way because they've initiated, for example, the names for the central bank and the finance minister. So it's sort of a hybrid. But it's like my comingwhen I was in the administration, Reagan years, coming here with some smallish group of a committee and working out some key issues. And in no way did I think back then that I could just get what I wanted. That was for certain.
SEN. HAGEL: So as the Finance minister's role becomes more apparent in decision making as the banking structure starts to develop with leadership in each bank, those decision making elements will be transferred and I assume much emphasis is being placed on the acceleration of that decision making by the Iraqis themselves.
MR. McPHERSON: Absolutely. I think this isin my AID days I worked all over the world, and in some countries I felt they sort of waited for you to tell them what to do or waited for you to tell them what you thought. By the time I left Iraq, I didn't feel that at all. These areI mean, they're intelligent people all over the world, but these are in many cases very educated people, and in some cases quite sophisticated and more and more assertive, which I see to be an advantage.
SEN. HAGEL: What industries, economic sectors would you point out that represent the best possibilities for jobs, opportunities, exports in the near-term for Iraq, other than oil?
MR. McPHERSON: I think that has to shake out. I've thought a lot about that. Agriculture has to play a role. There's major reforms that are going to be necessary there. Such huge subsidies is hard to calculate but I think ag does play a role. But I believe that a whole range of manufacturing industries certainly can evolve. Those that have a petroleum component to it would be natural. You worry that you don't want it to be a component that's subsidized, and that's why it's natural, though. And there's no use growing a big industry because you canas a result of the cheap oil you produce below world market prices.
But I can see, for exampleI can see there's no reason why there shouldn't be more refineries in the country, rather than exporting oil. The refineries in the country now are for domestic consumption. The policies which are now on the books will allow a shakeout over the next few years, and there'll be a bunch of industries.
SEN. HAGEL: Thank you.
Mr. Brown, you noted the Madrid Conference, which was a very point in this long journey to put Iraq back on its feet, and your involvement was critical to the success of that conference. Tell us what we do now, the process to move forward on collecting on the commitments, on those billions of dollars. What has to be done and how do you do that?
MR. MALLOCH BROWN: Well, I think they fall into two or perhaps even three categories. One is the U.S., which I don't think the U.S. needs any advice from me. It's anxious to get that money out into the field and get spending against the priorities that the CPA has established with the Iraqis. The second two components are the grant moneys committed by donors, a lot of which will go through a multilateral trust fund, part of which is managed by my organization, UNDP, on behalf of the U.N., and part by the World Bank. And ours will tend to address the quicker, faster dispersing items identified in the needs assessment. The banks will be more aimed at the sort of longer term, slightly bigger projects. Both, however, will require some quick work with the Iraqis to determine first priorities.
The third component is the lending program, which as I say, I think, you know, there'll be a lot of planning for it and perhaps some early mixed grant loans. The World Bank has so-called blend moneys, which are part grant, part loans, which may start this coming year. But the majority of the loans which are from the World Bank and the IMF, notthe only other big loan provider at this stage is Japan, and I should add some export loans from the Gulf. But all of those may take a little bit longer to come online.
The key final challenge is just to sort of link the spending priorities of this multilateral effort with the U.S.'s priorities to make sure that we're not falling over each other, that everything is done in close coordination. And we've set upproposed, at least, a basic coordination structure so that we can see what the U.S. is spending out of the so-called development fund and supplement it rather than repeat it in terms of the use of this multilateral fund.
SEN. HAGEL: Thank you.
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SEN. HAGEL: Senator Bayh, you.
Staying on the debt issue for a moment, what range of debt reduction do you think is possible? I'd like to hear from both of you.
MR. MALLOCH BROWN: Well, perhaps, you knowI mean, I would just say because I must say I find myself in the completely unaccustomed position, having to defend debt, because I'm completely with you, Senator Bayh. Yes, in fact, I'm going to get a medal of sound financialbecause all my instincts are on your side for a massive write-down. But just to give you a sense of what I think can be achieved under best current practice.
Under the HIPC initiative for poor countries, the governing principle is that a poor country can afford to service a debt which is something like one and a half times its GDP. The current debt of Iraq is 10 to 15 times it's GDP. So for me, if I was advising the Iraqi negotiators, my starting point would be to reduce the annual service and to reduce the volume, something close to that kind of HIPC level. So we are talking a real haircut.
I mean, this isyou know, and I think if you can't get there, then frankly countries which incurred their portion of the creditI mean became creditors because they were supporting Saddam Hussein during the particularly gruesome periods of his rule, you know, are going to find themselves subject to probably unilateral write-offs because I don't think they'll have the sympathy of the international community. Some of those countries are not themselves likely to be major extenders of future credit so, you know, wouldn't necessarilyit wouldn't have the punitive effect that Peter refers to in the case of Argentina. So, you know, I think there'll be a huge pressure for rapid, dramatic debt reduction even under conventional procedures.
