Saddam sets up new oil smuggling deal to beat sanctions
By Con Coughlin, Foreign Editor
<Picture>Saddam sets up new oil smuggling deal to beat sanctions
IRAQ has negotiated a secret deal with Syria to smuggle oil worth billions of pounds through a network of installations in Syria and Lebanon as part of Baghdad's continuing attempt to evade United Nations sanctions.
The deal, which was negotiated by Saddam Hussein's eldest son Uday, will enable Iraq to sell its oil on the international market through Syrian and Lebanese outlets in the Mediterranean. The Syrian authorities will receive a handsome commission for their co-operation, and a large share of the profits will go into Uday's personal bank accounts.
The deal has been negotiated as a direct result of The Telegraph's exclusive revelations in September that Iraq had been co-operating with Iran to smuggle large quantities of oil through the Gulf.
Details of the operation were provided by Sami Salih, an Iraqi businessman who masterminded the illicit oil exports, and defected to the West earlier this year. British and American warships, which are responsible for enforcing UN sanctions in the Gulf, moved quickly to close this smuggling route.
Following Mr Salih's defection, control of Iraq's illicit oil export network was seized by Uday Hussein, who uses the lucrative trade for illegal arms purchases and to line his own pockets.
Baghdad overcame its long-standing hostility to Iran when it established that oil smuggling operation, and relations with Syria, its latest partner, are generally far from cordial.
The main focus of the new network is the Iraq-Syria pipeline between Kirkuk, in northern Iraq, and the Syrian port of Banias. The oil will first be transported in a convoy of Iraqi trucks - each carrying 380 barrels - into Syria, passing through the Kurdish Al-Ya 'Rubia frontier area, far from the eyes of UN inspectors.
It will then be channelled through the Syrian section of the pipeline to Banias, where it will be refined. The oil will receive a Syrian certificate of origin and be sold on the international market as a Syrian product.
Some of the oil will also be transferred to Lebanese refineries where brokers will sell it in independent transactions on the world market. Several shipping companies in Greece and Cyprus have agreed to transport it.
All those involved in the illicit trade stand to make a handsome profit. Under an elaborate finance deal, Syria has agreed to pay Iraq $6 (£3.75) per barrel, compared with the $12 per barrel charged on the world market. Part of Syria's payments to Iraq will be made in much-needed military spares for helicopters and tanks, the supply of which is banned by UN sanctions.
Industry experts estimate that Syria can earn up to $2 million (£1.25 million) a day from the illegal trade with Iraq. Despite the long-standing rivalry between Damascus and Baghdad, Hafez al-Assad, the Syrian president, regards the deal as essential for his country's hard-pressed economy, which has been badly hit by the sharp drop in oil prices.
Saddam's regime is desperate to keep its oil smuggling network operational as the system generates hard cash which can be used for illegal purchases, such as arms, and enables the Iraqi leader's inner circle to maintain its high standard of living.
The steady income from the oil sales also provides Saddam with the funds to buy the loyalty of senior officers in the armed forces, which is the bedrock of the regime's survival.
The latest deal was ratified during a recent visit by Mohammed Jamal, the Syrian oil minister, to Baghdad. Syrian and Iraqi intelligence officers have played a key logistical role in establishing the smuggling route.
The deal is further proof that Iraq has no intention of abiding by the UN sanctions imposed at the time of the 1990 invasion of Kuwait. Baghdad has pressed UN officials unsuccessfully to lift the restrictions, claiming that Iraq has complied fully with all the requirements, including weapons inspections.
But yesterday's decision, by the Revolutionary Command Council, to halt all dealings with the weapons inspectors will almost certainly set Iraq on a new collision course with the West.
Britain and the United States, in particular, are determined to force Iraq to comply with the UN requirements, especially after it was confirmed last week that weapons inspectors had incontrovertible proof that Iraq has loaded deadly VX nerve gas on to its missile warheads.
telegraph.co.uk |
