WASHINGTON -- The U.S. Treasury is compiling and plans to publish a list of Iraqi-controlled businesses worldwide in an effort to block Iraq from trying to evade United Nations-imposed sanctions by diverting goods through third countries.
"The pressure will mount. It will be harder and harder for them to even try" to break the embargo, said R. Richard Newcomb, director of Treasury's Office of Foreign Assets Control.
The new measure, which has been modeled on an important step in the U.S. embargo of Cuba, will attempt to assemble the names of "any kind of an entity that a government would need to operate in a worldwide trading environment."
It will list so-called Specially Designated Nationals of Iraq -- individuals or organizations that act in Iraq's behalf anywhere in the world.
The list will allow governments outside the United States to undertake enforcement measures similar to one that occurred near Cleveland last Monday, when U.S. authorities blocked transactions by Matrix Churchill Corp. -- an Ohio machine-tool company that U.S. Customs says was purchased by Iraqi interests for the purpose of illegally acquiring critical weapons technology.
On Wednesday, British authorities froze bank accounts belonging to Matrix Churchill's British firm and some belonging to its parent companies, Technology and Development Group and TMG Engineering.
Faced with a tightening worldwide economic embargo, Iraq will increasingly try to evade sanctions by diverting goods through third countries, Customs says.
"We're not going to see any direct shipments. What we're going to see is diversions," said Vincent S. Radosta, deputy director of strategic investigations at the Customs Service. "As their needs increase, we're going to see more efforts to acquire merchandise."
Using a variety of middlemen and such devices as false final-destination certificates, Iraq can acquire food, military equipment and spare parts on the world market and have them transported overland through neighboring countries, Mr. Radosta said.
"Anyone with access to a border is a potential diversion point," he said.
To date, U.S. officials claim that the embargo is effective and has begun to pinch Iraq economically. More than 95 percent of oil exports have been shut off, a $25 billion blow if sustained for a year.
Many staples are available to Iraq's populace only sporadically. Prices of rice and beans have risen sharply. Reconstruction and development projects that require foreign expertise have been slowed or stopped.
Nearly all industries, particularly smaller ones, such as those producing household equipment and textiles, together with food processing, have been hampered by the exodus of foreign workers.
The embargo will tighten further with expected U.N. Security Council action extending it to commercial air traffic, although some officials say the action is largely symbolic. Only a small quantity of goods is believed to have reached Iraq by air, largely from Libya and Yemen.
Under the proposed U.N. resolution, neighboring countries would be obligated to deny overflight permission to flights bound for Iraq unless the planes were inspected. If the aircraft refused a demand for inspection, penalties could be imposed on the airline or the originating country.
One practical effect of the new embargo would be to make insurance hard to get for airlines flying to and from Iraq and Kuwait.
While all the countries bordering Iraq have pledged to uphold the existing sanctions, Jordan continues to import 40 percent of its oil from Iraq.
In addition, a U.S. official says, Iraqis have been working worldwide to try to arrange deals for evading the embargo, which is already having an economic impact on a number of Iraq's trading partners.
Besides Jordan, whose economic hardships have been widely reported, 10 other countries in Eastern Europe, Asia and Africa have appealed to the United Nations for some relief.
"Keeping Iraqi goods out of the U.S. has proved relatively easy," said Customs Commissioner Carol Hallett. "Preventing arms, precursor chemicals and high-tech from leaving the U.S. en route to Iraq has not.
"One of the reasons, of course, is money -- lots of it. For profiteers, an embargo translates into an opportunity to demand premium prices for their criminal cargo," Ms. Hallett said.