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U.S. Department of State

Department Seal James P. Rubin, Assistant Secretary
Bureau of Public Affairs

Excerpt from the Daily Press Briefing
Washington, DC, February 29, 2000

Presentation on Iraq

Mr. Rubin: Greetings. Welcome to the State Department briefing on this here Tuesday. Before I left, I wanted to make sure I got to do one more of these presentations. So we do have a presentation today on Iraq, and the purpose of this briefing is to present newly declassified satellite imagery which once again documents the perfidy of the regime of Saddam Hussein and the importance of international efforts to prevent such violations and to help the Iraqi people.

The imagery that I will show you today proves two things. First, since the Gulf War and until now, Saddam Hussein has been building enormous palaces and VIP residences for himself and his regime. These palaces cost billions of dollars, money which the government of Iraq could and should be spending on the needs of the Iraqi people.

To pay for these palaces and these luxury goods for Saddam Hussein's family, Saddam Hussein himself and his supporters, the regime is selling oil outside of the Oil-for-Food Program and in violation of UN sanctions. The people of Iraq would be a lot better off if he would simply cooperate with the UN, sell Iraq's oil under the Oil-for-Food Program and use the money to buy what the Iraqi people need.

We're releasing this information now because Baghdad is again pushing the canard that sanctions rather than the misrule and the cynical manipulation of his own people that Saddam Hussein propagates are responsible for the suffering of Iraqis. These photos tell a very different story. They document the real reason that Iraqi people don't have what they need, because Saddam Hussein refuses to use oil revenues to order goods for his people or to cooperate with the relief agencies providing them. Instead, he is building palaces, smuggling oil in order to buy the loyalty of his small coterie of guards and his small and significant security apparatus so that he can prevent them from putting a bullet in his head.

These photos and accompanying text are available in English and Arabic on the Web at usia.gov, and if you click on Near East, the photos and a new report on this subject will be available. We are also providing these photos on beta videotape. So let's go to the palace construction map.

What you see here is that there are nine palaces. Okay, let's move it over there. There are nine palaces listed by their names, five of whom are centered around Baghdad. That's a blow-up of those five palaces and their location. You'll notice that they're concentrated around Baghdad and in the center of the country where Saddam is in greater control. There is only one palace in the north--over there--and none in the south because these are both areas where popular resistance to Saddam Hussein is strong and his security cannot be assured.

Let's go to the Tikrit residential site, the largest and most elaborate of Saddam's presidential sites. Construction has been ongoing since 1991. The site itself covers four square miles. This whole area right there is four square miles. And then what you'll see is that there are numerous palaces--this is a palace, this here is a palace, and these are the VIP residences for his supporters.

There are also to the west of this site where you can't see, there are rural and extensive farm retreats also for use by regime favorites.

Now let's turn to the Al Salam Palace in Baghdad, the interior palace photo. This is located on the site of the former Republican Guard's headquarters in Baghdad which was destroyed during Operation Desert Storm. Since then, Saddam has been rebuilding the palace,and it was completed in early 1999. What you'll see here are--this is the main palace here, this is a large conference center, these are special waterways that have been created, and this is the whole palace grounds there in the red and white.

What we know about the interior of these palaces from firsthand reports, these particular palaces, who have traveled to Iraq and visited the palaces, that in these type of palaces they feature marble floors, crystal chandeliers and, according to eyewitnesses, gold-plated faucets and other excesses.

Now let's go to the Abu Ghurayb Palace. Construction at the Abu Ghurayb Palace is ongoing. As these photos show--this is before it was completed--you'll see all these areas weren't filled in with water. These are the after sites. So all of this area and down here was not filled in with water as they were constructed. There are elaborate fountains, waterfalls. We find the scale of this one particularly excessive.

The point here is that Iraq is suffering from a drought that the government claims has caused widespread crop damage. Think about this. They complain about a drought, and yet Saddam doesn't hesitate to use scarce water resources to ensure that the lakes of his palaces are filled and his grounds are well cared for.

