Mon, Dec 13, 2004 - Page 7 News List

US ignored Saddam's oil sales: CIA


Saddam Hussein was dead broke, the result of UN penalties. Or so it was thought.

So where did the former Iraqi president find the money to pursue missile technology from North Korea, air defense systems from Belarus and other prohibited military equipment.

The CIA's top weapons inspector in Iraq said Saddam carried out much of that trade with proceeds from illegal oil sales to Syria, one of three Iraqi neighbors that bought oil from Baghdad in defiance of the UN.

Trade with Syria, Jordan and Turkey was the biggest source of illicit funds for Saddam, more so than the much-maligned UN oil-for-food program, according to investigations of Saddam's finances.

Though considered smuggling, most of the trade took place with the knowledge -- and sometimes the tacit consent -- of the US and other nations.

With Republican-led congressional committees investigating allegations of oil-for-food corruption, some Democrats are pressing for answers about why the US did little to stop the smuggling. The issue is part of a series of broader questions these lawmakers have about what US officials knew about Saddam's overall illicit finances.

"I am determined to see to it that our own government's failures and oversights or mistaken judgments and decisions should also be exposed," said Representative Tom Lantos, a California Democrat.

Some Republicans are promising to hold hearings on the matter next year. During the dozen years between the two Iraq wars, Saddam's oil sales were supposed to be limited to those under permitted the UN oil-for-food program. From 1996 to last year, the US$60 billion program allowed Iraq to sell oil and use proceeds to buy food, medicine and other necessities.

That program has come under scrutiny because of allegations that Saddam received kickbacks and bribed UN and foreign government officials. Besides the congressional inquiries, UN Secretary-General Kofi Annan has appointed former Federal Reserve Chairman Paul Volcker to head an investigation.

The report by CIA weapons inspector Charles Duelfer found that oil-for-food corruption generated US$1.7 billion for Saddam. It said illegal oil contracts generated about US$8 billion: US$4.4 billion with Jordan, US$2.8 billion with Syria and US$710 million with Turkey. A short-lived agreement with Egypt generated US$33 million. Overall, Saddam had US$10.9 billion in illicit revenue from 1990 to last year, Duelfer said.

The Senate Governmental Affairs investigations subcommittee, using a different methodology, came up with a US$21.3 billion overall estimate, including US$13.7 billion from oil smuggling. The panel did not break that figure down by nation and it includes some smuggling related to the oil-for-food program.

Former State Department officials said the US had little choice but to allow some of these sales to Iraq's neighbors.

Jordan was desperate after the 1991 Persian Gulf War. The UN penalties against Iraq had cost Jordan a major trading partner. Iraq owed Jordan money, but could not repay without selling oil. Jordan needed oil, but could not import from other producers, angry that Jordan supported Iraq in the war.

"We realized that the Jordanian economy and the Jordanian state would collapse" if it didn't get access to oil, said David Mack, deputy assistant secretary of state for Near East Affairs at the time.

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