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Russia Drops Opposition to U.N. Oil-for-Food Probe

Russia dropped its opposition Monday to a U.N. resolution endorsing an investigation of the U.N. oil-for-food program, clearing the way for former Federal Reserve chairman Paul Volcker (search) to take charge of the inquiry.

U.S. lawmakers have said the U.N.-run program allowed billions of dollars in illegal oil revenue to flow to Saddam Hussein (search). Critics have said Saddam for years manipulated the program through illegal surcharges, kickbacks and illegal oil shipments.

With the exception of Russia, Security Council members had been prepared to endorse an inquiry into allegations of corruption in the U.N. humanitarian program launched by Secretary-General Kofi Annan (search) and to call for countries and companies to cooperate.

"There will be a resolution," Russia's deputy U.N. Ambassador Gennady Gatilov said, dropping his objection and adding that Security Council experts were working on a text.

Russian companies will undoubtedly come under scrutiny in any investigation because they were major buyers of Iraqi oil and suppliers of humanitarian goods to the program, which allowed Saddam's regime to sell oil and use the money to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War (search).

The United Nations confirmed Friday that Volcker and two others were prepared to serve on the panel investigating the allegations but indicated "that a Security Council resolution would be extremely helpful for the work of the inquiry."

Diplomats said Volcker insistied on the resolution, apparently because the investigation will include the U.N. Secretariat, which the secretary-general heads, as well as dealings with governments and companies. Volcker has refused to comment on the panel.

Gatilov said Friday that Russia believed a council statement on March 31 pledging cooperation with the inquiry was sufficient support for the panel. He said Russia didn't want "to look backwards into the history, and to stir up the old issue of the humanitarian program which is closed."

But the Russians apparently changed their mind after Annan spoke to Russian Foreign Minister Sergey Lavrov on Saturday and following extensive consultations by Germany's U.N. Ambassador Gunter Pleuger, the current council president.

"We are in a good way," Pleuger told reporters Monday, saying he hoped to have a draft resolution soon.

U.S. deputy ambassador James Cunningham was also optimistic.

"There'll be a resolution," he said. "I think there's agreement in principle to go ahead with a statement of support by the council for the investigation, and for cooperation with the investigation."

Under the oil-for-food program, which began in December 1996 and ended in November, the former Iraqi regime could sell unlimited quantities of oil provided the money went primarily to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War. Saddam's government decided on the goods it wanted, who should provide them, and who could buy Iraqi oil -- but a U.N. committee monitored the contracts.

The allegations of corruption surfaced last January in the Iraqi newspaper Al-Mada. It inlcuded a list of about 270 former government officials, activists and journalists from more than 46 countries suspected of profiting from Iraqi oil sales that were part of the U.N. program.

Annan launched an internal inquiry into the allegations in February but canceled it in March to allow a broader, independent examination that will also cover dealings with governments as well as companies and other entities that signed contracts with the United Nations or with Iraq.

Many U.S. lawmakers, who are conducting their own investigation, have expressed skepticism about the United Nations' ability to create an independent panel that could implicate some of its own high-ranking officials. So U.S. diplomats pressed for an American to lead the panel, and backed Volcker, who has a reputation for integrity and fairness.

The two other panel members selected by Annan are former Yugoslav war crimes prosecutor Richard Goldstone of South Africa and Swiss criminal law professor Mark Pieth, who is an expert in money laundering for the Paris-based Organization for Economic Cooperation and Development.