Now let's go to the oil question starting with the Basrah refinery. The question always arises where does money come from to provide for these palaces and to provide for other efforts to build their efforts to circumvent the sanctions. What you see here is this particular refinery was destroyed in Operation Desert Fox, and what these squares show you in the little stacks are not inflamed, meaning they're not operational after Desert Fox. So these were destroyed during Desert Fox. And you can see from where these little arrows are that they are not operating refineries.

Now if you look at them, you can see the flares in January 2000 to show that these are operating. The point here is that these are refineries. Iraq is not allowed to sell refined oil products pursuant to the sanctions; they are only allowed to sell oil. And what you discover is by rebuilding this site is the beginning of the pipeline--pipeline metaphorically--for the illegal gas oil sales that I will show you in the subsequent slides.

What they have now been able to do at Basrah is produce some 140,000 barrels per day; that is, illegal refined products for sale abroad. Oil exports are only authorized through the ports at Mina al Baqr; that is, the Oil-for-Food Program in the Persian Gulf and via the oil pipeline through Turkey. The oil smuggled at the Basrah refinery is illegally sold and smuggled out of Iraq through a loading facility called Abu Flus.

So what you see here is that this is the Basrah refinery. The ships are loaded and they are loaded at the Abu Flus loading facility, which is down here, and then they proceed down in the--I'm sorry, I should be over there--down this waterway out into the Persian Gulf. This is an example of the ships that pick up the illegal gas oil. These are--each of these are different ships that pick up the illegal gas oil in that waterway.

What then happens is that these ships then hug the coastline and come out here and hug the coastline along the Iranian border until they reach international waters here, which is the point at which the Multinational Interdiction Force can then intercept them. That is how we intercept ships, and I think we have intercepted a huge number of vessels over the years. Since 1990, the Multinational Interception Force has queried more than 28,000 vessels, boarded more than 12,000 and diverted 700 for violation of sanctions.

So the point of this presentation is to show you the extensive effort Saddam Hussein is making to illegally export gas oil outside the UN Oil-for-Food Program; take that money, meanwhile crying poverty and blaming the rest of the world for the effect of sanctions on its citizens; and building these elaborate palaces that I've just shown you.

So we think this is conclusive proof that, to the extent there are problems in Iraq on the question of food and medicine and concern about the people of Iraq, those problems are the fault of Saddam Hussein. In general terms, the level of smuggling has grown in recent months. It's reached the unprecedented level of 100,000 barrels per day, which puts more than $25 million into the hands of Saddam's regime so then he can spend the money on these palaces. Overall, we estimate since these palace constructions began, that over $2 billion of scarce resources has been diverted to the purpose of building these palaces.

I'd like to make one final point before taking any of your questions. We've heard a lot in recent days about the regime complaining about the effect of sanctions. In addition to using the illegal export of oil to provide funds for building things like these palaces, they also import a number of luxury goods, and we find it particularly ironic that while he is not spending the money that the Oil-for-Food Program permits him to spend for food and medicine, the regime led by Saddam Hussein spends money the regime controls on alcohol and cigarettes.

In the past ten weeks, ten 20-foot containers of whiskey have arrived in the Port of Aqabah bound for Iraq. This is, according to experts, below average for the period. Each 20-foot container contains an average of 900 cases of whiskey, or a total of 10,800 bottles of whiskey. In addition, a further 20-foot container of wine and beer went to Baghdad during the same period. That's 350,000 cans of beer and 7,200 bottles of wine. The regime in Baghdad is consuming more than 10,000 bottles of whiskey, 350,000 cans of beer and 700 bottles of wine per week - and alcohol is illegal in Iraq. Food is exempt from sanctions, and these goods are classified as foods, so Baghdad is importing all of this legally.

The important point here is that the regime is getting drunk while it claims that its people don't have enough to eat. So we are a little tired of hearing that sanctions are responsible for the problems of the people of Iraq. It's the government of Iraq that spends its scarce resources on these palaces, on items like beer and wine and liquor that's illegal in Iraq, and then complains about the rest of the world causing problems for the people of Iraq.

