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WebMemo #217 on Middle East

February 28, 2003

Facts on Who Benefits From Keeping Saddam Hussein In Power

By

France

  • France controls over 22.5 percent of Iraq's imports.[1] French total trade with Iraq under the oil-for-food program is the third largest, totaling $3.1 billion since 1996, according to the United Nations.[2]
  • In 2001 France became Iraq's largest European trading partner. Roughly 60 French companies did an estimated $1.5 billion in trade with Baghdad in 2001 under the U.N. oil-for-food program.[3]
  • France's largest oil company, Total Fina Elf, has negotiated extensive oil contracts to develop the Majnoon and Nahr Umar oil fields in southern Iraq. Both the Majnoon and Nahr Umar fields are estimated to contain as much as 25 percent of the country's oil reserves. The two fields purportedly contain an estimated 26 billion barrels of oil.[4]In 2002, the non-war price per barrel of oil was $25. Based on that average these two fields have the potential to provide a gross return near $650 billion.
  • France's Alcatel company, a major telecom firm, is negotiating a $76 million contract to rehabilitate Iraq's telephone system.[5]
  • In 2001 French carmaker Renault SA sold $75 million worth of farming equipment to Iraq.[6]
  • More objections have been lodged against French export contracts with Iraq than any other exporting country under the oil-for-food program, according to a report published by the London Times. In addition French companies have signed contracts with Iraq worth more than $150 million that are suspected of being linked to its military operations.[7]Some of the goods offered by French companies to Iraq, detailed by UN documents, include refrigerated trucks that can be used as storage facilities and mobile laboratories for biological weapons.
  • Iraq owes France an estimated $6 billion in foreign debt accrued from arms sales in the 1970s and '80s.[8]
  • From 1981 to 2001, according to the Stockholm International Peace Research Institute (SIPRI), France was responsible for over 13 percent of Iraq's arms imports.[9]
Germany
  • Direct trade between Germany and Iraq amounts to about $350 million annually, and another $1 billion is reportedly sold through third parties.[10]
  • It has recently been reported that Saddam Hussein has ordered Iraqi domestic businesses to show preference to German companies as a reward for Germany's "firm positive stand in rejecting the launching of a military attack against Iraq." It was also reported that over 101 German companies were present at the Baghdad Annual exposition.[11]
  • During the 35th Annual Baghdad International Fair in November 2002, a German company signed a contract for $80 million for 5,000 cars and spare parts.[12]
  • In 2002, DaimlerChrysler was awarded over $13 million in contracts for German trucks and spare parts.[13]
  • Germany is owed billions by Iraq in foreign debt generated during the 1980's.[14]
  • German officials are investigating a German corporation accused of illegally channeling weapons to Iraq via Jordan. The equipment in question is used for boring the barrels of large cannons and is allegedly intended for Saddam Hussein's Al Fao Supercannon project.[15]An article in the German daily Tageszeitung reported that of the more than 80 German companies that have done business with Baghdad since around 1975 and have continued to do so up until 2001, many have supplied whole systems or components for weapons of mass destruction.
Russia
  • Russia controls roughly 5.8 percent of Iraq's annual imports.[16] Under the U.N. oil-for-food program, Russia's total trade with Iraq was somewhere between $530 million and $1 billion for the six months ending in December of 2001.[17]
  • According to the Russian Ambassador to Iraq, Vladimir Titorenko, new contracts worth another $200 million under the U.N. oil-for-food program are to be signed over the next three months.[18]
  • Russia's LUKoil negotiated a $4 billion, 23-year contract in 1997 to rehabilitate the 15 billion-barrel West Qurna field in southern Iraq. Work on the oil field was expected to commence upon cancellation of U.N. sanctions on Iraq. The deal is currently on hold.[19]
  • In October 2001, Salvneft, a Russian-Belarus company, negotiated a $52 million service contract to drill at the Tuba field in Southern Iraq.[20]
  • In April 2001, Russia's Zaruezhneft and Tatneft companies received a service contract to drill in the Saddam, Kirkuk, and Bai Hassan fields to rehabilitate the fields and reduce water incursion. Together the deals were valued at $13.2 million.[21]
  • A future $40 billion Iraqi-Russian economic agreement, reportedly signed in 2002, would allow for extensive oil exploration opportunities throughout western Iraq.[22] The proposal calls for 67 new projects, over a 10-year time frame, to explore and further develop fields in southern Iraq and the Western Desert, including the Suba, Luhais, West Qurna, and Rumaila projects. Additional projects added to the deal include second-phase construction of a pipeline running from southern to northern Iraq, and extensive drilling and gas projects. Work on these projects would commence upon cancellation of sanctions.[23]
  • Russia's Gazprom Company over the past few years has signed contracts worth $18 million to repair gas stations in Iraq.[24]
  • The former Soviet Union was the premier supplier of Iraqi arms. From 1981 to 2001, Russia supplied Iraq with 50 percent of its arms.[25]
  • Soviet-era debt of $7 billion through $8 billion was generated by arms sales to Iraq during the 1980-1988 Iran-Iraq war.
  • Three Russian firms are suspected of selling electronic jamming equipment, antitank missiles and thousands of night-vision goggles to Iraq in violation of U.N. sanctions.[26]  Two of the companies identified are Aviaconversiya and KBP Tula.
China
  • China controls roughly 5.8 percent of Iraq's annual imports.[27]
  • China National Oil Company, partnered with China North Industries Corp., negotiated a 22-year-long deal for future oil exploration in the Al Ahdab field in southern Iraq.[28]
  • In recent years, the Chinese Aero-Technology Import-Export Company (CATIC) has been contracted to sell "meteorological satellite" and "surface observation" equipment to Iraq. The U.N. oil-for-food program approved this contract.[29]
  • CATIC also won approval from the U.N. in July 2000 to sell $2 million worth of fiber optic cables. This and similar contracts approved were disguised as telecommunications gear. These cables can be used for secure data and communications links between national command and control centers and long-range search radar, targeting radar, and missile-launch units, according to U.S. officials. In addition, China National Electric Wire & Cable and China National Technical Import Telecommunications Equipment Company are believed to have sold Iraq $6 million and $15.5 million worth of communications equipment and other unspecified supplies, respectively.[30]
  • According to a report from SIPRI, from 1981 to 2001, China was the second largest supplier of weapons and arms to Iraq, supplying over 18 percent of Iraq's weapons imports.[31]

