Examination of Witnesses (Questions 560
- 577)
TUESDAY 13 JULY 1999
DR LATIF
RASHID, MR
HOSHYAR ZEBARI
AND DR
SALAH SHAIKHLY
Mr Robathan
560. Is there a major trade in illicit drugs
in Iraq connected with the regime?
(Dr Shaikhly) We have not gone into that. I do not
know.
(Mr Zebari) Iraq has not been part of the drugs route.
The golden triangle includes Turkey, Iran and Afghanistan/Pakistan.
(Dr Rashid) Generally, in Iraq drug-taking is not
an acceptable habit.
561. What has been the impact of sanctions on
governance in general, not just at national level but at regional
and local level?
(Dr Shaikhly) The further one goes from Baghdad the
worse it becomes. I am reporting to you on the basis of what I
read in government-controlled Iraqi newspapers. For example, in
Baghdad electricity is cut for six hours a day while in the provinces
it is cut for 12 hours a day. Schools in the provinces are forced
to sell their various facilities to the private sector. These
are government directives rather than people taking their own
initiative.
562. What about the position of national, regional
and local governments? Is it made more corrupt or strengthened
or weakened by sanctions?
(Dr Shaikhly) All governors are military appointees—field
marshals, generals and what have you. Their main task is security
rather than administration. They are definitely corrupt. It is
reported in Iraqi newspapers that people's land and farms have
been confiscated. Their salaries are affected. The local legal
systems are also affected. This is something that we learn from
Iraqi newspapers. But they are no more or less corrupt than the
central Government in Baghdad.
563. I understand that in northern Kurdistan
a regional parliament was set up.
(Mr Zebari) A regional government is in operation
there. Although we have our own difficulties in the north, following
the peace agreement in Washington last year there is a chance
to have a unified administration. The Kurdistan Regional Government,
as we call it, is opening now and is operating in a kind of autonomous
way. It is not independent. It will also affect us because there
are certain needs that we cannot meet because of the sanctions.
For example, we do not have the raw materials to run the factories.
You asked whether sanctions could be lifted in the north. We have
been asking that certain items and materials be exempted in that
region. It has crippled everything, but there are ways and means
by which the Iraqi Government can unofficially, not legally, bring
into the country all the latest computers, cars and so on. There
is smuggling going on with Kuwait, Saudi Arabia and Dubai. There
is a route from Dubai to Baghdad to Iran, or the other way round.
Ann Clwyd
564. How does sanctions busting take place?
I think that everyone accepts that cross-border sanctions busting
goes on every day. Some of us have seen it with our own eyes,
particularly at the border between Turkey and Iraq.
(Mr Zebari) This has been tolerated. There is sanction
busting going on in all the neighbouring countries. For instance,
Jordan receives all of its oil from Iraq at a reasonable price.
Turkey has been asking for the same treatment. Certainly, the
neighbouring countries get some benefit from this. It involves
a limited amount of oil. That does not affect the overall sanctions
regime. For example, you have seen Turkish drivers come and collect
the oil and go back. But this is being done by two countries.
We are in the middle of it and have no control over it. For your
information, after the Washington agreement was signed in September
both Iraq and Turkey collaborated to reduce their trade for political
reasons so that the Kurdish administration would have insufficient
revenues to develop its institutions. Iraq cut oil production
by 3 million litres, not barrels, per day to 1 million or 0.5
million. On the other side, Turkey imposed a quota on the number
of trucks coming in. Even when the oil was available in the region
there was an insufficient number of trucks to take it. Now most
of the oil under sanctions busting is diverted to Syria; before
it was done through Abadan and the Gulf. After the Americans bombed
the Iraqi refinery at that point it was diverted to Syria. One
of the problems that the KDP has with the UK-Dutch proposal is
that it makes specific mention of Turkey, but it does not mention
Syria or all the neighbouring countries. The only way that you
can implement a UN programme is to have a viable administration.
If you are unable to pay the employees of the administration—150,000
people are dependent on the administration—you cannot survive
on just food and medicine; there are other needs. We have raised
these objections with the Security Council, with Washington and
the Foreign Office here. One way to address it, under Resolution
986, is to have 13 to 15 per cent of the aid in the north, but
we have always received the bottom line. One option is that we
should have 13 per cent and that the 2 per cent should be spent
on administration. Certainly, goods are smuggled into Iraq through
the Gulf and Europe. You can buy the latest computer in Abadan
downtown markets; you can buy the best four-wheeled vehicle from
Saudi Arabia or Dubai in Sulaymaniyah or Abadan.
