SOURCES OF REVENUE FOR SADDAM & SONS A Primer on the Financial Underpinnings of the Regime in Baghdad September 2002 Prepared by the Coalition for International Justice 2001 S Street, NW, Suite 740 Washington, D.C., 20009 EMBARGOED FOR RELEASE UNTIL 6:00 AM EST, SEPTEMBER 18, 2002 PURL: https://www.legal-tools.org/doc/4ccef1/ SOURCES OF REVENUE FOR SADDAM & SONS Table of Contents Introduction .................................................................................................................................................. 4 The Iraqi economy prior to the imposition of sanctions............................................................................. 8 I. Exports under the UN Oil-for-Food Program........................................................................................ 9 Background ............................................................................................................................................ 9 Oil Exporting Procedure....................................................................................................................... 10 Logistics ............................................................................................................................................... 10 Foreign contracting companies............................................................................................................. 10 Clawbacks, kickbacks and retroactive pricing ......................................................................................... 12 Consuming nations ................................................................................................................................... 16 II. Imports Under the Oil-for-Food Program ........................................................................................ 18 Background .......................................................................................................................................... 18 Procedure.............................................................................................................................................. 19 Logistics ............................................................................................................................................... 21 Relations between the Iraqi government, BNP and the UN ................................................................. 22 The Major Traders ................................................................................................................................... 23 By Country ........................................................................................................................................... 23 By Company......................................................................................................................................... 24 Holds/ non-compliance......................................................................................................................... 25 Oil field spare parts .............................................................................................................................. 26 III. Iraqi oil exports outside of the Oil-for-Food program......................................................................27 Tankers to Turkey..................................................................................................................................... 27 Background .......................................................................................................................................... 27 Trading mechanisms............................................................................................................................. 28 Political economy ................................................................................................................................. 31 International response........................................................................................................................... 33 Tankers to Jordan..................................................................................................................................... 35 Background .......................................................................................................................................... 35 Trading Mechanisms ............................................................................................................................ 35 Political Economy ................................................................................................................................ 37 International Response ......................................................................................................................... 38 Pipeline to Syria ....................................................................................................................................... 39 Background .......................................................................................................................................... 39 Trading Mechanisms ............................................................................................................................ 39 Political economy ................................................................................................................................. 41 International responses ......................................................................................................................... 42 Barges hugging the Iranian coast ............................................................................................................ 43 Background .......................................................................................................................................... 43 Trading Mechanisms ............................................................................................................................ 43 By truck to Iran..................................................................................................................................... 45 Political economy ................................................................................................................................. 46 2 PURL: https://www.legal-tools.org/doc/4ccef1/ IV. Minor Sources of Iraqi Government Income................................................................................... 50 Transport.................................................................................................................................................. 50 Iraqi-Jordanian Land Transport Company (IJLTC).............................................................................. 50 Iraqi-Syrian Land Transport Company (ISLTC) .................................................................................. 50 Exports other than oil: Sulfur.................................................................................................................. 51 Trade Fairs............................................................................................................................................... 51 Free Trade................................................................................................................................................ 54 Fleecing Pilgrims ..................................................................................................................................... 57 Pilgrimages to the Shi'i shrines............................................................................................................. 57 Iraqis on Hajj ........................................................................................................................................ 58 V. The Family ........................................................................................................................................... 61 Udai Hussein ............................................................................................................................................ 62 Qusai Hussein........................................................................................................................................... 64 Barzan Ibrihim al-Tikriti .......................................................................................................................... 65 Lt. Gen. Hussein Kamel Hassan al-Majid................................................................................................ 66 Summary..................................................................................................................................................... 69 3 PURL: https://www.legal-tools.org/doc/4ccef1/ Introduction Since 1997 Iraq has earned an average of $6 billion a year in civilian goods via the United Nations Oil-for-Food program, the country’s only legitimate source of income, through which Iraqi oil is exported in exchange for imports deemed by international experts to have no military utility. On top of this, Saddam, aided variously by his two sons and close relations before them, has managed to earn more than $2 billion a year in hard currency by illegally exploiting the UN system and running extensive smuggling operations outside it. This paper details the sources of that estimated $2 billion, which is projected to increase to $2.5 billion in 2002. Oil smuggling accounts for 90 percent of it. Examined herein are nine channels outside the Oil-for-Food program through which