Iraqi oil evades sanctions

Smuggling: A sharp rise in prices has spurred illicit trade that is allowing Saddam Hussein to rebuild his military, the U.S. says.

February 20, 2000|By Tom Bowman and Jay Hancock | Tom Bowman and Jay Hancock,SUN NATIONAL STAFF

WASHINGTON -- On a still night earlier this month, a Navy Seahawk helicopter sped across the dark waters of the Gulf of Oman and hovered above the Russian-flag commercial oil tanker Volganeft, anchored just off the United Arab Emirates. Suddenly 10 SEALs -- black-clad commandos carrying M-16 rifles and machine guns -- clambered up to the deck and rounded up the crew.

Scrambling up to the bridge, the commandos found documents claiming that the 4,000 metric tons of oil on board -- the equivalent of 29,200 barrels -- had been pumped in Iran. But satellite-based navigation records revealed that the tanker's route began in Iraq and that charts of the voyage had been erased, said U.S. government officials. Commandos interrogated crew members, who told different stories about their route and where they stopped in Iran.

Evidence seized aboard the Volganeft on Feb. 2 included a sample of the oil. A U.S. laboratory tested the sample. Several days later Defense Secretary William S. Cohen announced the results: The oil came from Iraqi wells, a flagrant violation of United Nations sanctions.

The story of the Volganeft is a common one these days in the Persian Gulf, where a sharp increase in oil prices has spurred a smuggling business that is making millions of dollars for Iraqi leader Saddam Hussein, allowing him to rebuild his military and maintain his security apparatus, U.S. officials say.

One official, who like most others interviewed for this article asked not to be identified by name, called the smuggling of Iraqi oil through the gulf the "main hole" in the tough U.N. trade sanctions imposed on Iraq after the Persian Gulf war of 1991. He estimated that more than 90 percent of the illicit oil is getting through the allied net.

Russia insisted that the oil on the Volganeft came from Iran, not Iraq, and asked a Swiss laboratory to provide another analysis. No results have been announced.

Through a spokesman at its mission to the United Nations in New York, Iraq denied that it sells oil in violation of international sanctions. Iran acknowledges that smuggling occurs but "rejects allegations of complicity" on its part, said Hossein Nosrat, press secretary in Iran's U.N. mission.

But U.S. officials and Western diplomats say that Iranian officials, at least including the country's elite Islamic Revolutionary Guard, receive a large portion of the smuggling dollar for providing ships with forged documents and safe passage through Iran's territorial waters -- out of reach of allied warships that are enforcing the decade-old oil embargo against Iraq.

"Clearly Iran is involved. They come out and help with the forged papers and such," said P. J. Crowley, a Pentagon spokesman. "Iran is very complicit in this." The historical enmity between the two countries, which fought to a stalemate in a war in the 1980s, is being set aside for a "business deal," said a Pentagon intelligence report.

United Arab Emirates

The Iraqi and Iranian middlemen in the trade are operating out of the United Arab Emirates, a U.S. friend in the region, bringing together the smugglers and officials of the Iraqi state oil company and arranging for the illicit traders to obtain the forged documents and transit papers from Iran's Revolutionary Guard, U.S. officials say.

After cruising southeast through Iranian waters, the ships must run a 30-mile stretch of international water where allied ships patrol and are empowered to stop and board them.

Once they reach the ports or territorial waters of the United Arab Emirates, which does not permit seizure and boarding in its waters, they face few if any restraints on selling their cargo.

"The U.A.E. is part of the problem," said one Western diplomat, adding that officials in the emirates have been approached by the United States and its allies.

Hamadi al-Habsi, charge d'affaires in the United Arab Emirates' Washington embassy, declined to comment, saying that U.S. officials who are unhappy with United Arab Emirate policies should communicate through diplomatic channels, not the media.

The State Department, mindful that a United Arab Emirates smuggling crackdown might trigger reprisals against the tiny emirate from Iran, officially plays down the United Arab Emirates' ability to block illegal trafficking. The Persian Gulf is broad, it says, the smugglers legion, the illegal traffic increasing. And on any given day, the United Arab Emirates' waters are congested by scores of ships carrying legal cargo that inadvertently lend cover to the smugglers.

"We have no information that the government of the U.A.E. is involved in the smuggling activity," said State Department spokesman James B. Foley, who said the United Arab Emirates has been "very supportive" of control efforts. "Smuggling of Iraqi oil through the gulf involves a number of countries and is an issue that needs to be addressed in a variety of ways: through the U.N. sanctions committee, the multinational interception force and at offloading points."

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