565. In your view, why does the UN not impose
its will on those countries that are sanctions busting?
(Mr Zebari) Take the Turkish-Iraqi trade. According
to British Embassy estimates, in the south east of Turkey the
trade has created 200,000 jobs. Before those people were in a
state of rebellion with the PPK and other activities. People were
unemployed and so on. Therefore, that silk route has been revitalised.
Turkey needs that for its own reason. Because it has also suffered
as a result of the sanctions and has not been compensated for
it, it is allowing the trade to go on. We have benefited from
it to a certain extent.
(Dr Rashid) Sanctions busting is illegal, whether
or not we benefit from it. It is very difficult to control it.
Illegal imports into the country take place on a daily or hourly
basis. One needs a huge administration to control it. I think
that the United Nations should concentrate more on sanctions busting.
If it takes place it should not benefit one group or another.
This has created a big political problem and mistrust among many
groups in the area. I know it has benefits for KDP. We do not
know the exact volume of sanctions busting. There have been various
reports on sanctions busting through Turkey. Every time there
is a loading and unloading fee to be paid, apart from the cost
of the amount of oil that is carried. I am sure that you have
seen it. That trade does not take place with one or two lorries
but thousands, and it takes place on a daily basis. I hope that
once there is joint administration between the two main parties
in Iraqi Kurdistan there will be a combined effort to look into
this and ensure that the revenue is for the benefit of all regions
and not just one group or another.
Dr Tonge
566. Dr Shaikhly said that conditions in northern
Iraq were much better because the UN was administering the programme.
How can you be sure that that is so? Could it be due to sanctions
busting?
(Dr Shaikhly) My view is that if people bring in food
and medicines, all well and good. In a sense, it is like telling
a white lie. However, if sanctions busting brings in armaments
and rocket fuel I consider that to be a very serious matter. As
early as 1992, even before the implementation of Resolution 986
one could tell the difference as a result of the administration
in Iraqi Kurdistan. But because the UN supervisors see to it that
food and medicines go exactly where they should it may be there
is a slight difference, but it is very insignificant. People do
not bring in food and medicine because the differential in price
is such that it is much more profitable to bring in Apple Mackintosh
computers than to bring in 2 tonnes of wheat. Everything is grown
in the north. Medicine is not that expensive; it is available.
That reflects the difference in the premium on food and medicine
between the Saddam-controlled areas and Kurdistan. There is also
a difference in the cost of living. In the north it is quite different,
in view of the different value of the dinar. I cannot quantify
the contribution of sanctions busting to the wellbeing of an Iraqi
child in Iraqi Kurdistan.
(Mr Zebari) The whole concept of sanctions busting
would be irrelevant if the British-Dutch resolution was accepted.
There would be no ceiling on Iraqi oil exports. No matter how
much it shipped it would be legal.
(Dr Rashid) Not every part of the Kurdish region benefits
from sanctions busting, but all the reports by the United Nations,
NGOs, local administration, experts, medical groups and visitors
show that the situation as far as food, medical supplies and humanitarian
aid in the Kurdish region under the control of the United Nations
is far better than in the rest of Iraq. A number of reports have
been produced that provide facts and figures, and they can be
made available to the Committee.
Mr Khabra
567. We know that sanctions can be easily busted.
Who benefits from sanctions busting? The purpose of sanctions
is to destabilise the position of Saddam, but it does not look
as if they have been successful. They have given him an opportunity
to mount a propaganda campaign against the western powers. When
the western powers bombed Basra it strengthened his position.
He is not becoming weaker but stronger?
(Mr Zebari) There are three provinces that are outside
the control of the Iraqi Government. Two of them are under the
control of KDP and one is under the control of the PUK. Unfortunately,
there has been internal conflict, the details of which we do not
want to go into. The northern population amounts to about 3.5
million. Nearly 2 million people benefit from the sanctions busting.
On the other side, in Turkey sanctions busting has created 200,000
jobs for the local population. The aim is that the benefits should
go to all the people.
