Steve Quayle News Alerts

May 22, 2002

Iraq is subverting international sanctions to both buy friendships and earn illicit income, reports the London-based Arabic daily Al-Hayat.

In a recent article, reporter 'Hazem Al-Amin says Saddam Hussein's regime is using two means to thwart the sanctions: the "oil for food" program administered by the U.N. and the smuggling of oil through Syria, Jordan and Turkey, and via waterways.

A summary of the story was published in English by the Middle East Media Research Institute, or MEMRI.

"Iraq's relationship with Jordan is a case in point," said MEMRI. "The road between Amman and Baghdad is crowded with cargo shipments and oil tankers. Big transactions, generating big profits, are common. The Iraqi leadership is famous for its 'generosity' toward those who support its causes and its financing of Jordanian newspapers is well-known. Journalists who receive their salaries from the Iraqi embassy can be critical of the Jordanian government and even of the Jordanian royal institution, but never of Iraq.

"Another way of supporting Jordanian newspapers is through commercial contracts. In one instance, Iraq contracted a Jordanian newspaper to publish Iraqi schoolbooks. In another instance, a Jordanian newspaper was contracted to print all official stationary for Iraqi ministries. Al-Amin points out that the Jordanian government is a shareholder in these newspapers and ultimately benefits from these transactions."

MEMRI's summary explains how Iraq uses the "oil for food" program to collect cash for the government.

"Under the 'oil for food' program, oil revenues are deposited in a special account administered by the United Nations to allegedly prevent Iraq from using these revenues to buy weapons or weapon-related equipment and supplies. The special account reimburses the exporters and suppliers for goods exported to Iraq after advance approval by the U.N. However, it is the Iraqi government that negotiates the deals with the exporters or suppliers. At that stage, the two sides (the government and the exporters) connive to add a big margin, a minimum of 10 percent, to the negotiated price. This additional margin of illicit profit (known in business as pricing transfer) is then transferred in cash to the Iraqi treasury or to an individual beneficiary designated by the government."

As in many other developing countries, Al-Amin points out in his story, "politics and trade are indistinguishable," particularly in view of the fact that the ruling elites often control the economy and monopolize economic activities, says MEMRI.

"In Iraq, most of the trading companies are owned by members of the ruling Ba'ath Party or their children, trade unions, activists, and media personalities, who turn these companies into 'a large political bazaar,'" explains MEMRI's summary. "Foreign trading companies, which are not allowed to do business directly with the government of Iraq, operate through an Iraqi representative with political clout. Some traders, particularly those from Qatar, enter into contracts through these agents to buy smuggled Iraqi oil at a discounted price. Once the oil reaches Qatar, it is issued a new 'certificate of origin' and sold into the international markets.

"The problem is that many of the ships used for oil smuggling are unseaworthy and cause serious environmental damage to the Gulf," according to MEMRI's summary of Al-Amin's article. "According to the International Maritime Bureau, smugglers sail their ships at night through the Shatt Al-Arab waterway between Iraq and Iran, claiming to be heading for Iranian ports; then they turn north and pick up the oil at Iraqi terminals. They go back through Iranian waters, sometimes paying a transit fee on the way. Another study claims that the smugglers pay Iran $50 a metric ton for a tariff to use Iran's waters."

There is ample evidence, says the story in Al-Hayat, that Iraq uses the "oil for food" program to acquire support among writers, artists, singers and journalists across the Arab world.

According to MEMRI's summary, "One way to secure their support, according to an Iraqi official who fled to Amman, is for the government to grant individuals a coupon which allows them to receive a certain amount of oil either free or at discounted prices. The beneficiary of the coupon uses the services of a local agent to sell the coupon to a foreign company. The buyer of the coupon submits it to SOMO (State Oil Marketing Organization) of Iraq, which, in turn, will pump the oil through the Iraqi-Syrian oil pipeline for the benefit of the buyer who is responsible for shipping the oil. There are various estimates about the volume of Iraqi oil exports to Syria through the Kirkuk-Banian pipeline, but it is probably close to 250,000 barrels per day. The potential to use this money for Saddam Hussein's weapons of mass destruction is enormous."

On May 14, the U.N. Security Council approved a revised sanctions regime on Iraq. While Iraq is still denied access to items that may be used for dual (military as well as civilian) purposes, such as heavy trucks and communications equipment, it may import everything else subject to a quick review by the Security Council.

Summarized MEMRI, "As has been the case since the 'oil for food' program was introduced in 1996, oil revenues will continue to be deposited in the special account administered by the U.N., and Iraq will, no doubt, continue to play its old tricks to subvert the system and generate illicit revenues."

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=27711