Volume 1 - Iraq Watch

providing the Iraq population with economic relief,Saddam was free to develop illicit procurement programsto arm his Regime against perceived and realthreats. By the end of this period, Iraq had developeda growing underground network of trade intermediaries,front companies, and international supplierswilling to trade oil or hard currency for conventionalweapons, WMD precursors, and dual-use technology.After 1996, the state of the Iraqi economy nolonger threatened Saddam’s hold on power in Iraq,and economic recovery underpinned a more confidentRegime posture.Transition and Miscalculation (1999-2003)The Transition and Miscalculation phases openedwith Iraq’s suspension of cooperation with UNSCOMand IAEA. The subsequent lack of effective monitoringemboldened Saddam and his procurementprograms. The Regime successfully manipulatedIraq’s oil production and sales policies to influenceinternational political actors and public opinion.However, during this period, Iraq’s long-neglected oilinfrastructure began to falter, resulting in an inabilityto meet demand. As a result, the growth in thelegitimate side of the Iraq economy slowed. Meanwhile,Saddam’s increasing illegitimate revenue andprofits from UN oil sales compensated for legitimaterevenue loses. Illicit oil revenue provided Saddamwith sufficient funds to pay off his loyalists andexpand selected illicit procurement programs. From1999 until he was deposed in April 2003, Saddam’sconventional weapons and WMD-related procurementprograms steadily grew in scale, variety, andefficiency. Saddam invited UNMOVIC and IAEAback into Iraq in September 2002, in the face of growinginternational pressure, calculating that a surge incooperation might have brought sanctions to an end.10