SEN. HAGEL: Thank you.
MR. McPHERSON: Someone was telling me the other day that the Iraqi secondary debt market was about 21 cents on the dollar of debt and interest, and I said I wouldn't buy it. Now, a lot of push and shove between here and there, but Iraq reallyI think the parallel we ought to think about on this is Versailles, 1919. France particularly, but the whole group insisted upon these huge reparations, a big burden on Germany, that it wasn't the only reason Hitler came to power but it certainly helped.
And the Kuwaitis and their reparations, the world community needs to see, okay, it's impossible to pay debt the next few years of any large amount. But the usual inclination of bankers, and I've been a banker, so I know I could calculate it in a few moments, all right, fine, so you're not paying it in a few years. Why don't we push it off? Well, if we're having Iraqis pay for Saddam 25 years from now in a big way, that's a geopolitical mistake.
We didn't go into Iraq to make money, we did it for a whole set of reasons. And we need to come out of this with an Iraq that has something of a democracy, a stable economy, including a debt structure which is realistic and which the people will see as realistic. So I wouldn't buy debt at 21 cents in the dollar.
SEN. HAGEL: Thank you. Would you describe the intent and what you think will be the short-term impact of the 100 percent foreign ownership law that the governing council approved recently?
MR. McPHERSON: Well, I think there is some regional interest. For example, some regional banks. As the securityand there'll bebut up front it's mostly regional. In fact, as the security situation gets under control, there'll be global interest. There were companies from all over the world that were inquiring about Iraq even before the law. But it will take the foreign investment, especially investment outside the region, will take a little time. It always does.
It is aI think the tax and tariff majors involved here are very important as well.
SEN. HAGEL: Thank you. The tax tariff measure issue you just mentioned and you mentioned during your testimony the 15 percent flat tax.
MR. McPHERSON: Actually it is the top marginal rate, is 15 percent. So below that, including some people of low incomes indeed that won't pay tax, as I expect. Now, the rest of that hasn't been determined. All that's in the law now is the top marginal tax rate will be no more than 15 percent. As you of course are well aware, it's not only what rate you pay that's on the books, but the compliance, the prior rate was like 45 percent, not everyone paid that. It's important that you have a rate low enough so most people do in fact pay, and that, I think 15 percent will do that, as well in my judgment it's important for growth.
SEN. HAGEL: What structurally, institutionally is being put in place in order to assure that compliance?
MR. McPHERSON: The Ministry of Finance is responsible for tax collection. It's a unit within their ministry, not separate. The whole tax code is being reworked and the compliance, collection structure being restructured. And that work is ongoing. There's a huge push to get this done because a new tax rate is effective, the 15 percent top tax rate is effective January 1.
SEN. HAGEL: Thank you.
Mr. Brown, you mentioned some of the past experiences we've had, you've had, the United Nations has had, that we are applying to Iraq reconstruction, economic growth, development. Each is different, we all understand that situation. What lessons would you note that we've learned as we are working our way along in Iraq from donor projects in Afghanistan, East Timor, Bosnia. Is there anything we can draw from those experiences and apply to Iraq?
MR. MALLOCH BROWN: Well, of course you know in Afghanistan our big complaint was and remains that there isn't an adequate international security force to keep the peace across the country. And, you know, whatever the difficulties the U.S. is having it's enormously important that there is that nationwide force, coalition force keeping the peace. It's hard to imagine how much more difficult the situation would be if it wasn't there. So I think, you know, what is often criticized is nevertheless a basic of peace building, that the peace is kept even if it's proving difficult in the case of Iraq.
Second, obviously I think it's fair to say, it's been much commented on in the press, that the general experience of peace building is it's very imprudent to demobilize the army of the defeated power without a strategy for reintegrating it effectively into civilian life and without a sort of strategy for jobs and well-being for soldiers and their families in the interim. A third lesson that I think we are learning is the enormous importance of a clear political timetable, which everybody understands, every Iraqi whatever their political position, the international community, the CPA, the governing council, that there is a clear blueprint with a timeline on the process to be followed.
And I myself, constantly the name Mountbatten rings in the back of my mind because, you know, when Mountbatten was sent to India at the end of the Second World War, you know, he made one quick snap decision, let's do this quickly. It will only get worse the longer we take. And I think as I watch events in Iraq, I would urge my friends in the United States to really think about how this process can be accelerated as rapidly as possible, obviously without a loss of control, because the quicker you have Iraqis in power to make decisions for Iraqis, the quicker there's the potentially stable base for easing the political violence which is so difficult at the moment.
