Volume 1 - Iraq Watch

Annex EIllicit Earnings Sources andEstimation MethodologyFigure 17 and the subsequent notes describe how ISGderived its estimates for Iraq’s various illicit revenuestreams.• The UN was aware of the Jordanian Protocol; consequently,it was not considered illicit. However, itis included in this section in order to document allthe revenue streams Iraq possessed through its tradeProtocols and oil sales programs.Jordan ProtocolIraq has provided little data on the earnings from theJordanian Protocol.• Data for 1991-95 is an ISG estimate based on accumulatedIraqi debt owed to Jordan over this periodof $1 billion—averaging $200 million in “income”for each of the five years. To this was added anestimate for the amount of trade to be financed byJordan under the trade Protocol of $200 million peryear. This provides a total of $400 million per year.Syria ProtocolData is based on SOMO actual collections. The programdid not exist prior to 2000. Any exports to Syriaprior to 2000 would be accounted for as private sectortrade.Turkey ProtocolData is based on SOMO actual collections. Theprogram did not exist prior to 2000. Any exports toTurkey prior to 2000 would be accounted for as privatesector trade.Egypt ProtocolData is based on SOMO actual collections. Theprogram existed only in 2001 and 2002. There is noevidence that oil exports to Egypt occurred except inthese years.Import KickbacksThis program did not exist prior to 2000. Iraq has providedlittle data on earnings from the UN OFF importkickback scheme. Data for 2000-2003 is based on:Regime Financeand Procurement• Data for 1996-98 is the Protocol trade figure citedin press and other reporting.• Data for 1999-2001 is based on SOMO data forthe value of invoices with Jordan under the generaltrade Protocol as well as a 60 percent credit, 40 thpercent cash arrangement with Jordan’s Ministry ofEnergy and Mineral Resources. SOMO did not provideactual collections for this period so the invoicefigure was adjusted downward based on the averagedifference (70 percent) between invoices and actualcollections in 2002 and 2003. Seventy percent ofthe SOMO invoice figure is used to estimate Iraq’sactual collections.• Data for 2002-2003 is based on SOMO actual collectionsunder the trade Protocol and 60/40 arrangements.• UN data for Iraq’s oil earnings per phase.• The amount of money actually spent on importsby the UN OFF program during its existence afterdeducting for UN purchases for the Kurdish North(contracts Iraq would not get kickbacks from).• UN data that over $16 billion in funds remainedunspent when OIF started—more than the $10 billionin earnings from phases 12 and 13 and indicatingthose earnings did not result in actual kickbacksreceived by Iraq.• An assessment that lags between earnings and contractsignings in the UN OFF procurement programresulted in the money earned in phase 7 of the program(prior to the implementation of the kickbackscheme) actually being used to sign contracts andobtain kickbacks in phase 8 and later—when thekickback program was in effect.217