How Iraq Subverts UN Sanctions

(Al-Hayat [UK]/MEMRI) - Reimbursement for goods exported to Iraq under the "Oil for Food" program includes a 10% "pricing transfer" that is transferred in cash to the Iraqi treasury. Some commodities imported under the UN program are not needed for local markets and are re-exported by the government to earn illicit cash. Oil traders, often from Qatar, buy smuggled Iraqi oil at a discounted price, then arrange a new "certificate of origin" and sell it on international markets. Other smugglers sail their ships at night through the Shatt Al-Arab waterway between Iraq and Iran, claiming to be heading for Iranian ports, then turn north and pick up oil at Iraqi terminals. Traders who want to do business with the Iraqi State Oil Marketing Organization pay a special surcharge of $0.25-0.40 per barrel, though this is officially illegal under the UN sanctions regime. The Wall Street Journal (May 2, 2002) reports that Iraq receives at least $1 billion annually from its oil exports to Syria. On May 14, the Security Council approved a revised sanctions regime on Iraq. Yet Iraq may be expected to continue to subvert the system and generate illicit revenues.

2002-06-03 00:00:00

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