The last point, and I'll turn to your question. You know, we're often asked whether the sanctions regime is weakening, that people are losing their support for it. I would advise you all to take a look at the communique issued by the Saudi and Syrian Governments last week which squarely places the blame for the suffering of the people of Iraq on Saddam Hussein's refusal to comply with UN resolutions. That's the Syria and Saudi Arabian Governments communique as a result of their high-level meetings last week. I can get you a copy of the public version of that at the end of the briefing.

With that opening comment, let me turn to any of your questions.

Question: Apparently, a lot of these ships are making it past the monitors. How come it can't be more efficient than it is?

Mr. Rubin: Well, on the monitoring, obviously it is a difficult process. As I said, we've intercepted or diverted 700 vessels and boarded more than 12,000 and queried more than 28,000. With this increased level of smuggling that we're seeing, we're looking at ways to beef up the assets for the Multinational Interdiction Force in the region. The government of the United Arab Emirates is working closely with the UN and the Multinational Interception Force to crack down on this smuggling activity. The UAE has accepted far more vessels diverted by the MIF than any other country in the region.

Obviously, Iran plays an important role in the smuggling of Iraqi oil by allowing the smugglers to avoid the MIF by transiting through its territorial waters, as I showed you earlier. We have raised this issue in the Security Council Sanctions Committee and we plan to do so again. The government of Iran has tended to respond positively when this issue has been raised, and we do expect the government of Iran to uphold its obligations as a UN member state and to crack down on this illegal activity.

Question: I thought the refining capacity was 140,000 barrels a day and the illegal export was about 100,00 barrels a day. Does that mean that the other 40,000 is for home consumption?

Mr. Rubin: Well, there may be - that is what - those are the numbers that I have. I will try to, after the briefing, get you an explanation for whether that 40,000 stays inside Iraq for domestic purposes.

Question: Jamie, it's not just Iraq that's complaining about the effect of the sanctions. A significant number of members of the US Congress have complained also about the effect of the sanctions. What will you tell those in Congress who are sending you letters and urging you to move to ease the sanctions after 9 years?

Mr. Rubin: Well, what we would tell them is that the sanctions are there for a very real purpose: to deny Saddam Hussein access to the funds he needs to build up his military machine; and that this is a repeat offender who started a war with Iran for eight years, who started the war with Kuwait that led to this situation; and that we're prepared to err on the side of caution when it comes to ensuring that Saddam Hussein can never again get the capability to threaten his neighbors and the world.

When it comes to the suffering of the Iraqi people, we would tell these members of Congress and whoever made this point that they are misinformed. It is the United States and Argentina and the United Kingdom that created the Oil-for-Food Program that forced Saddam Hussein to spend over $10 billion on food and medicine that have now been approved for the export to Iraq.

And we would further add to those members of Congress that even if sanctions were lifted, only wishful thinking could make someone think that Saddam Hussein would spend more of his money on food and medicine for his lower classes when that is only being done because we force him to. Instead, if he has his way, he would be using the money to spend on the kind of palaces and luxury living that I've been describing.

Question: First of all, I was wondering why you didn't condemn or in some way repudiate Iran for its--what you called an important role in the smuggling of oil. You only said that Iran should live up to the UN regulations, but you didn't have any sort of negative language about them. That's my first question.

My second question is the U.S. has used deadly force in its enforcement of the no-fly zones, and I wonder why - if this is a problem why you're not doing what you've done before which is to bomb, for example, the Basrah refinery.

Mr. Rubin: Well, you shouldn't confuse, on the second point, apples and oranges. With deadly force on the no-fly zone, we're talking about a situation where Iraq is threatening our pilots, and we believe that the use of force is necessary to deter and to eliminate those threats.

Secondly, the purpose of the no-fly zone is to prevent Iraq from using its air space to kill and maim its own citizens in the north and the south, as it has done in the past. That is a different--both of those issues are different than illegal oil smuggling.

With respect to your first question, we do expect Iran to live up to its obligations as a member state. We have had some success in bringing to the attention of the Iranians through the Sanctions Committee this activity, and they have responded, and that is the accurate statement of the facts.