(Dr Rashid) Who benefits from sanctions busting? Basically,
the benefit goes to the regime in Baghdad. Without that there
can be no sanctions busting. Even the oil that comes through the
Kurdish region originates from the area that is controlled by
the regime. It is the regime that encourages sanctions busting
and it is the regime that benefits from it. The regime wants to
increase sanctions busting because the money goes straight into
its pocket without any account being given for it. Nobody knows
the volume or by how much the regime benefits. I do not agree
that Saddam is stronger with sanctions and the bombing of Baghdad.
Unfortunately, the sanctions have not been tightly and properly
supervised by the United Nations. The bombing campaign has not
been organised to end the regime, but it has weakened it. You
are looking at it from the outside and reading the headlines.
I agree with you that Saddam is still there, but I do not think
that he is stronger; he is much weaker.
568. From the remarks that you have made, would
you like a proper military campaign against Saddam to finish him
for ever? That was a view put forward during the last confrontation
and the western powers decided not to do that. Do you think that
there should be military intervention?
(Dr Rashid) We have our own ideas about how to get
rid of the regime, but I do not think that we should go into that
aspect in detail.
(Dr Shaikhly) We definitely do not want outside military
intervention. This is an absolutely no-go area as far as the INC
is concerned. We believe that change will come from inside, but
we need a few signals from outside to get the people going.
Dr Tonge
569. A very good friend of mine, Ian Ritter,
was imprisoned in Baghdad for about eight years by Saddam Hussein.
He was accused of bribing the mayor of Baghdad, as a result of
which the mayor of Baghdad was publicly executed. That indicated
that Saddam Hussein was keen on stamping out illegal trade and
malpractice, but presumably that was done for purely political
purposes and had nothing to do with the welfare of trade in Iraq.
Is he doing anything to prevent illegal trading?
(Dr Rashid) Minor things, yes. For example, if somebody
is caught stealing a piece of bread or a tomato to feed his children
his hand is liable to be chopped off, but his sons can steal the
entire wealth of the nation and sell it outside, or buy whatever
they want, without anybody looking into it. With all the suffering
in Iraq, the regime still has not stopped building palaces.
570. Presumably, in the case that I mentioned
the mayor of Baghdad was an enemy of the regime?
(Dr Shaikhly) Not at all. I knew him. The poor guy
was a very high official and a member of the Ba'ath party. His
misfortune was that he was not in Saddam's inner circle. All the
hangings for economic crimes were imposed on people to deter anybody
outside Saddam's family from indulging in such activities. As
you probably know, the son, wife, cousin and chief of the bodyguards
are the only people who are entitled to oversee illegal trade
and smuggling. At one time there was a programme of privatisation.
All state industries and farms were sold to the relatives and
cronies of Saddam Hussein, but woe betide anyone who is outside
that circle and attempts to do anything of this nature.
Mr Worthington
571. Can you go round the neighbouring states
and tell us their attitude to sanctions? Which ones do they enforce
and which ones are not enforced? Can certain states improve their
enforcement of sanctions? However, that depends on their attitude
in the first place.
(Dr Rashid) It depends. Iraq has six neighbouring
countries. Each has its own individual case. For example, Turkey
and Jordan would like sanctions to be lifted because they would
benefit from that. They have been business partners with Iraq.
A lot of Iraqi contracts have gone through Turkey; a good number
of Turkish businessmen and contractors have worked in Iraq. Turkey
always claims that it is losing $10 billion a year because of
sanctions. Jordan has been an Iraqi satellite for business and
imports and exports. Even now, most Iraqi-registered companies
function in Jordan. They import and export a lot of goods through
Jordan. If sanctions were removed it would be a different matter.
The relation between Iraq and Syria was very tense. There were
no commercial contracts between the two countries, but I do not
know what will happen in future. Unofficially, Iran is still the
enemy of Iraq. Because of the war business contacts have been
very limited. Kuwait and Saudi Arabia officially do not want to
have business contacts with Iraq. The two countries that might
benefit from sanctions removal would be Turkey and Jordan.
572. Is it worth looking at the capacity of
neighbouring states to improve their ability to prevent sanctions
busting, or is the will not there?
(Dr Rashid) It is certainly well worth it because
they do not want it to be known publicly that they are helping
sanctions busting.
573. But that is a matter of monitoring those
states rather than improving their capacity to impose sanctions?
(Dr Rashid) By the United Nations, yes.