United States

 

  • The United States remains the largest importer of Iraqi oil under the UN Oil-for-Food program. However, U.S. companies can no longer deal directly with Iraq for its oil imports. U.S. companies are forced to deal with third party vendors as a result of a ban on all American companies imposed by Iraq. In 2002, the U.S. imported $3.5 billion worth of Iraqi oil.[32] 
  • Iraq is the sixth largest supplier of oil to the United States. In 2002, imports from Iraq accounted for only 5 percent of total U.S. oil imports, dropping down from 8.5 percent in 2001. In addition, American oil companies have not signed a contract with Baghdad since 1972.
  • In 2002, the U.S. exported $31 million worth of goods to Iraq.[33]The exports consisted mostly of agricultural goods and machine parts. U.S. sales to Iraq dropped off after the Gulf War and resumed only on a limited scale in 1996 under the UN Oil-for-Food program.
  • According to the SIPRI arms transfers database, from 1981 to 2001, the United States was the 11th largest supplier of weapons and arms to Iraq, supplying approximately $200 million of Iraq's weapons imports. The top three suppliers, from 1981 to 2001, were Russia, China and France respectively.[34]



[1]Central Intelligence Agency, The World Factbook 2002, at http://www.cia.gov/cia/publications/factbook.

[2]Jon Talton, "French Ideals and Profits in the Iraqi Triangle", The Arizona Republic, February 23, 2003.

[3]Jon Talton, "French Ideals and Profits in the Iraqi Triangle," The Arizona Republic, February 23, 2003.

[4]Kenneth Katzman, Iraq: Oil-for-Food Program, International Sanctions, and Illicit Trade, Congressional Research Service, September 26, 2002.

[5]Evelyn Iritani, "Hussein's Government Signs Lucrative Contracts, Especially with Nations that Oppose the U.S. Led Effort to Oust the Regime," The Los Angeles Times, November 11, 2002.

[6] David Gauthier-Villars and John Carreyrou, "France Hopes to Use Old Ties to Land Role in Rebuilding Iraq", The Wall Street Journal, March 26, 2003.