Question: To follow up on the question of force or not and why it's apples and oranges, why not use something less than deadly force and blockade the Shatt Al Arab?

Mr. Rubin: Well, we have made the decision to intercept ships and deter additional smuggling through this interception of ships. We're looking at providing additional assets. I'm not going to get into a tactical discussion with you about what our other options are.

Question: Jamie, a couple of things. There seems to be something - one thing missing. What's the destination of all this illegal oil? Who's buying this stuff?

Mr. Rubin: What happens is it gets on the oil market, and then it gets mixed in with oil products that go anywhere.

Question: Well, it's got to go somewhere first where someone knows that it's illegal.

Mr. Rubin: Well, absolutely. What we try to do--well, if we knew every place that it was, we would certainly try to take action. It's not always possible once a ship leaves this area where you know it's an illegal export to track it so thoroughly that you can be sure that you know once it's mixed in with other products. So we've tried to deal with it at the source through this Multinational Interdiction Force, and obviously when we have evidence of where the illegal oil ends up, we act on that as well.

Question: Where has it ended up in the past?

Mr. Rubin: I'll try to get you additional information after the briefing as to some of the locations.

Question: And the other thing is that there is a lot of smuggling of alcohol in other places--into a lot of countries where it's illegal, and I'm just wondering why--you know the destination of these thousands of cases of whiskey is Saddam and his--

Mr. Rubin: That's the information I've been provided, yes.

Question: We don't have any - I mean, you don't have any photos of impounding Chivas here. How do we know--

Mr. Rubin: Well, if I get one of those, I'll be sure to provide that to you directly.

Question: Jamie, the bottom line in your message is that the sanctions is not responsible for the suffering of the people of Iraq; the government is. However, the people in the area, fair-minded people, are wondering why official after official of the United Nations are disagreeing with you. The head of the - Hans Von Sponeck, Denis Halliday before him, the head of World Food Program, they all disagree with your assumption.

Mr. Rubin: Well, as I indicated, the Saudi Government and the Syrian Government last week put out a very clear statement placing the blame squarely on Saddam Hussein's shoulders for the harm done to his citizens. So it's not just our view; it's the view of the Syrian and Saudi Governments in that statement. I'd be happy to provide you a copy of that.

With respect to well-intentioned but misguided individuals like Mr. Von Sponeck, I've heard his account of these events. And he seems to think--in what I consider and what this administration considers a matter of wishful thinking--that if sanctions weren't on Iraq, somehow the people of Iraq would be getting the benefits of sanctions relief when all the indicators are the opposite.

Let me give you a very clear example. In northern Iraq, the UNICEF did a study and they looked at infant mortality in northern Iraq during the period of the Oil-for-Food Program where Saddam Hussein has no control over the distribution of food and medicine. And what they discovered is the infant mortality rate is lower in northern Iraq during the sanctions under the Oil-for-Food Program than it was prior to sanctions.

Think about that. That means that before sanctions were imposed, there were more people dying in northern Iraq, infants, than there are now under the Oil-for-Food Program. That's an indicator of what a post-sanctions world might be like under Saddam Hussein where no effort is made to provide food, medicine and necessary supplies to prevent problems like infant mortality.

So as well-intentioned as Mr. Von Sponeck is, we have consciences too. He's not the only one with a conscience. That's why we created the Oil-for-Food Program. That's why we've allowed $10 billion worth of food and medicine to go to the people of Iraq. And if we hadn't done so, it never would have gotten there. So we find it unjustified for people like Mr. Von Sponeck to point the finger at us rather than pointing the finger at Saddam Hussein's regime which hasn't implemented the Oil-for-Food Program.

The problems Mr. Von Sponeck identifies in central and southern Iraq, many of them could be resolved if Saddam Hussein's regime would take the medicine and food and other supplies out of the pipeline - out of the warehouses and distribute them, if he would spend the money that he's allowed to spend on food and medicine.

The UN has to force him to buy food and medicine for his people because he doesn't care about them. That should give you an indicator of what the world would look like if sanctions were lifted. So we think he's well-intentioned, he has a conscience. So do we. We have a different judgment as to what would happen in a post-sanctions world.

