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U.S. Department of State

Daily Press Briefing

MR. FOLEY:

...........

Finally, if you'll go to - not the video, but the static chart, I'd like to make a brief comment about the ongoing phenomenon of Iraqi oil smuggling which continues to this day.

Recently declassified satellite photography - of which this is one example - reveals that Iraq continues to smuggle oil in violation of UN sanctions.

This comes at a time when the government of Iraq has refused to participate in an extension of the Oil-For-Food Program. While Iraq's refusal to sell oil during this period has not caused immediate disruption to the humanitarian program because of the back log or what was in the pipeline, it's refusal to fund UN-approved purchases while filling the regimes coffers with illicit revenue in defiance of the UN shows the regime's arrogance and indifference. It demonstrates yet again that Saddam Hussein puts the interest of his regime ahead of those of the people of Iraq. That is because the revenues from the sale of Iraqi oil under the UN-administered Oil-For-Food Program are controlled by the United Nations to ensure that Iraqi imports are devoted solely to humanitarian purposes; whereas, the proceeds from the illicit and illegal sale of Iraqi oil obviously are not controlled by the international community or by the UN. They are controlled solely by Saddam Hussein and his regime and therefore there is every reason to believe that they are going for illicit purposes, or at least non-humanitarian purposes. There's no reason to believe that Saddam Hussein, who is denying his people the fruits of the UN's Oil-For-Food Program, is surreptitiously providing for humanitarian needs of his people through this sort of illicit smuggling.

Now, satellite photography taken on November 26 of this year - and this is a satellite photograph taken on that date - shows that Iraqi oil tankers - excuse me; not Iraqi, but differently flagged oil tankers - and these are where the arrows are. This is in the Shatt al-Arab and you see tankers in this waterway in the process of loading gasoil at a facility associated with the Basra refinery in southern Iraq. That refinery is somewhere off the satellite photograph.

Under UN Security Council resolutions and the Oil-For-Food Program, Iraq is permitted to export oil only through the approved facilities in Mina al Baqr in the northern Persian Gulf, which is, of course, way off the charts here; and by the oil pipeline through Turkey through the port of Ceyhan. The gasoil being loaded onto tankers in this photograph is being smuggled illicitly outside the Oil-For-Food Program to supply revenue that is totally under the regime's control.

What you see here, this is an oil storage facility. You see barges here; what the barges do is they go out to the different oil tankers that are positioned here and load the oil onto those tankers. These illicit oil exports via the Persian Gulf averaged about 70,000 barrels per day in November. And that represents the highest level since sanctions have been in place. During the last month, Baghdad earned an estimated $21 million from this trade. And again, at the same time, the regime of Saddam Hussein has rejected two-week and a one-week extension of the Oil-For-Food Program.

So, once again, the evidence shows that Saddam Hussein has no compunction about preventing the international community from helping the people of Iraq while at the same time insuring that he has enough money to line his family's pockets, to build palaces and vacation villages for regime supporters, and to buy prohibited goods, including inputs into weapons of mass destruction.

With that, I am ready to take your questions.

QUESTION: Are there any penalties that could be applied since he has violated UN sanctions?

MR. FOLEY: This is a very difficult challenge for the international community, precisely because there are a number of buyers and brokers in the oil market that are willing to purchase smuggled Iraqi gasoil. There is a maritime interdiction force which routinely patrols in the northern Persian Gulf to intercept these kinds of vessels smuggling gasoil but it is impossible to completely cut off the flow of illegal exports, given the fact that even the littoral states in the Persian Gulf don't all necessarily know what's going on in some of the shorelines there where the gasoil is offloaded, sometimes to middlemen, illegal smugglers themselves who are not necessarily acting with the knowledge, let alone the consent, of host governments.

Our aim is to ensure that as much of Iraqi oil production as possible goes through the approved Oil For Food facilities and to work with our partners in the international community to limit Iraq's ability to evade sanctions. I think you're aware that today there is, if it hasn't happened already, there is going to be a six-month rollover of the current Oil For Food Program which allows Iraq to sell, legitimately, up to $5.2 billion every six months of oil, the revenues of which are strictly controlled by the international community under the Sanctions Committee at the UN.

