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Last Updated: Friday, 15 April 2005, 19:41 GMT 20:41 UK
Turning a blind eye to oil trade

By Jim Muir
BBC News, Baghdad

An Iraqi oil field worker checks pipes at the West Qurna oil field in Iraq
Iraq made billions of dollars from illegal oil sales and bribes
Drive from Iraq's northern border along the main road into southern Turkey and even today, you will pass spectacularly long queues of petrol trucks.

Lined up patiently at the roadside, often two abreast, the chain of tankers, nose to tail, snakes for kilometre after kilometre through the rolling Turkish hills.

Drivers say that typically they have to wait around 10 days to get across the border.

Nowadays, the tankers are carrying refined petrol through the Habur border crossing into Iraq, and returning with Iraqi crude. There is nothing furtive or illegitimate about this commerce, which reflects Iraq's current inability to refine the oil it needs for its own consumption.

But similarly spectacular queues have been lined up on both sides of the border since as far back as 1991. For most of that time, the trade was technically illicit, busting the international sanctions imposed on Iraq until 2003 under UN resolutions.

In the early days, it was not carried out by dedicated fuel tankers but by ordinary goods trucks with enormous "spare tanks" welded on their undersides. They would carry Turkish products into Iraq - mainly to the northern city of Mosul - then fill their tanks with thousands of litres of diesel at rock-bottom prices.

The fuel would then be sold at market prices in Turkey, yielding enough profit to make the long waits worthwhile.

Blind eye

It was inconceivable that the Americans, the main architects of sanctions against Iraq, did not know the sanctions-busting trade was going on. Together with their British allies, US military officers in the early 1990s ran a Military Co-ordination Committee (MCC) based in north-west Iraq near the Turkish border.

US and British military jets regularly patrolled the skies over the Kurdish "safe haven" in northern Iraq under the Provide Comfort mission, run from airbases inside southern Turkey.

A decision had clearly been taken to turn a blind eye to the lucrative trade. Nato ally Turkey was complaining bitterly that it was suffering huge commercial losses because of the ban on trade with Saddam Hussein's Iraq.

The blatant "smuggling" at the official border crossing served the double purpose of providing the Iraqi Kurds, then under western protection, with their main source of income. Tolls paid by the Turkish truck drivers brought in millions of dollars a month.

In early 2002, relations worsened between Turkey and the Iraqi Kurdish faction controlling that stretch of the border, the Kurdistan Democratic Party (KDP). But the cross-border traffic continued, this time on the basis of a state-to-state deal between Ankara and Baghdad.

Crude trail

Astonishing though the truck queues on the Turkish border were, they yielded markedly smaller dividends for Saddam Hussein's embattled regime than bigger-scale operations which supplied Iraqi crude to Jordan and Syria.

A report last year by the CIA analyst Charles A Duelfer estimated that the Baghdad regime made $4.4bn from oil sales to Jordan, and $2.8bn from supplies to Syria. The trade with Turkey, the Duelfer report concluded, added a relatively modest $710m to Saddam Hussein's coffers.

The US was also clearly aware of these huge shipments to Jordan and Syria, and lesser ones to Egypt (fourth on the list of importers from Iraq, after Turkey). All four countries were regarded as allies, even at that time Syria, which had joined the coalition in the Desert Storm campaign.

As early as 1991, the UN's own Sanctions Committee "took note" of the Iraqi deliveries to Jordan. But nobody did anything about them. Jordan, like Turkey, was complaining about the disastrous economic repercussions it was suffering from the sanctions against Iraq.

All enquiries and reports so far have agreed that the figures involved in the smuggling operations dwarfed the sums the Baathist regime allegedly made from corrupt implementation of the UN-administered Oil-for-Food programme.

According to the Duelfer report, Baghdad benefited to the tune of around $1.7bn from Oil for Food kickbacks - a mere 16% of the estimated $11bn or so the regime allegedly gained from illicit commerce between 1990 and 2003.

Separate issue

Paul A Volcker, the former US Federal Reserve chairman who is heading the official enquiry into the Oil-for-Food scandal, has already made clear his view that smuggling represented a much bigger breach of sanctions than any deviations under the Oil-for-Food programme.

"The big figures that you see in the press, which are sometimes labelled oil-for-food - the big figures are smuggling, which took place before the oil-for-food programme started and continued while the oil-for-food programme was in place," he said in an interview late last year.

So when the UN Secretary General, Kofi Annan, said that the bulk of sanctions-busting was carried out by smuggling conducted "on the American and British watch", he was not saying anything new.

Both the UN and the US-led coalition - which was the power on the ground - were well aware of what was going on, and neither did anything.

Going along with a campaign of smuggling by an embattled regime may or may not have involved an element of culpability.

But that is a separate issue from allegations of corruption in the administration of the Oil-for-Food programme - an official UN-run project with the lofty aim of providing food and medicine for the long-suffering Iraqi population.

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