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    another victory for democracy..., 2004-02-29 15:06:21 | Main | To the Editors of the Christian Science Monitor..., 2004-03-01 15:25:15

    oil for fantasy art:

    there appears to be a lot of chatter about the report that Saddam was skimming oil for food money since mid-2001. People appear to be either confusing or ignoring the black market sales relative to comparably minor levels of corruption in the oil for food program, and misunderstanding how the funds were embezzled. Certain parties are making their usual noises over just how awful the UN is, etc. But it's not the megaheist they're looking for. See CASI:

    While official figures for smuggled oil exports are not published, the usual estimate suggests that $2 billion is being exported annually [Robin Allen, Financial Times, 4/10/00]. US officials publicly estimate that $1 billion is being smuggled through Iranian waters [Robin Wright, Los Angeles Times, 6/6/00]. A former British diplomat in the Middle East suspects that the charges imposed by Iran for shipping through its waters mean that Iran earns more than the Iraqi government from these oil sales. In volume, an often quoted figure for smuggling is 100,000 barrels per day. This seems to derive from a July story which claimed that Iraq was refining 100,000 barrels per day in excess of it needs [Leon Barkho, 'Iraq says will expand smuggling of crude oil and refined products', Associated Press, 21/7/00].

    Whatever the precise sums resulting from this smuggling, it does benefit Saddam Hussein. According to this year's Forbes list of the World's Working Rich, Saddam's personal wealth has grown from about $5 billion in 1997 to $7 billion in mid-2000 [Forbes, 'How Dictators Manage Their Billions', 22/06/00].

    Some of the oil sold outside of 'oil for food' is sold at below-market rates, in the hope of purchasing political influence. The Security Council has looked away since the early 1990s when Iraq continued the concessionary sales to Jordan that had started before sanctions. Since November, a similar agreement seems to be in place with Syria, and negotiations on analogous terms are also under way with Lebanon.

    This is stuff that was going on under the nose of the US and its allies, who were aware of it and did nothing, giving it defacto condonement. According to the US embassy report [pdf] on the program illicit trade with Washington allies in the region was explicitly condoned:

    After the Gulf war, Jordan notified the Security Council that it was importing Iraqi oil (between 70,000 - 100,000 barrels per day as of March 2002, according to the GAO study) at below-market prices. According to Jordanian officials, the oil was in exchange for civilian goods and write-downs of Iraq’s debt to Jordan. The United States supported the Sanctions Committee decision to “take note of” the Jordanian purchases - neither approving them nor deeming them a violation. The Administration routinely waived unilateral sanctions on Jordan that could be imposed because of this trade

    According to the GAO study, Iraq exported the equivalent of 40,000 - 80,000 barrels per day of oil through Turkey in March 2002. The exportation was in the form of 450 Turkish trucks per day carrying Iraqi oil products (not crude oil) through the Iraqi Kurdish areas into Turkey in spare fuel tanks. The Turkish government taxes and regulates the illicit imports. As in the case of Jordan, the U.S. Administration had routinely waived the imposition of U.S. sanctions on Turkey for permitting this illicit trade.

    Saddam's kickback system under the OFP didn't begin until mid-2000, but if it had been discovered one rather wonders whether the UNSC members would have done anything about it.

    The companies that were giving Saddam the kickbacks obviously had to know about the scheme, and would be guilty of defrauding the UN as well as collaborating with a monstrous regime, but don't expect Instaflak and his ilk to pass any blame beyond the UN, e.g. "Those guys are either lying, or dumb as rocks", etc. Well no, the OIP funds were held in an escrow account in New York, per the procedures for processing OIP applications those funds passed directly from the escrow account to the companies in question - it never passed the hands of the Ba'ath government: the Office of the Iraqi Programme's only means to detect fraud was by discrepancies in sales data or by breaking protocol and persuing investigations into those companies signing the contracts, discrepancies were put up for review through the US-dominated sanctions committee, which apparently passed the buck further down the line:

    In the few instances when Mr. Sevan's office suspected an irregularity, the statement said, it notified the sanctions committee, "which then requested member states concerned to investigate."

    That ought be enough to spread the blame around quite generously. To end all this corruption economic sanctions should have just been lifted in return for the return of weapons inspectors, freeing up wasted efforts elsewhere for better enforcement of a broader arms embargo.

    As for the scale of the embezzlement the smuggling had been going on for a decade, a scale comparable each year to the estimated $2.3 billion the regime managed to squeeze through the OFP in the past three.

    Which source of illegal funds paid for all of Saddam's Boris Vallejo posters is a question we hesitate to answer.


:: posted by buermann @ 2004-02-29 16:48:48 CST | link





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