- The Washington Times - Wednesday, October 25, 2000

IBRAHIMAL-KHALIL, Northern Iraq As dusk falls across the Kurdistan region, a ribbon of oil tankers is lined up waiting to cross the border into Turkey.

At least 200 trucks stretch toward the horizon on a typical evening, their drivers waiting to bring black-market oil out of Iraq's Kurdish-controlled north. By some estimates, as many as 2,000 tankers a day make the crossing.

There is no attempt to disguise the cargo. Everyone the drivers, customs agents, Iraqi officials, U.N. observers and interested governments knows exactly what is going on.

"Yes, of course," shrugged Taha Houmoud, Iraq's deputy oil minister. "Everyone knows this, even [Washington]."

Ten years after the U.N. Security Council imposed a sweeping economic blockade against Saddam Hussein's government in Iraq, it is apparent that the sanctions regime has begun to rot from within and erode from without.

Nearly a dozen countries have recently sent charter flights into Iraq, each carrying some quantity of ill-defined medical or humanitarian aid. Only one or two technically violated the comprehensive Security Council embargo against Iraq, which makes explicit exceptions for humanitarian assistance.

But diplomats say that as oil prices climb and the embargo grinds into a second decade without accomplishing its purpose, it makes little sense for Iraq's neighbors and former trading partners to honor it.

"The sanctions regime is pretty much crumbling," said one diplomat whose country is a member of the Security Council. The reason, he said, is recognition of the deep humanitarian crisis that persists in once-prosperous Iraq and resentment at the "political points" being scored off Saddam's regime by Western nations.

Opponents of the sanctions regime including 77 members of the U.S. House and Senate say the disintegration is a good thing because the people of Iraq have been starved and humiliated for too long.

In a letter to President Clinton, they said, "the time has come to turn a new page in our dealings with Iraq." But such advice carries little weight in an election year.

Those who support the Iraq embargo acknowledge the devastating humanitarian impact but contend that the strictures are the only way to weaken the repressive regime and prevent President Saddam Hussein from building weapons of mass destruction.

They add that Iraq is pumping record amounts of oil and should be able to lessen the crisis with better planning and cooperation with U.N. programs.

Indeed, many in Washington and among its Persian Gulf allies wonder with apprehension about how much oil is being pumped from Iraqi to an eager foreign market.

No one knows how much Iraqi oil seeps through increasingly porous borders with Turkey, Jordan, Iran and Syria. But there is no question that the black market is thriving, and revenues are quietly accruing for the Iraqi regime and its supporters.

Take those trucks on the Turkish border, for instance. Are any of them legal under U.N. sanctions?

"In the north, the only recognized export is through the pipeline into Ceyhan," said John Mills, a spokesman for the U.N. Iraq program. In the south, he said, there's the Min Al-Bakr facility in the Persian Gulf.

Iraq officially exported 16 million barrels of oil in one recent week, depositing some $450 million for the U.N. program that monitors the sales and then approves Baghdad's expenditures. The U.N. Office of the Iraq Program (OIP), has for four years managed a complicated rationing program that supplements the starvation-level diet of some 22 million Iraqi citizens.

There is no sugar-coating Saddam Hussein's brutal 1990 annexation of Kuwait, nor his continued threats to Israel. So why are foreign states, including U.S. allies, so eager to do business with him?

In some cases it's compassion, in others, greed.

Scores of governments, most major religious organizations and dozens of humanitarian groups around the world have demanded that the sanctions be lifted immediately, without regard to Iraq's disarmament.

"You cannot keep punishing the people of Iraq, regardless of how you feel about their government," said Hussein Hassouna, the U.N. representative of the Arab League, noting the devastating statistics from UNICEF and other aid agencies.

In January, the group issued a unanimous statement that urged Baghdad to cooperate with all Security Council resolutions and the recent expansion of then oil-for-food program. The same statement called for the sanctions to be lifted.

But in other cases, the motive may be less philanthropic.

"Iraq is using the one card it has, and that's oil," said Raad Alkadiri, a political analyst with Petroleum Finance Company, a Washington consultancy. "It's a valuable foreign-policy weapon, providing [oil] to those countries that need it and attracting those countries that would like to invest."

Still trading above $32 per barrel, not far below record prices, oil makes a potent invitation to political leaders and businesses.

