Iraq Survey Group Final Report
Use of Illicit Smuggling and Transportation Networks
Iraq has been at the center of various trade routes for centuries. Historically, this trade involved illicit activity, or smuggling, to escape taxes or to evade governmental oversight. Despite the imposition of sanctions by the United Nations in 1990, Iraq managed to circumvent UN sanctions through long-established business relationships with its neighbors, cross-state tribal connections, and use of ancient smuggling routes. Contemporary smuggling methods used by Iraqi trade companies used the entire spectrum of smuggling methods: disguising illicit shipments as legitimate cargo; hiding illicit goods in legitimate shipments; avoiding customs inspections; and for high priority, low-volume shipments, using Iraqi diplomatic couriers.
Captured documents indicate that there were approximately 500 official and unofficial border crossing points between Iraq and Syria, Jordan, Saudi Arabia, Kuwait, and Iran. According to the documents, there were also other border checkpoints between Iraq and Turkey and between Iran under Kurdish control. Despite the number of possible crossings, almost all goods entered Iraq at just five major border crossings and the port of Umm Qasr.
- Only goods supplied under the UN OFF Program were subject to UN inspection at the four permitted border points; Turaybil/Al-Karamah on the Jordanian-Iraqi border, Tanf/Al Qaim on the Syrian-Iraqi border, Habur Bridge/Zakho on the Turkish-Iraqi border, Ar’ar on the Saudi-Iraqi border and the port of Umm Qasr on the Gulf.
A mid-level Iraqi official asserted that Iraq signed a formal transport agreement in the 1990s. These agreements ensured that before 1999 Jordan was the primary conduit of illicit trade with Iraq. The change in the Iraqi-Jordanian relationship was promoted by a combination of improvement in Iraqi-Syrian relations, and Jordanian concern over increased political scrutiny in the United States.
Syria’s two primary transportation companies, SES International (previously known as Lama Trading Company) run by its General Manager, Asif Al-Shalish, and the Nurallah Transportation Company, had significant ties to the Iraqi MIC.
Smuggling by Air
A former Iraqi diplomat described how several times per month Iraqi diplomatic personnel would smuggle large quantities of money and prohibited equipment from Russia to Iraq. From 2001 until the fall of Baghdad, goods were smuggled out of Russia by Iraqi Embassy personnel. Equipment smuggled by this method included high-technology items such as radar jammers, GPS jammers, night-vision devices, avionics, and missile components of various types. A charter flight flew from Moscow to Baghdad every Monday, with a return flight on Wednesday. The flight was not inspected by the UN and was used to smuggle cash and other goods, which Iraq was not allowed to procure under UN sanctions, into Baghdad. Cash and equipment were smuggled two or three times a month by diplomatic courier, usually disguised as diplomatic mail. Bribes were paid to Russian customs officials to facilitate these illicit shipments.
- A former Iraqi MFA employee who worked as a diplomatic courier and had direct access to information reports that the Iraqi ambassador to Russia personally delivered GPS jammers to the Iraqi Embassy in Damascus during April 2003. The ambassador used a private jet for transport, with the GPS jammers concealed as diplomatic mail. The jammers were transferred to Al Qaim border checkpoint.
A senior executive in the MIC provided information detailing how direct frequent flights between Minsk and Baghdad were instituted in the summer of 2000. Belarus established a joint airline with Iraq that employed four Boeing-747s to transfer unspecified illicit items, experts, and officials direct to Baghdad under the cover of humanitarian aid missions.
Amman airport was also used as an air transshipment point. An Iraqi businessman declared that, a Jordanian company procuring illicit goods on behalf of Iraq shipped prohibited goods to Amman airport for onward transfer to Iraq.
Smuggling by Land
Iraq deployed many state institutions whose mission was to facilitate illicit trade by land. According to an Iraqi customs inspector with direct access, the IIS, the SSO, and the MIC used the border checkpoint system as a method of obtaining prohibited goods.
One such Border Check Point (BCP) facility was located at Turaybil. The activity at that BCP was representative of the smuggling infrastructure used to ship illicit goods into Iraq at other BCPs. Turaybil was part of the MoTC border checkpoint system that facilitated the movement of a large amount of contraband goods into Iraq. The Iraqi customs service was forbidden to inspect IIS shipments.