SEN. HAGEL: Thank you.
Peter, do you want to comment on any of that?
MR. McPHERSON: Well, I would not want to engage too extensively with my British colleague on Mountbatten's decision in 1949, but I'm not sure everybody would agree with this being a good case study on making quick decisions on new governments in India and Pakistan.
Well, Ino, I'm fine, thank you.
SEN. HAGEL: Now, remember Peter, you don't represent a government, you can speak for yourself. So that gives you some latitude here.
The Arab countries' assistance to Iraq, I don't know what measurement or standard we went into the Madrid Conference with regarding the Arab nations as to what we expected or a range of expectations, but I suspect there was some sense of disappointment around that we didn't see more financial commitment from Arab countries. Are you aware of any specific effort the United Nations is undertaking to try to engage other Arab nations more to get them more directly involved in helping reconstruct Iraq?
MR. MALLOCH BROWN: Well, I mean, first, I think you're right. I think there was disappointment that there was not more funds pledged from the region at Madrid, Senator. Second, my late colleague, Sergio Vieira de Mello, probably one of the most significant contributions he made as the secretary general's special representative in Iraq was to try and get the region involved. He had just at the time of his assassination completed a round of meetings with visits to the regional capitals, both looking for their financial support, but frankly even more their political endorsement of the political process in Iraq, recognition of the governing council, the participation of the governing council in regional political meetings.
All of which are the other side of the coin of financial contributions to reconstruction. And I think he felt that that was moving forward, and I think the U.S. has tried to keep that momentum subsequently. But there is no escaping the deep ambivalence and skepticism in the region towards what is happening in Iraq.
SEN. HAGEL: Thank you.
Peter, do you want to add anything to that?
MR. McPHERSON: Well, I think that what is happening in Iraq is likely to have dramatic changing impacts on the whole region, if we're even halfway successful. Because what we're seeing is that we need a democratic process, we need market forces, we need open economies. And in fact that's a central component for the region. And my hope is that we'll continue, that there'll be more and more help from the other countries. I certainly felt I had that, for example, in talking to regional central banks for help for our Central Bank. I hope that will continue to develop along.
By the way, there was something that I wantedlet me get back to the debt for a moment. I absolutely disagree with the idea that the current governmental structureor it can't negotiate the sovereign debt. In fact, we can't say that because that'll be excuses to the Russians and the French and these other guys, they don't have to do it now. This has to be done reasonably quickly. I disagree with a legal doctrine, and I think it's very important for us to say, look, this has to be done now, and we need to move on.
There'll be some creditors that will try to claim that they can't negotiate with this government before there's an election. I frankly think any government that does is hypocritical and doesn't really want to negotiate.
SEN. HAGEL: Well, doesn't that also apply to loans? I mean, who are you going to sign a loan agreement with?
MR. McPHERSON: Yeah, they're going to give loans, they're going to sign loans. All theseI mean thisthere was this huge debate about what the CPA could do. I mean, people said the CPA shouldn't do the currency. Well, we had to do the currency. Every time we turned around there was somebody in Iraq whonot the Iraqis, the Iraqis virtually never, but internationals outside, the French or somebody would say, well, look, this is beyond the authority of the occupying power. Well, it really does seem odd that Saddam can do anything and find it internationally acceptable, including decide what to buy with the Oil for Food program, and the CPA in its best efforts to get things done would be criticized for doing things like the currency.
And I didn't find criticism of that in Iraq.
SEN. HAGEL: Mr. Brown, do you want to add anything?
MR. MALLOCH BROWN: Well, look, the last thing I want to do is pick a fight with Peter on this, because I don't want to do anything to dis-empower the current reform movements in Iraq, and I completely agree with him that we've got to push with economic change now, and a lot can't wait. The issue on debt is that we do have a moratorium till the end of next year. It gives us time to do it and to allow an Iraqi government to do it.
As we've repeatedly made clear we think that, like in Afghanistan, you can have a sovereign government before elections. It is the CPA which believes that elections must come first and then a sovereign government. We think that a representative Iraqi body could emerge based on the governing council well before that time, which could exercise full sovereignty and complete debt restructuring. But as I say, I mean, we have a point of view based on international law, and we know we disagree with the U.S. on this, but --
MR. McPHERSON: But it's really important, Mark, there is this debate, which is a legitimate debate, as to what the CPA can do under the law. And as I say, I always found it a little really odd that Saddam was recognized and thought his actions to be legitimate sovereign actions, even if they were illegitimate in their very core. And the CPAbut aside from this, which has now become almost a theoretical dispute as a practical matter, I really think it's important for people of goodwill toward Iraq, which you are obviously one of them, and I mean that.
