Volume 1 - Iraq Watch

• Illicit barrel surcharges on oil sold through the UNOFF program, hereafter referred to as surcharges.• Ten-percent kickbacks from imports authorizedunder the UN OFF program, hereafter referred to askickbacks.• Exports, primarily petroleum, to private-sectorbuyers outside the Protocol and UN systems, hereafterreferred to as private-sector exports.The Regime filtered the majority of the illicitlyearned monies through foreign bank accounts inthe name of Iraqi banks, ministries, or agencies inviolation of UN sanctions. According to senior Iraqiofficials at SOMO, oil suppliers and traders, whosometimes brought large suitcases full of hard currencyto embassies and Iraqi Ministry offices, so thatthe payments would be untraceable, filled these illegalbank accounts.During 1997 to 2003, Saddam generated enoughrevenue to procure sanctioned military goodsand equipment, dual-use industrial material, andtechnology as well as some legitimate uses. Thesesanctioned goods transactions will be described indetail in later sections. He used those funds to slowthe erosion of his conventional military capability incontravention of UN SC resolutions. Available informationalso indicates Iraq used trade Protocols withvarious countries to facilitate the delivery of somedual-use items that could be used in the developmentand production of WMD.Bilateral Trade ProtocolsIraq’s bilateral trade Protocols with neighboringstates provided Saddam with his largest source ofillicit income during UN sanctions. The Protocolwith Jordan ensured the Regime’s financial survivaluntil the UN OFF program began in December1996. Total income from the Protocols is estimated at$8 billion.• Baghdad coordinated Protocols with Syria, Turkey,Jordan, and Egypt. These governments were fullparties to all aspects of Iraq’s unauthorized oilexports and imports (see Annex A: Translations ofIraq’s Bilateral Trade Protocols).Analysis of Iraqi Financial DataThe following revenue analysis is based on governmentdocuments and fi nancial databases, spreadsheets,and other records obtained from SOMO, theIraqi Ministry of Oil, and the Central Bank of Iraq(CBI), among others. These sources appear to begenuine, of good quality, and consistent with otherpre- and post-Operation Iraqi Freedom information.This hard data are augmented, put into context, andexplained by statements from former and currentIraqi government offi cials, particularly from SOMO,the Ministry of Oil, the Ministry of Trade, and theCBI (for more details, see Annex E: Illicit EarningsSources and Estimation Methodology).• According to SOMO records, Iraq earned approximately$3.5 billion from illicit oil sales to Syria,Turkey, and Egypt under the Protocols from 2000until the recent war, exclusive of trade with Jordan.We estimate Protocol trade with Jordan added anadditional $1.4 billion since 2000 and $3 billionfrom 1991 through 1999.Jordan Trade Protocol. Jordan was the key to Iraq’sfinancial survival from the imposition of UN sanctionsin August 1990 until the implementation ofthe UN’s OFF program. Jordan was Iraq’s largestsingle source for income during the sanctions period.Oil sales to Jordan under Protocols began as early as1983. Terms were negotiated annually, including 1991and every year thereafter during sanctions. The UNSanctions Committee “took note” in May 1991 of Jordan’soil imports from Iraq. Essentially, the Committeeneither approved nor condemned Jordan becauseof its dependence on Iraqi oil at the time (see AnnexA: Translations of Iraq’s Bilateral Trade Protocols).• Iraq trucked both crude oil and oil products—fueloil, gas oil, LPG, base oil, and gasoline—to Jordanunder the agreement, according to SOMO records.Crude shipments rose from about 45,000 barrels perday (bbl/d) in 1990 to 79,000 bbl/d by 2002. Oilproduct shipments rose from 13,000 bbl/d to 20,000bbl/d over the same period.• Jordan was to receive up to 90,000 bbl/d of crudeoil that year. The difference between this numberand the 79,000 bbl/d figure announced in 199324