And, moreover, the Omnibus Resolution that is supported by the United States, that is supported by a majority of the members of the Security Council, would further enhance the Iraqi's ability to import oil. It would lift the ceiling in fact. And this would really open a much wider perspective for the provision of humanitarian assistance, of food, to the Iraqi people. This kind of smuggling has nothing to do with the international community's ability to help feed and care for the humanitarian needs of the Iraqi people. It occurs precisely because it evades the controls of the United Nations, allows Saddam to line his pockets, to build his palaces and to otherwise import goods that would be prohibited by the UN.

It is a problem. I don't want to overstate the dimensions. We had not seen activity of this degree through the month of September. It picked up significantly in November. In terms of what punitive measures the international community can undertake, it is obviously something that we are taking up with our friends and allies in the Security Council.

QUESTION: Did you say 70,000 barrels a day earning $21 million in November?

MR. FOLEY: Yes, that's what I said.

QUESTION: I'm not familiar with the term "gasoil." Is that diesel fuel?

MR. FOLEY: I would have to get the technical definition for you. It's something like that, is my understanding, yes.

QUESTION: Speaking of parts for weapons of mass destruction, earlier this week I asked about these electronic switches that the Iraqis were buying up, apparently buying medical machinery. Did you get any response yet?

MR. FOLEY: We're looking into it. We have begun to be in touch with the UN Sanctions Committee. The facts are not, I think, firmly established. I know I owe you an answer on that and we're going to continue to pursue the matter. When I am in a position of having confirmed those details and that information, I'll be willing to share it with you. In other words, we're working on it.

QUESTION: Can you say, given the increase in this kind of activity, has there been also an increase in the number of ships that have been caught by the international community in -

MR. FOLEY: That's a good question - that's a good question. I'd have to take that. As I said, it is difficult. Certainly, there is interdiction. As I said, the maritime interdiction force operating in the northern Persian Gulf area is patrolling and is intercepting vessels that are smuggling the gasoil. And I don't have the latest report on the incidents of intercepts, if you will.

But as I indicated, as these tankers go out into the Persian Gulf, they're able to hug the coastline and evade detection to some degree and it really requires a more concerted and vigilant effort on the part of some of the littoral states in order to crack down further. I don't think it's a problem that's going to be eliminated, but by giving greater publicity to the problem today we hope to increase awareness and therefore cooperation.

QUESTION: Which countries' flags these tankers carrying where oil is going to - which countries are they?

MR. FOLEY: There are numerous international flags, I think, under which these tankers operate in terms of where the gasoil is going. As I said, it's offloaded on the shoreline of the Persian Gulf. That involves, I think, a number of countries. But that is not necessarily the destination of the gasoil. It obviously can disappear or lose its identifying characteristics once it arrives on the market. But we don't believe - at least it's my understanding that the primary market for the gasoil would be the states along the littoral of the Persian Gulf.

QUESTION: (Inaudible) - the US or the UN are not putting pressure on those countries who are buying the oil from Iraq?

MR. FOLEY: Again, I drew a distinction between those who actually wind up buying the gasoil. That's, I think, probably impossible to track once it's been offloaded and gone to market. But what we are doing is trying to work with the countries of the Persian Gulf to try to see if they can upgrade their efforts in cracking down on the smuggling. Other questions on this or do you want to move on?

QUESTION: (Inaudible.)

MR. FOLEY: Yes, sure.

QUESTION: (Inaudible.)

MR. FOLEY: I didn't say complicit. I said that to some degree we do have a problem with some of the states in the region. But to a large degree we believe that a lot of this is happening without the knowledge of governments in the Gulf.

QUESTION: So the ships whose flags are being flown may not necessarily be involved?

MR. FOLEY: That's a separate issue and I believe that is also true, yes.

QUESTION: To what do you all - you had mentioned earlier that the this activity significantly since November and that relative to September it was a greater volume of smuggling. Do you all have an analysis or to what do you attribute this uptick in the smuggling?

