Examination of Witnesses (Questions 540
- 559)
TUESDAY 13 JULY 1999
DR LATIF
RASHID, MR
HOSHYAR ZEBARI
AND DR
SALAH SHAIKHLY
540. You said that Russia and France had a particular
interest in the sanctions being removed. Do they already have
contracts in place?
(Dr Shaikhly) Yes.
541. Does Britain not already have contracts
in place?
(Dr Shaikhly) No.
542. Is that why we are being so nice, presumably?
(Dr Shaikhly) There could be contracts in place but
you are more respectful of international resolutions than Russia
and France. The Russians, French and Chinese have put contracts
in place particularly in the oil sector. These contracts have
two components. The first is the Iraqi component which is financed
by local money. The other is foreign currency. They are waiting
for sanctions to be lifted to get the foreign currency into the
country. But they have started to implement initial feasibility
studies and engineering investigations, such as soil tests, at
many sites. It is just like a car ready to go. All it needs is
the flag to come down and everybody will be rushing to race.
(Mr Zebari) As to the second part of your question—the
possibility of improving the food for oil programme—that
is a unique humanitarian programme which is aimed and directed
at alleviating the suffering of the people. For the first time
in many years the wealth of the country is being spent on caring
for the people through this programme. Iraqi oils sales are controlled
by the UN through escrow accounts and goods, medicines, foods
and other goods are distributed to the people. The programme has
been very effective and has helped the regime's propaganda war
that the west, the United States and Britain, are suffocating
and killing the Iraqi people and do not care or have any feelings.
But this programme was aimed at answering that accusation and
to show that the international community cares and there is an
option that the regime can follow. For nearly a year it refused
to accept it because it undermined its sovereignty, but the situation
in the country was so bad that it had to accept it. The programme
has also increased oil sales. Resolution 986 was followed by Resolution
1115 or 1116. That has increased the amount of Iraqi oil sales.
If this programme continued the best thing to do would be to bring
it under UN control throughout the country. The UN network of
agencies should be in charge of it. We have a living example of
that in the three provinces in the north. The UN Secretary General
has confirmed that that has been more successful. It has made
further improvements. I believe that that is one option that will
have a greater effect on the people.
543. I understand you to say that half of that
programme is administered by the regime?
(Mr Zebari) Iraq has 18 provinces and only three are
outside Iraq's control in the north (Iraqi Kurdistan). But the
capital and southern region are still under the control of the
regime.
(Dr Rashid) We deal with the question of the removal
of sanctions on a daily basis. Our answer is that, having thought
about the reality of the situation, sanctions cause suffering
to all the Iraqi people. There is no doubt about that. However,
before sanctions Iraq was a centralised country, as it is now.
To give one example, we have very little infrastructure in our
region. We have very small factories. All the spare parts for
those factories are kept in Baghdad. They must travel at least
400 or 500 km to repair the infrastructure. Why? The Government
do not allow any region to become economically self-reliant. Even
if you remove the sanctions and go back to square one everything
will be centralised. There is now in reality no sanction on Iraq
to prevent it from selling as much oil as it wants. The amount
of money available for food, medical supplies and humanitarian
needs is much more than was allocated before the Gulf War. There
could be an amendment to the sanctions regime, but we should concentrate
on the development and repair of infrastructure. We should bring
education, transportation and the environment into the resolution.
That is the solution, not the total removal of sanctions.
Ann Clwyd
544. In the north you are the victims of a double
effect: Saddam Hussein's embargo against you and the UN's embargo.
Is it realistic to argue that the UN embargo should be lifted
in the first instance against the north of Iraq, or would that
simply not be workable?
(Mr Zebari) I think that that is very realistic. We
have been lobbying for many years for the support of the international
community for an area of the country to be a model and example
for the rest of the country. But there are legal problems. It
is a sovereign country and we cannot legally lift the sanctions
on part of the country and keep them in the rest of the country.
If we do that the whole sanctions regime will be undermined.
(Dr Rashid) There are other ways to do it. First,
let us amend the sanctions to include infrastructure and development.
Secondly, an important role can be played by neighbouring countries;
they can be more flexible in allowing import to and exports from
the region. They are imposing restrictions on UN movements. We
come back to where we began: everything must go through Baghdad.
