1996 -- Iraq Saddam Hussein oil smuggling started under UN Oil for Food Program
IRAQ: Oil for Food Scandal
Author: Sharon Otterman
Updated: October 28, 2005
Council on Foreign Relations
The UN Security Council started the Oil-for-Food program in 1996 to allow Iraq to sell enough oil to pay for food and other necessities for its population, which was suffering under strict UN sanctions imposed after the first Gulf War. But Saddam Hussein exploited the program, earning some $1.7 billion through kickbacks and surcharges, and $10.9 billion through illegal oil smuggling, according to a 2004 Central Intelligence Agency investigation. Wide-scale mismanagement and unethical conduct on the part of some UN employees also plagued the program, according to the UN Independent Inquiry Committee.
2002 - US Administration rationale for Turkish smuggling of Iraqi oil
From CNN report 2 February 2005, "Documents: U.S. condoned Iraq oil smuggling:"
Trade was an open secret in administration, U.N.
Documents obtained by CNN reveal the United States knew about, and even condoned, embargo-breaking oil sales by Saddam Hussein's regime, and did so to shore up alliances with Iraq's neighbors.
The oil trade with countries such as Turkey and Jordan appears to have been an open secret inside the U.S. government and the United Nations for years.
The unclassified State Department documents sent to congressional committees with oversight of U.S. foreign policy divulge that the United States deemed such sales to be in the "national interest," even though they generated billions of dollars in unmonitored revenue for Saddam's regime.
The trade also generated a needed source of oil and commerce for Iraq's major trading partners, Turkey and Jordan.
"It was in the national security interest, because we depended on the stability in Turkey and the stability in Jordan in order to encircle Saddam Hussein," Edward Walker, a former assistant secretary of state for Near East affairs, told CNN when asked about the memo documents.
The memos obtained by CNN explain why both administrations waived restrictions on U.S. economic aid to those countries for engaging in otherwise prohibited trade with Iraq.
The justifications came at a time when the United States was a staunch backer of U.N. sanctions on Iraq imposed after it invaded Kuwait in 1990.
"Despite United Nations Security Council Resolutions," a 1998 memo signed by President Clinton's deputy secretary of state, Strobe Talbott, said, "Jordan continues to import oil from Iraq."
But Jordan had a "lack of economically viable alternatives" to Iraqi oil, Talbott's memo said.
Talbott's memo lauded Jordan's commitment to the Middle East peace process, citing the late King Hussein's personal efforts to broker a resolution to the Palestinian-Israeli conflict.
"Timely, reliable assistance from the United States fosters the political stability and economic well-being critical to Jordan's continuing role as a regional leader for peace," Talbott said.
Identical language was used four years later in a 2002 memo by Richard Armitage, undersecretary of state under President George W. Bush.
"Jordan has made clear its choice for peace and normalization with Israel," Armitage said, calling Jordan "an important U.S. friend" and citing its 2001 free trade treaty with the United States.
"U.S. assistance provides the Jordanian government needed flexibility to pursue policies that are of critical importance to U.S. national security and to foreign policy objectives in the Middle East," Armitage said.
Economic and military ties to Turkey were cited by Talbott and Armitage in justifying waivers of U.S. penalties to Iraq's northern neighbor. Indeed, their memos advocated hundreds of millions of dollars in aid to the U.S. allies.
Talbott's memo praised Turkey for deploying troops to the peacekeeping mission in the former Yugoslavia, policing heroin trafficking through Turkey, and cooperating with enforcement of the "no-fly" zone in northern Iraq by allowing U.S. and British jets to use Incirlik, Turkey, as a base.
Armitage's memo said Turkey "provides irreplaceable assistance in countering the threat the Baghdad regime poses" and lauded the U.S. ally for sending troops to Afghanistan after the September 11, 2001, attacks.
"The primacy of Turkey's role as a front-line ally in the war on terrorism is expected to assume even greater prominence and urgency as the global war on terrorism continues," Armitage said.
Deputy State Department spokesman Adam Ereli told CNN Tuesday the waivers were given to Jordan and Turkey every year since 1998.
Estimates of how much revenue Iraq earned from these tolerated side sales of its oil to Jordan and Turkey, as well as to Syria and Egypt, range from $5.7 billion to $13.6 billion.
This illicit revenue far exceeds the estimates of what Saddam pocketed through illegal surcharges on his U.N.-approved oil exports and illegal kickbacks on subsequent Iraqi purchases of food, medicine, and supplies -- $1.7 billion to $4.4 billion -- during the maligned seven-year U.N. oil-for-food program in Iraq.
The Government Accountability Office estimated last July that Iraq earned $5.7 billion from smuggling oil out of the country, especially to Jordan, Turkey, and Syria between 1996 and 2002.
A CIA-backed Iraq Survey Group report by former Iraq weapons inspector Charles Duelfer estimated last October that Saddam acquired $8 billion by smuggling oil to Jordan, Turkey, Syria, and Egypt through 2003, when oil for food ended with the toppling of Saddam.
The Senate Governmental Affairs Permanent Subcommittee on Investigations estimated last November that the Iraqi regime earned $13.6 billion by smuggling oil during the sanctions period it defined as 1991-2003, or five years before oil-for-food started.