MR. FOLEY: I'm not sure we've arrived at a judgment on that. As I said, it was actually, in our judgment, rather negligible for most of 1999 and through September and then it picked up significantly since then. I'm not sure that it's possible at this stage to analyze the ups and downs of the illicit activity. What we do know is that these revenues are not controlled by anyone except Saddam Hussein and his regime and that's why it's so disturbing.

QUESTION: You had also suggested in a previous statement that some of this money may go to the regime's efforts to purchase items that may help it reconstitute some of its WMD programs and we used to ask you and the other spokesman from time to time about what your analysis was of Iraq's progress while the inspectors were gone. What's your latest sort of sense of that?

MR. FOLEY: I'd be happy to - or I'd be willing to go through that for you. I did on Wednesday, I believe, and I'd refer you what I said because I kind of probably to the consternation of many of your colleagues, I went on at length about it. It was either Wednesday or Monday when I briefed.

QUESTION: Does the United Nations Security Council have all of this information about this process throughout last year for example and how does that factor into the discussions now under way on whether to continue Oil For Food or vote on the Omnibus -

MR. FOLEY: Certainly, we are sharing this information with countries in the Persian Gulf that are affected and with the United Nations and with members of the Security Council.

In terms of how it affects what's going on in the Security Counsel, in other words, the review by the Security Council of the current Omnibus Resolution which is designed, as I said, to actually enhance the Oil For Food Program to the benefit of the Iraqi people, to return inspectors to Iraq to do their job and to really do their job of disarmament of weapons of mass destruction, that as this matter is being considered in the Security Council today, we believe that it only - that this phenomenon of gasoil smuggling only reinforces our determination to see that the resolution which is going to be voted upon is a real resolution, a credible resolution, especially insofar as it pertains to two factors. One, the credibility of the inspection regime to go into Iraq to pursue disarmament of Iraq's weapons of mass destruction programs and, secondly, that under the Oil For Food Program, that the revenues and therefore the imports continue to be monitored and approved by the United Nations because it is clear through this effort that Saddam is trying to circumvent that system to obtain revenue that he can use for his own purposes, purposes, of course, which we cannot verify and certainly approve.

.........

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QUESTION: The Iraqis have said that the Pope can't go to Iraq after all. You obviously had reservations about the trip in the first place. Were you pleased about this development or do you have any comment on the way the Iraqis explained their decision?

MR. FOLEY: Yes. There are several parts to your question. First, no, we're not pleased. We certainly had reservations that had nothing to do with the Pope's intent. We were concerned that Iraq would try to use his visit to exploit his presence in Iraq for propaganda purposes. And so we were in discussion with the Vatican about our view that it would be important to the extent possible to try to avoid having or allowing the visit to be exploited by Saddam Hussein's propaganda machine. But we fully respected Pope John Paul II's intentions in that regard.

We believe the Iraqi Government has reconsidered its position on the visit of the Pope precisely because the Iraqis - or the regime, rather, of Saddam Hussein - was concerned that the Pope in his visit would tend to highlight Saddam Hussein's horrible abuses and horrible human rights record. And so we respect the Pope's - as I said, his intentions. We understood what he wanted to achieve by the visit. It's clear that perhaps Saddam Hussein felt that he couldn't adequately exploit the Pope's visit, but rather would have suffered from increased international opprobrium as a result of the visit.

In terms of the last part of your question, though, as to the reasons advanced apparently by the Iraqi regime for disinviting the Pope, we believe those arguments are bogus. The UN sanctions and the no-fly zones were never an impediment to the Pope's travel to Iraq. Had the Pope requested assistance, we, on our part, and I'm sure others in the UN, would have done everything possible to facilitate his visit and to ensure his safety.

QUESTION: Does that include suspending attacks on Iraqi air defenses during his visit?

MR. FOLEY: I can't get into operational matters of that nature. But I can repeat what I said. We would've done everything possible to facilitate the visit and ensure his safety.

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Thank you.

(The briefing concluded at 2:15 p.m.)

[end of document]