574. During our investigation we have often
been encouraged to look for smarter sanctions instead of overall
sanctions, for example that we should target the elite. You said
that the regime continues to build palaces and the wealth of Saddam
Sudden increases. Are there any actions that can be taken to target
that wealth specifically that have not so far been taken?
(Mr Zebari) It is very difficult. Many of the materials
have a dual use. For example, steel bars can be used to build
a hospital or school and also a palace. The Saudis proposed the
maintenance of sanctions on military-related material but to lift
all other sanctions on goods and materials. But it is difficult
to draw the line on what is and what is not the smart imposition
of sanctions. I am sure that the Sanctions Committee at the UN
is the best body to contact as to how dual use materials should
be classified.
575. I am surprised at the answer. We are talking
about a relatively small group of people who dominate Iraq and
are using that country to accumulate wealth for themselves. Do
you not think that anything further can be done to tackle that?
(Dr Rashid) A lot of things can be done to tackle
the regime. For example, Iraqi diplomats should be debarred from
travelling outside the country. We have a list of suggestions
to make, some related to sanctions and some not. Those suggestions
cover the diplomatic and political spheres. I know that it is
a small group, but it has control of the whole country. There
is no one else in control. Iraq does not have institutions and
organisations like a democratic state in which actions can be
taken step by step. Saddam can control exports and imports from
a needle to the latest tank. How can you control the movement
of all goods? It is not easy.
576. But what about his personal wealth and
property? What about his bank accounts? Is everything possible
being done in that connection?
(Dr Rashid) Unfortunately, it has not been done. A
lot of ordinary Iraqis suffer because if they have savings in
the bank they are frozen. Saddam has created multi-million organisations
in various countries, from Mexico to Japan, in different names
and individuals, mainly Jordanians, Lebanese and Palestinians.
The movement of his wealth and accounts is conducted on a daily
basis. There has not been a thorough investigation of that.
(Dr Shaikhly) During the oil price increases in the
1970s the Revolutionary Command Council—the highest ruling
body in Iraq—adopted a resolution which meant that 5 per
cent of oil revenue was devoted to what was called the future
party fund. This was official and is on record; it is not just
an allegation. That money was taken from every barrel of oil sold
and stashed away in accounts known only to Saddam himself, his
cousin, who died in a very mysterious helicopter accident, and
one of his Ministers, who ultimately was executed. We know that
his brother, Barzan Tikriti, used to run it. He was at one time
Iraq's representative in Geneva. We have calculated that in early
1991 that money with interest would have amounted to about $31
billion. This has been dispersed among various anonymous companies.
We tried to initiate an investigation into it and lost the thread.
Even the US put one of its most intelligent chaps from an accountancy
firm to the task. He lost track. We have monitored funds going
round the world with things being brought and transferred from
place to place, beginning with Tunisia, Yemen, Afghanistan and
various other places. To give you a small anecdote, the day before
the Iraqi Ambassador to Tunisia defected two years ago a messenger
arrived with a diplomatic bag in the shape of a black bin bag
that contained $3 million which had arrived from Brussels. Saddam
does have funds outside the country. This goes round in bin bags,
diplomatic bags and whatever other bags he can lay his hands on.
We would do very well to try to trace those funds and freeze it.
Ann Clwyd
577. What do you suspect Barzan Tikriti was
doing in Geneva with those vast sums of money?
(Dr Shaikhly) They have weird and wonderful ways of
managing these funds. For example, they can invest it under various
names in the Central Bank of Jordan. It is not in the interests
of the Jordanians to say anything if, say, a lump sum of $10 or
$20 million turns up at a bank. That can be invested in Egypt
and many other places in Islamic countries, and they can get away
with it. Barzan knew a great deal about the funds. I believe that
he was managing a good part of it. Even people in England manage
Saddam's funds.
Chairman: We must end at this point. Thank you
all very much for giving us so much information. You have painted
a very sombre picture of a country whose economy is working roughly
at the same level as before the war but nonetheless is incapable
or unwilling to ensure that development takes place and that distribution
is at least fair. It is only in the northern states that needs
are being met. It seems that Iraq is a country that is highly
dependent on those who rule it. I think that in terms of all three
of your agendas that is a very difficult prospect to tackle, as
the sanctions were designed to do. Thank you very much indeed.
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