[7] Stephen Grey and Jon Ungoed-Thomas, "France's $150m Deals linked to Iraq Arms", Sunday Times-London, February 23, 2003.

[8] Faye Bowers, "Driving Forces in War-wary Nations: The Stances of France, Germany, Russia and China are colored by economic and national interests", Christian Science Monitor, February 25, 2003.

[9]Information from Stockholm International Peace Research Institute (SIPRI), "Arms Transfers to Iraq, 1981-2001," at http://projects.sipri.se/armstrade/IRQ_IMPORTS_1982-2001.pdf.

[10]David R. Sands, "France, Germany Protect Iraq Ties," The Washington Times, February 20, 2003.

[11]David R. Sands, "France, Germany Protect Iraq Ties," The Washington Times, February 20, 2003.

[12]"Africa Analysis-Trade Points Way to Peace", The Financial Times: Asia Africa Intelligence Wire, November 19, 2002.

[13]Faye Bowers, "Driving Forces in War-Wary Nations: The Stances of France, Germany, Russia and China Are Colored by Economic and National Interests," Christian Science Monitor, February 25, 2003.

[14] Faye Bowers, "Driving Forces in War-wary Nations: The Stances of France, Germany, Russia and China are colored by economic and national interests", Christian Science Monitor, February 25, 2003.

[15]"Helping Saddam Rearm," The Wall Street Journal, October 11, 2002.

[16]Central Intelligence Agency, The World Factbook 2002, at http://www.cia.gov/cia/publications/factbook.

[17]Testimony provided by Ariel Cohen to the House International Relations Committee, "Russia and the Axis of Evil: Money, Ambition and U.S. Interests," February 26, 2003.

[18]Nelli Sharushkina, "Russia Plays the Field in Iraq-Mixed Signals Worry Baghdad," Energy Intelligence Briefing, February 5, 2003.

[19]Dan Morgan and David B. Ottaway, "In Iraqi War Scenario, Oil Is Key Issue," The Washington Post, September 15, 2002.

[20]Dan Morgan and David B. Ottaway, "In Iraqi War Scenario, Oil Is Key Issue," The Washington Post, September 15, 2002.

[21] "Russia Angles to Protect Post-war Interests", Energy Comapss, March 21, 2003

[22]Scott Peterson, "Russia's Newest Tie to Iraq: Moscow Is Set to Sign a $40 billion Economic Pact with Baghdad Next Month," Christian Science Monitor, August 20, 2002.

[23]"Mideast Tensions to Delay Iraq Iraqi-Russian Signing," Energy Compass, April 19, 2002.

[24]Dmitry Zhdannikov, "Russian's Grim About Working Under Saddam," The Houston Chronicle, April 14, 2002.

[25]Information from Stockholm International Peace Research Institute (SIPRI), "Arms Transfers to Iraq, 1981-2001," at http://projects.sipri.se/armstrade/IRQ_IMPORTS_1982-2001.pdf.

[26] Peter Slevin, "3 Russian Firms' Deals Anger U.S.", The Washington Post, March 23, 2003.

[27]Central Intelligence Agency, The World Factbook 2002, at http://www.cia.gov/cia/publications/factbook.

[28]Trish Saywell, "Oil: The Danger of Deals with Iraq," Far Eastern Economic Review, March 6, 2003.

[29]Kenneth R. Timmerman, "Rogues Lending Hand to Saddam," Insight on the News, March 4, 2003.

[30]Kenneth R. Timmerman, "Rogues Lending Hand to Saddam," Insight on the News, March 4, 2003.

[31]Information from Stockholm International Peace Research Institute (SIPRI), "Arms Transfers to Iraq, 1981-2001," at http://projects.sipri.se/armstrade/IRQ_IMPORTS_1982-2001.pdf.

[32] U.S. Census Bureau, "U.S. Trade Balance with Iraq", available at http://www.census .gov/foreign-trade/balance/c5050.html.

[33] U.S. Census Bureau, "U.S. Trade Balance with Iraq", available at http://www.census .gov/foreign-trade/balance/c5050.html.

[34] Information from Stockholm International Peace Research Institute (SIPRI), "Arms Transfers to Iraq, 1981-2001," at http://projects.sipri.se/armstrade/IRQ_IMPORTS_1982-2001.pdf.

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