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Saddam's illicit oil trade was no secret to U.S. officials
By Ken Guggenheim
The Associated Press
Published December 13, 2004

Washington — Saddam Hussein was dead broke, the result of U.N. penalties. Or so it was thought.

So where did he find the money to pursue missile technology from North Korea, air defense systems from Belarus and other prohibited military equipment?

The CIA's top weapons inspector in Iraq said Saddam carried out much of that trade with proceeds from illegal oil sales to Syria, one of three Iraqi neighbors that bought oil from Baghdad in defiance of the United Nations.

Trade with Syria, Jordan and Turkey was the biggest source of illicit funds for Saddam, more so than the much-maligned U.N. oil-for-food program, according to investigations of Saddam's finances.

Though considered smuggling, most of the trade took place with the knowledge — and sometimes the tacit consent — of the United States and other nations.

With Republican-led congressional committees investigating allegations of oil-for-food corruption, some Democrats are pressing for answers about why the United States did little to stop the smuggling. The issue is among broader questions these lawmakers have about what U.S. officials knew about Saddam's overall illicit finances.

"I am determined to see to it that our own government's failures and oversights or mistaken judgments and decisions should also be exposed," said Rep. Tom Lantos, D-Calif.

Some Republicans are promising to hold hearings on the matter next year.

"I believe the smuggling issue is huge," said GOP Rep. Christopher Shays of Connecticut, chairman of the House Government Reform subcommittee on national security.

During the dozen years between the two Iraq wars, Saddam's oil sales were supposed to be limited to those permitted under the U.N. oil-for-food program. From 1996 to 2003, the program allowed Iraq to sell oil and use proceeds to buy food, medicine and other necessities.

That program has come under scrutiny because of allegations that Saddam received kickbacks and bribed U.N. and foreign government officials. Besides the congressional inquiries, U.N. Secretary-General Kofi Annan has appointed former Federal Reserve Chairman Paul Volcker to head an investigation.

Former State Department officials said the United States had little choice but to allow some of these sales to Iraq's neighbors.

Jordan was desperate after the 1991 Persian Gulf War. The U.N. penalties against Iraq cost Jordan a major trading partner. Iraq owed Jordan money, but couldn't repay without selling oil. Jordan needed oil, but couldn't import from other producers, angry that Jordan supported Iraq in the war.

"We realized that the Jordanian economy and the Jordanian state would collapse" if it didn't get access to oil, said David Mack, deputy assistant secretary of state for Near East Affairs at the time.

The United Nations formally acknowledged Jordan's oil dealings with Iraq in May 1991, without approving or disapproving.

Turkey had an important role in containing Saddam: Its Incirlik air base was used by U.S. military planes.

"With Turkey, it was plain illegal. It was smuggling, but everybody just said, 'Oh well, geez, it was too hard to try to do anything about that,"' Mack said.

Syria was another matter.

Allen Keiswetter, deputy assistant secretary of state for Near Eastern Affairs in 2000-01, said U.S. officials were aware that Syria was buying oil from Iraq through a pipeline.

"We objected to it mightily and often, but there did not seem any good way to stop it short of military action," he said.