Volume 1 - Iraq Watch

Many transactions for prohibited goods wereorchestrated through a trade protocol sponsored bythe Iraqi MoO. The second Deputy Director for theMIC, Dagher Mahmoud, was responsible for monitoringthese transactions.• A source with direct access estimated that therewas approximately $50 million in the trade protocolaccount. Goods and materials were occasionallyprocured on a cash basis from Egypt, but the majorityof the protocol was based on oil transshippedthrough Jordan.• M-23 officers from Balad, Iraq often accompaniedMIC personnel to Egypt and between 2000 and2003. M-23 was responsible for the physical securityof MIC facilities and personnel. Abd al-HamidSulayman Al Nasiri, the Director of M-23, personallywent to Egypt under the auspices of the IAECabout six months before OIF.After 2000, Yemen became a state trade intermediaryfor Iraq, providing Baghdad with “end-user” cover formilitary goods prohibited by UN sanctions and resolutions.There is no evidence, however, that Yemenwas complicit in the procurement of WMD-relatedcommodities.Throughout the 1990s, Yemeni President Ali ‘AbdallahSalih publicly supported UN sanctions againstIraq, but he remained concerned about the humanitarianimpact on Iraq’s citizens. Starting in February1997, senior members of the Yemeni Governmentprivately argued that Yemen should unilaterally abrogatethe UN sanctions on Iraq. They contended thatlifting the embargo would help to provide the Iraqipeople with much-needed humanitarian assistanceand enhance regional stability. By 1999, PresidentSalih was beginning to publicly criticize the UnitedStates and the UK for the imposition of no fly zonesover Iraqi airspace and the UN embargo.Regime Financeand ProcurementAccording to a senior Iraqi official from the MIC,the Egyptian state was involved in illicit trade withIraq. Known Syrian procurement agents for Iraqifront companies also assisted in some of these transactions.It is also apparent that the Syria-Iraq TradeProtocol facilitated illicit trade from Egypt. Individualbrokers and Iraqi foreign nationals in Egypt may havealso initiated illicit trade, motivated by the lure ofcorporate and individual profits.• Nitric acid supplies were reportedly the responsibilityof the Dr. Asif Shalish, Director of the SyrianSES International, who dealt regularly with Iraqiprocurement companies. All payments of the nitricacid were handled under the Syrian protocol andthe head of Al-Basha’ir, Munir Mamduh Awad al-Qubaysi.ISG, however, judges that the most likely transshipmentroutes through Jordan and Syria were based onthe ties to the trade protocols.YemenImproving bilateral relations between Sana’a andBaghdad in the late 1990s resulted in direct Yemeniparticipation in Iraq’s illicit procurement schemes.Opening Conventional Trade With Yemen forOil and CashIn addition to increasingly pro-Iraqi rhetoric, Yemenand Iraq also built closer trade ties in 1999. Throughregularly scheduled Iraqi-Yemeni Joint Committeemeetings, Iraq and Yemen had signed trade agreementsand Memoranda of Understanding aimedat strengthening bilateral ties, sparking economicgrowth, and exchanging energy experts in the fieldof natural gas and petroleum exploration. The twocountries also signed a customs treaty, whereby noduties would be paid on the transfer of goods betweenIraq and Yemen. Although these agreements werewithin the guidelines set forth by UNSCR 986, theyprovided an avenue for increasing trade coordinationand eventually led to sanctions violations.• The Iraq Government signed a $9 million deal inNovember 2000 with the Yemeni Hayal Sa’id groupof companies to provide Iraq with food and medical-related goods in exchange for hard currencyderived from Iraqi oil sales.• On 29 September 2000, President Salih authorizedone of the first commercial airline flights to Baghdad.Salih had rejected earlier calls by Yemeni131