Saddam has received with fanfare such figures as Venezuelan President Hugo Chavez and Iranian Foreign Minister Kamal Kharrazi.

When he was in New York last month for the Millennium Summit, Iraqi Deputy Prime Minister Tariq Aziz had little trouble scheduling meetings with leaders from around the world.

The sanctions are collapsing, said Mr. Aziz, "but not all at once. They can last another one, two, three years. But in the end, people will act in their own interests."

Government after government has sent trade missions into Iraq, often traveling over land on an arduous 12-hour journey from Amman, Jordan, to promote contracts with Baghdad.

Russian, Italian, Yugoslav, Syrian, Indian and other government delegations have turned up in the Iraqi capital, bidding for the opportunity to sell the government goods and services. Salesman from private industry make regular pilgrimages here to sell trucks, machine parts, building supplies and anything else that could be approved under exceptions to the U.N. embargo.

Baghdad has been using oil to grease friendships and cement alliances.

Iraq announced in March that it would sell Lebanon as much as $10 million worth of discounted crude oil to help it rebuild after Israel's air strikes last summer. Beirut said recently it had signed a deal with Baghdad to buy up to 400,000 barrels of oil this year at concessionary rates.

This arrangement is similar to one under which Iraq is permitted to supply its neighbor Jordan with nearly 5 million tons of crude oil and by-products annually, sometimes in barter for humanitarian goods.

This deal, which is outside the U.N. oil-for-food program, is renewed every year without objection from the United States or the United Nations. It is designed to ease the burden on indebted Jordan, whose economy was badly damaged by the Gulf War and continued sanctions.

The Turkish government which is said to have lost at least $3 billion through Iraqi sanctions now makes no effort to hide or justify the oil tankers arriving from northern Iraq. Turkey has even begun charging import taxes on it, like any other imported commodity.

"It's one of the great cynical political secrets," said Mr. Alkadiri in Washington. "If you want to keep Turkey on board, you have to let the oil go through." He said Washington is not likely to object to Turkey's black-market trade, given that Syria and Iran are considered hostile to U.S. goals.

The Iraqi Kurds who control the Ibrahim Al-Khalil border crossing collect as much as $15 from every truck that leaves Iraq, and a similar amount from those entering. They also get a small share of oil to use or sell, as they wish, according to a spokesman for the Patriotic Union of Kurdistan of Jalal Talebani in Northern Iraq.

In western Iraq at the border with Jordan, a U.N. inspector said: "For every one truck that we search, at least 20 just speed right past." He said that on the Turkish border, the smuggling is even more flagrant: "Into Ceyhan, it's just a joke. There are maybe 200 trucks for every one we we look at."

And so the neighbors benefit from open or illicit trade, but what about the Iraqis themselves?

It's hard to say.

In theory, every item in every Iraqi shop should be grown or manufactured inside Iraq, or imported under a program of U.N. exemptions. This is clearly not the case.

In most Baghdad neighborhoods, residents wear mended garments and plastic sandals.

But goods of all varieties are available in wealthy neighborhoods, from designer sunglasses and gold jewelry to freshly imported fish and perishable French chocolates. State-of-the-art dentistry and expensive prescription drugs exist for those who can afford them.

There are large walled-in residences going up in Baghdad's richer areas, and business remains steady and strong at private clubs. There is no shortage of luxury cars in the traffic that clogs downtown Baghdad and the major arteries.

The problem isn't the extra oil that reaches the market, nor even the luxury items imported. The concern is that Saddam Hussein uses unregulated billions to build new weapons of mass destruction.

Meanwhile, the Security Council appears as ossified as ever when it comes to how to define and enforce the sanctions, and how to eventually lift them.

Under current resolutions, the embargo stays until the new weapons inspection commission certifies Iraq as fully disarmed of proscribed chemical, biological and nuclear weapons.

But Baghdad refuses to allow the new inspectors to do their jobs, and the council is divided over how to advance the stalemate.

Some suggest that foreign governments are taking advantage of a perceived pre-election vacuum in Washington.

Even Hans Blix, the chief U.N. weapons inspector, says his teams are unlikely to get the green light from the Security Council before the end of November.

"No question they are seizing on the inertia created by the American elections," said Ambassador Anwarul Chowdhury, who represents Bangladesh on the Security Council. "They know that Washington is not in a position to do anything about it right now."

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