Iraq is smuggling crude oil worth as much as US$2 billion a year, even after it halted official exports that are controlled by the UN, US government and industry analysts said.
President Saddam Hussein stopped official sales on April 8, sacrificing funds for the purchase of food and medical supplies for the Iraqi people as a show of support for the Palestinians in their fight with Israel.
Smuggled oil, moving overland through Jordan, Syria and Turkey, and by tanker in the Persian Gulf, continues to generate revenue that's free from UN oversight.
"This kind of money is golden for Iraq because it's impossible to police," said Anthony Cordesman, a senior fellow at the Center for Strategic & International Studies in Washington and a former State and Defense Department official. "It can be used to obtain critical military spare parts or fund extremist activity that could further undermine the Middle East."
Iraq, the third-biggest oil producer in the Middle East, pumped 2.46 million barrels of oil a day in March, more than 3 percent of world supply, according to Bloomberg estimates.
The country's exports through the UN program netted $1.15 billion last month at an average rate of 1.76 million barrels a day, according to UN figures. Most of the proceeds are spent on relief supplies for the Iraqi people. UN-controlled exports via pipeline and tanker have been idle since April 8.
Oil exported outside of UN control fluctuates between 300,000 and 400,000 barrels a day, according to the US Energy Department's Energy Information Administration. The shipments generate cash that Hussein's government can spend as it likes, analysts said.
About 100,000 barrels of crude oil and motor fuels are trucked to Jordan each day, shipments that the UN says it has been aware for years and hasn't tried to stop. Iraqi Oil Minister Amer Mohammed Rashid told the official Al-Qadissiya newspaper on April 16 that the decision to cut off UN-controlled sales wouldn't affect deliveries to Jordan. Iraq provides some of this oil to Jordan free of charge.
The biggest conduit for illegal exports is a pipeline to Syria, which reopened in November 2000. An increase in Syrian oil exports since then has led analysts to conclude that Syria is importing as much as 200,000 barrels a day from Iraq, freeing up more of its own production for export.
In the 12 months through January, Syrian oil exports averaged about 460,000 barrels a day, according to London-based Lloyd's Maritime Intelligence Unit, which tracks tanker movements through a global network of shipping agents.
Syrian exports have been ``fairly sustained'' so far this year, said Andrew Lorimer, manager of oil trade analysis at the Lloyd's unit.
Syria's own oil production is about 520,000 barrels a day, and domestic consumption is 260,000 barrels a day, according to a February report by the Energy Information Administration.
"From our figures we can see their exports are almost on a par with their production, and if they are consuming about half of their own output, the excess exports have got to be coming from somewhere," Lorimer said.
The UK accused Syria at a UN meeting in January of helping Iraq break the international sanctions and has sought to bring those shipments within the UN program.
UK Foreign Office officials in London said Iraq's illegal exports through the pipeline are continuing this month, though Syria denies this.
``It is not functioning,'' said Fayssal Mekdad, deputy permanent representative at the Syrian mission to the UN in New York. Syria tested the pipeline in 2000, the first time it had been used in a decade, and determined that a new pipeline would need to be built, Mekdad said.
As much as 150,000 barrels a day have been smuggled to Turkey by truck, according to the US Energy Department. Some experts say those shipments have dropped to about 40,000 barrels a day.
A smaller amount, about 30,000 barrels a day, is smuggled on coastal tankers in the Persian Gulf for resale in the United Arab Emirates or Iran, according to analysts.
A ship smuggling more than a thousand tons, or 7,000 barrels, of Iraqi oil sank off the United Arab Emirates coast, the Associated Press reported on April 15, citing a US Navy official in Bahrain. The vessel had been boarded several days earlier.
The UN instituted strict controls on the proceeds from Iraqi oil sales to limit Hussein's access to hard currency until arms inspectors were certain that Iraq was no longer building weapons of mass destruction or missiles to deliver them.
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