I mean, Mark and Julie Taft just behind us here worked so very hard to get this needs assessment done. But I don't think anybody shouldwe shouldn't let anybody off the hook to not negotiate this debt fast and soon, and I really believe that we shouldn't wait for anything. We wanted to get by the debt conference and to before we had serious debt negotiations, and now in my judgment, as soon as practical is time to do it. The longer this goes on, the tougher it's going to be. If you didn't have serious negotiations for a year from now, it'll be tougher to get the debt reduction necessary. The calendar is not on the side of the deep reductions required, I believe that.
MR. MALLOCH BROWN: I mean, there's no doubt that Peter is right, that with debt reduction the sooner you do it, the better. Strike while the iron is hot. And we are trying to ourselves be as flexible as possible. I mean, I think the practical line in the sand is that it's very hard for an occupying power to do things which tie the hands of its sovereign successes indefinitely. The currency arguably didn't do that. You could even in a way argue that debt restructuring doesn't, because it frees you of future obligations rather than increasing them.
So maybe we will find a way around even this. But, you know, at the end of the day you can't pretend there isn't a line there in the sand. You can shuffle it around a bit, move it a bit, but fundamentally a lot of Iraq's international economic relations, its ability to leverage its wealth with new loans and new foreign direct investment rests on a sovereign government. And I think the U.S. equally needs to hear that pressure. If France needs to hear that it needs to do a good debt deal and soon, the U.S. needs to hear that the sooner there's a sovereign government in Iraq, the easier a lot of this is going to become.
SEN. HAGEL: Well, I think we've gotten the point.
Thank you very much. Let meand I'm not going to keep either of you here much longer.
MR. McPHERSON: Good thing we're such good friends.
SEN. HAGEL: This actuallyyou remember your old days up here, Peter, when you used to testify. This actually is rather timid and serene compared to some of it. The UN Oil for Food program.
Where are we with all that?
MR. McPHERSON: Well, the Oil for Food program endsit has ended in the sense no more money is going into it. The oil proceeds are going into the account, the established account for those purposes. There is still a substantial amount of goods purchased from the old program which are in process of arriving. It's a vast structure, and I don't know its exact position. A very important part of the Oil for Food program was the delivery of food, some 60 percent of the people depending almost totally for their food on that.
There's enough food purchased in the pipeline to go through this spring from the Oil for Food program. The Trade Bank was set up to pick up the flak uponfor new purchases out of the new oil money. This is a program that's beyond the scope of this hearing, but a good audit would be appropriate.
SEN. HAGEL: I heard your comment.
MR. MALLOCH BROWN: Well, Peter, knowing his views on this program, he's being very gracious. But let me just say that this is a program which was micro-managed by one man and one committee. The one man was Saddam Hussein, who was only restricted in the areas of the country he controlled by the fact that we had to ensure that what he ordered was actually delivered. But the price he paid for goods and the countries from which he procured them were his decisions to make.
And the approval of the list of goods he could procure and the detailed management of the program was in the hands of a committee at the UN, a committee of the Security Council called the 661 committee, which the U.S. was an extremely active participant. And I think the whole program was a reflection of a lousy, terrible moment in international affairs where a clean cut decision would have led to Saddam Hussein's much earlier removal from power, either by the hands of the Iraqi people or of the international community.
But absent that, and a lot of cynicism surrounding it, the program reflects an effort to square the circle of how on earth you sought to put some kind of control over the procurement activities of a corrupt leader who was still in power. And it was undoubtedly not the perfect solution. But I think for all of us it was the best effort we could make under impossible circumstances.
MR. McPHERSON: I wish the UN several years ago had said enough is enough, we're not going to stand for this any more. I mean, the UN are good people, worked hard at it, this committee of, what, 15 people, Brits and the U.S. were by farwere very active. But I, you know, if lessons, historical lessons are here, one of them is that the UN should have said, we're not going to be part of this any more.
MR. MALLOCH BROWN: Yes, I think it's just worth saying it's not 15 people, it's 15 governments of Security Council members which approved every contract. My own view is the governments should have said, enough is enough, this system doesn't work.
MR. McPHERSON: The U.S. and the U.K. did. I mean, vigorously again and again and again. And Iit's a matter that sitting over there and being in the middle of this, I got kind of interested in. But we are where we are, and it's good for everybody I think that the money is now going to the newly established fund.
SEN. HAGEL: Well, gentlemen, that's a good constructive way to end the hearing.
Julia Taft, nice to see you, thank you for your good work, we appreciated always what you were doing for our country.
Unless you have additional comments we are grateful as always, and we may call upon you again soon.