If one is allowed to have exports and imports through Iran, Turkey
and Syria our situation will be much better and the people can
benefit much quicker. We are always talking about the legal aspects
of the sanctions, but there is an illegal aspect. Saddam is smuggling
oil for cash. That is one of the points on which we must concentrate
through the neighbouring countries.
545. You referred to the involvement of France
and Russia in various ways with the regime. Do you have any concrete
examples of British businesses breaking the UN sanctions?
(Mr Zebari) I do not have specific examples, but I
am absolutely confident that a number of British businessmen,
or representatives of British companies, have travelled to Baghdad
to meet Iraqi government officials to talk about business after
the lifting of sanctions. That was also reported here in the FT
in 1996 and 1997.
546. We talked about the bishops. I have not
met them myself. Clearly, they feel that they are acting in a
responsible Christian and humanitarian way by arguing that sanctions
should be lifted. There are also proponents of the lifting of
sanctions among politicians, some very prominent ones, in the
House of Commons. Are you saying that they have all been duped
by the regime, or would they have any other reasons for pushing
for sanctions to be lifted?
(Mr Zebari) There is fatigue in many political circles
about the situation in Iraq. Despite all the pressure, Saddam
is still in power. It is said that if there were a change in regime
it would also create a wave of unpredicted results, destabilisation
and fragmentation. Therefore, some people are resigned to accepting
gradually the regime and its rehabilitation in the international
community. Here, there is a sharp difference between British and
American policy. America has changed its policy from containment
to containment plus a change in regime, while here in Britain
the policy is not to change the regime. That is not the business
of Britain; it must be done by the people of Iraq because Britain
does not interfere in other countries' affairs. One finds these
contradictions. The suffering of a large number of people will
definitely affect some people in the religious and political communities,
but some famous members of the Labour Party have been duped or
influenced by the regime in this regard.
(Dr Rashid) The sources of pressure on politicians
arise in three areas. Obviously, there are certain groups of very
sincere people. They see starving children on television and hospitals
without medicine. They believe the pictures without going into
the realities of the situation in too much detail. Those people
are sincere, and I am sure that they act in good faith. However,
with respect to some political figures, they have been naive.
I quote one politician in this country who was very proud to have
been invited to dinner by Tariq Aziz. He said that Tariq Aziz
was a very nice man because he had been invited him to dinner.
They have been naive and fallen into the regime's propaganda trap.
Chairman
547. * * * * *
(Dr Rashid) * * * * *
Mr Robathan
548. * * * * *
(Dr Rashid) * * * * *
549. * * * * *
(Dr Rashid) * * * * * I heard
him on radio. He kept implying that Tariq Aziz was a good man
because he had dinner with him. There is another source of pressure
from businessmen. Businessmen put pressure on the Foreign Office
and other institutions. I attend seminars and heard their point
of view stating: Why should one worry about it? Saddam is not
the only dictator. Business is being lost. They have contacts
with Iraq's neighbouring countries. They may not visit Baghdad
directly but they go to Jordan, Turkey and many other Gulf states
to establish business contacts with Iraq.
Ms King
550. Is there any member of the Iraqi opposition
under your umbrella who calls for the lifting of sanctions?
(Dr Rashid) Yes—the Communist Party of Iraq,
and certain individuals.
Barbara Follett
551. What is the extent of popular support in
Iraq for the lifting of sanctions?
(Dr Rashid) According to information—all three
of us are in daily contact with Iraq—I think that it would
be a nightmare for the Iraqi people if the pressure on the regime
was reduced.
552. As an economist, I know that to measure
the black economy is very difficult. I want to put a question
to which it may be impossible to give an answer. What is the scale
of the black economy in Iraq at present, and to what extent do
you think it has grown since the imposition of sanctions?
(Dr Shaikhly) I am glad that you are also an economist.
Perhaps I may first explain to Members the background to the question.
When sanctions were imposed on Iraq the first thing that the regime
did was to carry out adjustment, to use foreign exchange jargon;
in other words, it imposed a rationing system. That was good.
It created deflationary pressure and would have brought down demand
to a containable level. However, it began to print money. We have
information that probably every member of Saddam's family has
his own print. They produce so many Iraqi notes that Iraqi Kurdistan
has a dinar that has a different value from the rest of the country.