Question: Jamie, some of those on Capitol Hill are urging the administration to delink sanctions and basically get rid of the economic sanctions and keep military sanctions in place. Is that something that seems reasonable?

Mr. Rubin: No. We think that would be ill-advised in the extreme. The problem here is making sure that Saddam Hussein's access to hard currency is as limited as possible. We have denied him something like $100 billion in hard currency. That has prevented him over the period of sanctions from spending that hard currency on weaponry, on illegal goods that he could try to buy even if there were sanctions around. Hard currency to Saddam is a prescription for disaster, so we try to limit the amount of hard currency through the oil embargo and through other steps and try to keep it down to these small amounts of money that we track as best as we can.

And so we think it would be ill-advised in the extreme to allow a dictator like him to get access to billions of dollars of hard currency through some suspension of the economic embargo unless and until he has shown a willingness to comply with UN Security Council resolutions.

Question: What makes you think he isn't using some of that money that he gets from selling oil illegally to buy the very things that you're--

Mr. Rubin: We have no doubt that he's trying to do that. What we're trying to do through sanctions is limit the amount of money he could use, because the more you have the more you're able to bribe people, do things illegally, get dual use equipment. So what the sanctions--the primary tool they serve is to limit his access to hard currency so we limit his access to military hardware and military goods so that he can never again be the threat that he was to the rest of the world.

Question: First of all, is all of the money being spent?

Mr. Rubin: No. We think that there are significant gaps in what he is prepared to order, and I can go through a little bit with you after the briefing. But certainly we believe that UN reporting has shown that he is under-utilizing the funds. They've under-funded the food sector by more than $200 million. It is allocated to the health sector, two-thirds less than what the Secretary General said was minimally acceptable. And it continues to ignore calls - that's the regime--by the UN to order critical medicines to treat child leukemia.

So those are some of the examples of ways in which he has not ordered what he could using the funds available. We're talking about a lot of money here. Over the coming year, there may be as much as $20 billion in oil revenue that could then be used for significant portions for food and medicine, but if he doesn't use it and he won't spend it, that's where Mr. Von Sponeck should have focused his energy on the regime. Why isn't it using these enormous amounts of money to ease the concerns that he has?

Question: Von Sponeck and others have said that the requisition and the licensing procedure is unnecessarily restrictive and cumbersome. Have you thought about improving that system?

Mr. Rubin: Well, we do not believe contract holds are the problem. In December 1999, the UN's Office of the Iraq Program issued a report on the impact of holds on the program. The report concludes that contract holds have had a minimal impact. This is the UN's own report. Mr. Von Sponeck's own organization has said that holds have had a minimal impact on most sectors. It also says that poor ordering by Iraq and Iraqi delays in distribution are hampering the program's effectiveness.

About 90% of the contracts submitted to the UN are approved. There are no contract holds on food. With minor exceptions, there are no contract holds on medicines. The most frequent reason for contract holds is the quality of information that accompanies the contract. We currently have 300 contracts on hold because the technical information or the end use information in the contract was insufficient to make a judgment.

We want to be cautious. We do not want to let dual use equipment sneak through this process. Let me give you an example. Pesticides. Pesticides can be used for legitimate purposes and illegitimate purposes. And unless we know the information and understand who the end user is and whether the supplier is someone who has violated sanctions in the past, we want to be careful. But none of that interferes with the bulk of the job of the Oil-for-Food Program, and Saddam Hussein's refusal to order supplies, food and medicine, far exceeds the very limited effect of these holds.

They constantly want to blame the holds, and we are troubled when people fall into the trap of accepting that as the reason when the reality is these tens of billions of dollars that are available they don't want to spend on food and medicine, and they have to be forced to. So our concern is that we will obviously look to ensure that the contract review process is speeded up, that there are pre-approved goods that don't require committee approval pursuant to the Resolution 1284.

But if you look at the facts, a really good, hard look at the numbers, the delays in distribution, regularly we have situations where there is huge amounts of food and medicine sitting in warehouses that they don't want to distribute. And they only distribute them when we make so much noise publicly that people running the program, like Mr. Von Sponeck, finally feel compelled to approach the Iraqi Government and ask them what happened to the food and medicine that's in this warehouse. And then suddenly, magically, there is an effort to distribute it.

