Volume 1 - Iraq Watch

Since 1991, Iraqi-Turkish trade revolved primarilyaround the Turkish import of Iraqi oil products outsidethe UN OFF Program. Iraqi oil sales to Turkeywere substantial. For instance, in March 2002, Iraqexported between 40,000 and 80,000 barrels of oil perday (bbl/d) to Turkey using approximately 450 to 500Turkish trucks to transport the oil and oil products inspare fuel tanks. In February 2003, in the prelude tothe war, this trade came to a halt. Illicit trade betweenIraq and Turkey was built on the foundations of pre-Operation Desert Storm trade—Turkey had traditionallybeen one of Iraq’s biggest trading partners. Thiswas formalized by a trade agreement signed by thetwo governments in 1993 and their other trade agreement,the Iraq-Turkey Trade Protocol, in 2000.Turkey was a secondary conduit for illicit purchasesof civilian goods from 2000 until OIF. Under theauspices of the Iraq-Turkey Trade Protocol, Iraqiministries and other entities would sign contracts withTurkish companies for goods and services prohibitedby the UN’s OFF program. Information from aSOMO database shows that Iraq signed contractsworth almost $304 million, with payment dates fromApril 2000 through April 2003. These contractsreflect Iraq’s imports financed from SOMO accountsunder the Iraq-Turkey trade Protocol. The fundsmost likely came from the protocol credit accountcontrolled by SOMO. The CBI controlled the fundsfrom the protocol cash account. ISG does not knowif there were other expenditures for imports throughTurkey from other SOMO or non-SOMO accounts(see Figure 58).The MIC was the only military or security entity thatopenly contracted with Turkish companies under theauspices of the Iraq-Turkey trade Protocol, accordingto the SOMO database.• The MIC contracted for $28 million worth ofgoods—9 percent of the total procurement noted.• Of this $28 million, 137 contracts were signed withat least 24 different companies. The single largestTurkish supplier seems to be Ozgin Cinko BakirveMetal Mamulleri, Imalat Sanayi, although the namewas listed in seven different ways. This companyaccounted for a total of 30 contracts with MICworth over $10 million—36 percent of MIC’s totalcontract value. Although the SOMO database doesnot include specific information about the goodscontracted for, the beneficiary companies listedinclude MIC research centers and manufacturingcompanies.• In contrast to Iraq’s arrangement with Syria, theMoD did not import goods from Turkey under itsown name. It did, however, import goods throughthe Ministries of Trade and Transport, accordingto the SOMO database. The MoT importedgoods valued at $2.7 million (10 percent of its totalcontracts) and the MoTC imported goods valuedat $48.9 million (59 percent of its total contracts)for MoD. Therefore, MoD’s share of total contractswas $51.6 million or 17 percent of the total contractvalue.• Because the MoT sometimes acted on behalfof other entities, it is possible some of the MoTtransactions not specifically mentioned as being onbehalf of the MoD as mentioned above also weredestined for Iraqi security, industrial, and researchfacilities. How much of these other MoT importsmay have been destined for these end users is notknown.In addition to the Turkish demand for cheap Iraqi oiland oil products, the Turkish government also tolerated,if not welcomed, the flourishing, mainly illicittrade conducted in the northern Iraqi free tradezone. Turkey and Iraq engaged in direct military tradefor common military use materials. For example,documentary sources reveal that in 1997 the IIS, theGMID, and the Iraqi Military Attaché in Ankara dealtwith the Turkish firm Sigma Gida IAS SAN VE TICLtd for the sale to Iraq of fireproof military clothing;150,000 meters of material were purchased for $27per meter. In lieu of cash, Iraq paid in oil.The Iraq-Turkey Trade Protocol also allowed Iraqto procure goods prohibited by the UN sanctions,although most of those goods were for nonmilitaryuses. The Iraqi Finance Minister approved cash allo-Regime Financeand Procurement105