Before the invasion of Kuwait the Iraqi dinar used to be worth
$3.2. At present, each dollar equals roughly 2,000 dinars. You
can imagine what happened. That paper money flooded the market
and rationing went out of the window. It began to chase very few
goods in the market. The Government then began to finance their
imports through local currency and competed with the private sector
for the dollar. It is not true that at present there are no medicines
or food in the market. There is plenty of food and medicines.
The fact is that people on fixed incomes cannot get it. All of
us here have extended families and have a budget. For example,
I send my aunt and her family $100 a month and my cousin and his
family another $100 a month. That sum comes to 200,000 dinars
which would mean that any family could live very comfortably and
eat as much as it wanted. The food and medicine is there; there
is no shortage. They can visit the doctor and get treatment. One
day some Daily Mirror photographers went to Baghdad on
another mission and photographed taxis outside hospitals serving
as pharmacies. The doctor would give a prescription, but instead
of going to a pharmacy the patient would go outside and get the
medicine from the boot of a taxi. It is a car boot sale except
that the goods are medicines. The goods are there but people do
not have the money to buy them, even if sanctions are lifted.
If you sent in aeroplanes and spread Iraqi dinars it would not
help. A system is required where each dollar goes to the individual
Iraqi. That system is not in place. We estimate that before accepting
Resolution 986 Iraq's income from black market smuggling was about
$1.3 billion. That was controlled by Saddam's own family, for
example Yuday, his mother and others. This still goes on. In Iraqi
Kurdistan the local administration uses UN money plus its own
resources. That is why the situation is so much better in the
north. If Saddam at the centre had managed to use some of the
$1.3 billion, which he still gets, together with the UN allowable
funds the lot of the Iraqi people would have been so much better.
I know what Ms King suffers in her constituency; I suffer the
same from my own extended family. I am labelled as the agent of
all kinds of things because I do not call for the lifting of sanctions.
But if one looks rationally at what is happening in Iraq it is
nothing to do with the UN and the sanctions; it is due to the
maladministration of the economy and the Government's push to
get rid of all these restrictions. The black economy is huge but
it is a multiple of what Iraq gets at present. It can be measured
in billions of dollars, and it is certainly three times the present
sum. The per capita income has decreased from $2,000 in
1980 to $400 now.
553. Therefore, one has an impoverished population.
Is there any way of finding out how much foreign money is coming
in?
(Dr Shaikhly) One can find out the approximate figure.
Most of the transactions are illegal.
554. You are saying that the black market has
expanded. You quoted the figure of $1.3 billion. Was that the
size of it before sanctions or now?
(Dr Shaikhly) That was the figure up to 1996. Today
the figure is much higher.
Mr Worthington
555. You have used the word "maladministration"
several times in describing the conduct of the regime. Do you
mean inefficiency or that the regime has organised it so that
this is the outcome?
(Dr Shaikhly) It is both. The regime is definitely
inefficient. The fact is that we regularly meet ex-Ministers and
officials. But the second factor is more important: it is a deliberate
attempt by the Government to make the situation worse.
556. To starve the people and prevent them from
receiving medicines?
(Dr Shaikhly) To bring them to the brink of starvation
rather than complete starvation. One always looks up to receive
the next supply of food. Anything that Saddam gives to people
is called "mukarama", which in English means "gift".
Chairman
557. Is the objective to make people dependent
on the regime?
(Dr Shaikhly) Precisely.
558. You say that it is not sanctions but maladaministration
by the regime that creates the black market. But is it not true
that without the sanctions the black market could not have been
created?
(Dr Shaikhly) I accept that, but necessity creates
a black market. To supplement his income a teacher must work as
a taxi driver. That extra income is not declared. One has foreign
currency dealing and smuggling, with goods coming from Iran, Turkey
and Saudi Arabia. A great deal of that kind of activity is taking
place at the moment.
559. Who is enforcing the sanctions at the border?
(Dr Shaikhly) Not the UN people but officials.
(Dr Rashid) The black market is not something new
and has not arisen since the sanctions. Before the Gulf War Iraq
was very prosperous, yet people had to queue for eggs and vegetables.
Iraq does not have to import vegetables because they are grown
locally. We could easily export eggs. Saddam's policy has always
been that people must struggle for what they get. It is only through
the central government that they are allowed to buy or not to
buy items they need. The black market has always been the policy
of the regime. The price of a car in Iraq at one time was four
times the price paid in Europe. All of that was controlled by
the central government and the people around the dictator himself.
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