So the concern on holds is greatly exaggerated. It's a very small percentage that are put on hold, but we obviously want to improve the process.

Question: On the pesticides, the illegitimate use would be possibly chemical weapons?

Mr. Rubin: Correct, yes.

Question: Do you think the diesel fuel trade with Turkey also contributes to Saddam's wealth and this decadence?

Mr. Rubin: The Turkish Government estimates that Turkey has suffered losses of tens of billions of dollars as a result of enforcing Iraqi sanctions. Because of these losses, Turkey asked the Sanctions Committee in 1996 to legalize its diesel and gas oil trade with Iraq. The action was deferred on this request.

We have raised this issue with Turkey and are working to find a way to strengthen sanctions enforcement without causing further hardship on southeastern Turkey. But we certainly believe that Turkey, like all countries, should understand that these sanctions are important to the security of the world because they deny hard currency to the regime so that it can never again pose the same threat as it has to its neighbors.

Question: Jamie, to go back to the question of the imports, Mr. Eckhart, Kofi Annan's spokesman himself, said after he resigned - Mr. Von Sponeck resigned--that Mr. Annan shared the views of Mr. Von Sponeck on how to improve the regime in terms of getting (inaudible) with Iraqis. Are you saying that he's just being diplomatic? Is he--

Mr. Rubin: Well, you know, if you look carefully--and I'll be happy to get you the material, it's quite voluminous--there are many reports by the UN. Most of the figures that I'm giving you about the ways in which Saddam Hussein has refused to sell--buy the food that he's able to buy, to distribute the food that he has purchased or to buy the medicine or distribute the medicine that he's allowed to do, most of this data comes from the UN. And there are many reports the UN has put out that include the demonstration that the bulk of the problem is their refusal to order--distribute pursuant to the UN's recommendation we agree with.

When it comes to the contract holds, I'm--we're being quite candid, we tend to err on the side of caution when it's a dual-use issue, and we do that for very good reasons. And what I'm suggesting is that the UN itself acknowledges that that's a very, very tiny percentage and bears almost no effect on the problem. Minimal is the word they themselves have used.

Question: Well, Jamie, getting back to the smuggling coming through Aqabah you cited cases of alcohol which is illegal in Iraq. Why is that allowed to be trans-shipped from Aqabah out through--

Mr. Rubin: Well, it's under the food and--

Question: Well, it's under food, but you apparently know what's in it. And it would seem to me--

Mr. Rubin: They're classified as foods, these goods. I'm just pointing out the hypocrisy of the regime, that they spend their money on things like whiskey and then come to people like Mr. Von Sponeck and others and they try to make the case that they don't have the money to feed their people.

Question: Just about the palaces that you showed before, you showed a before and after. What were the time periods--

Mr. Rubin: There were some dates on those, and we'll be able to give you that. They're along the top.

Question: And you also mentioned that you all estimate about $2 billion--

Mr. Rubin: Over $2 billion.

Question: Over $2 billion was diverted for the purpose of building those palaces.

Mr. Rubin: Yes.

Question: Again, what--

Mr. Rubin: That's an estimate.

Question: But over what period of time?

Mr. Rubin: Say over the last decade roughly, okay?

Question: Children in Iraq are suffering from diseases because of impurity of water, and Iraq has claimed they need chlorine to purify the water which is dual function--one of their dual--how do you deal with issues like pesticides which they need to grow their food and their plants, chlorine to purify the water? How do you deal with such issues?

Mr. Rubin: Well, obviously, there are complexities, but what we deal with them in--is because, based on caring about what happens to the Iraqi people, unlike the regime, which I think we've demonstrated conclusively doesn't care and uses these arguments to try to divert attention from what their real intent is. There are very technical issues. I can try after the briefing to get you some information about various contracts and what the concerns were. But by and large, once the legitimacy of the product is certified and once the legitimacy of the end user is certified, we allow these things to go through. We're just not going to do it willy nilly. And Iraq tends to use any contract hold as an attempt to divert all of your all's attention from the fact that their not spending the money that is in the program.

Question: Nobody will argue about the focus of the system, and you describe those who believe lifting the sanction may end the suffering of the people, and you describe them as wishful thinking.

Mr. Rubin: Right.

Question: Do you still believe that sanctions or lifting the sanctions or staying with the sanctions may put an end to the system or to the regime, or this too is wishful thinking?

Mr. Rubin: No, that's not what we say sanctions are for. The sanctions are for containment. We believe that to protect the security of the region where he has gone to war against Iran, gone to war against Kuwait, threatened the whole Gulf with war and devastation and destruction - and those of you who remember the Gulf War know the threat that he poses where he's used weapons of mass destruction against his own people - those are the dangers. We are containing that danger through sanctions by denying him the hard currency to rebuild the military machine that poses those dangers.

In the meanwhile, we are supporting a number of opposition groups who understand that the only long-term solution to the danger of Saddam Hussein's regime to the region and to the world is to have that regime changed. But the sanctions we've never said are going to change the regime. We think they contain the danger he poses to the extent they put pressure on him and cause other Iraqis to understand the value of another way of running their country. Fine. But the purpose of them is to contain the danger posed by hard currency reserves.

Question: Jamie, besides buying whiskey and building palaces, do you all have any idea where this money is going?

Mr. Rubin: Well, that's obviously two important outputs. There are other outputs. We certainly think they tried to rebuild their hardware, cannibalized their system, used some of their hard currency to try to improve their military machine. They've been testing and seeking to deploy very short-range missiles that are permitted below, I think, 150 kilometers. That cost a lot of money.

So they're spending their money on the things that have nothing to do with the concerns about water and water purification and infant mortality. They are focusing their money on missiles, palaces and other outputs.

Question: You mentioned nine palaces.

Mr. Rubin: Yes.

Question: Are these new palaces, or is that the sum total since he started his palace construction program?

Mr. Rubin: I think there are others. It depends on where--these are the large style. There are smaller ones, and I can get you some numbers of--there's dozens of others that are in the small palace category. These are in the large palace category that are particularly egregious examples of excess and waste.

Question: So you don't dispute the statistics that say that people, particularly children, are suffering from malnutrition and dying in Iraq? You just dispute who's to blame for it?

Mr. Rubin: I think what I indicated from the UNICEF report is that we do care about the children of Iraq, that's why we created the Oil-for-Food Program, as a result of which the children in northern Iraq, where the UN runs the program and Iraq doesn't, have a lower infant mortality rate than the children in that part of the region did before the Gulf War when there were no sanctions.

Is there suffering in Iraq? Of course there's suffering in Iraq. Mostly the suffering is a result of the fact that this mad dictator has launched his country into 10 years of war against Iran and 10 years of war against the rest of the world. After 20 years, it's not a surprise that their economy is in shambles. What we're saying is that we care about it and we're trying to do something about it, and that people should not be misled from the propaganda that comes from Baghdad.

Question: After all these violations and these numbers, do you have any new--do you think you are going to revise or review?

Mr. Rubin: Sorry?

Question: After all these violations by the system--Iraqi system--and complaints all over the world, I mean are you inclined, are you thinking about revising or reviewing sanction policy?

Mr. Rubin: No. On the contrary--

Question: No modification or--

Mr. Rubin: No, no. We were going to implement Resolution 1284 in the way that I suggested in trying to make sure that certain products are notified and approved in advance, that the control hold process is limited. That's not changing the sanctions policy. The sanctions are those measures that deny hard currency to the regime and prevent the import of weapons of mass destruction, military hardware and other consumer goods that could be used for that purpose. There is no consideration whatsoever being given to that, headlines in major newspapers notwithstanding.

Question: How long is the United States going to wait?

Mr. Rubin: Well, we are not in the waiting business; we are in the protecting business. We are protecting our national interests by containing the danger he poses. And so long as there is a danger from Iraq to our national interests, we're going to continue to act to defend those interests.

[end of document]

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