- Turaybil contained an IIS office, an ILTC office, an SSO office, and a Directorate of Military Intelligence office, according to information relayed by an Iraqi customs inspector with direct access. The “Orient Company” was often listed as the sender of equipment, with Iraqi front companies, including Al-Basha’ir, Al-Faris, Hatteem and Al-Faw, served as the consignees. The “Orient Company” was the most common cover name for illicit IIS-assisted shipments into Iraq—the company did not exist.
- The volume of traffic at the Turaybil border crossing meant that it would not be possible to adequately inspect traffic entering Iraq.
According to a captured document, days before OIF, the JEFF Corporation of Bulgaria offered and was prepared to export 500 Igla MANPADS missiles, 50 grip stocks, and two inspection platforms to Iraq. There is no evidence that the contract was fulfilled. The Iraqi front company named Al-Basha’ir, however, subcontracted the Nurallah Transportation Company of Damascus to ship the embargoed goods from a Lebanese port to Al-Basha’ir warehouses, and then on to Baghdad. The goods would take a total of three months to reach Baghdad from Bulgaria via the sea and multiple shipments by truck. An Iraqi businessman has confirmed that illicit equipment arriving in Damascus from Minsk, Belarus, was transferred to Baghdad via Syrian roads and railways.
Open sources detail how the Habur bridge or gate near Zakho on the border with Turkey was also a scene of illicit smuggling. The large volume of traffic across Habur bridge (see Figure 65) hindered the adequate monitoring of cargo. Recent open sources point to the fact that UN monitors were able to inspect only one in every 200 trucks that crossed into Iraq via this route.
Other sources suggest that Iraq may have also received goods smuggled in by truck from Dubai via Saudi Arabia. Illicit trade between Iraq and Iran was also problematic. Smuggling occurred on the road linking the Iraqi city of Al-Basrah and the Iranian city of Khorramshahr. Iran exported foodstuffs, luxury goods, and especially cement and asphalt along the 40-kilometer highway. A former employee of the MIC declared that the smuggling was under the protection of both the Iraqi SSO and the Iranian Revolutionary Guard Corps.
There are a dozen official entry points into Iraq from the neighboring countries (see figure 66) of Jordan, Syria, Turkey, Iran, Kuwait, and Saudi Arabia, three air entry points at Baghdad, Basra, and Mosul and two main ports at Umm Qasr and Al-Basrah. As indicated on the map, the UN monitored only five border crossings. The primary reason for the UN’s oversight centered on the UN OFF Program. UNSCOM weapons inspectors seldom visited Iraq’s border control points because they were based in Baghdad. The UN contracted two private companies from 1996 to 2003 (Lloyds Register and later a Swiss company called Cotecna) to authenticate and certify the arrival of humanitarian supplies under the UN OFF Program at three land border points. (A fourth was added just prior to OIF and the port of Umm Qasr (see figure 67).
This left at least two major border crossings and Baghdad’s airport completely unmonitored. Even at the monitored crossings, cargo not approved by the UN could freely enter Iraq because UN monitors only dealt with UN OFF cargo. Any non-UN cargo could freely enter Iraq at either monitored or unmonitored entry points.
Smuggling by Sea
During the sanction years, traders used a pool of private dhows, barges, and tankers to smuggle oil out and commodities into and out of Iraq’s southern ports with relative ease. It is possible that easily concealed military and dual-use items could have been transported by this method.
Smuggling via Jordanian Ports
The port of Aqaba in Jordan served as a maritime transshipment point. Beginning in the mid-1990s, Lloyds Register provided monitoring of goods arriving at Aqaba, but Jordan terminated the contract in 2000. The IIS had a representative in Aqaba, overseeing illicit trade including shipments made by a Middle Eastern firm.
From 1996 to March 2001, Mohammed Al-Khatib, a Jordanian businessman, became the most prominent intermediary for the Indian company NEC. Al-Khatib runs the Jordanian transport companies named MK-2000, Jordan Oil Services, and the Jordan Establishment for Transit, all located at the same Jordanian address. Al-Khatib facilitated the shipping of illicit goods to Iraq. Contraband was shipped by Pacific International Lines Ltd and Orgam Logistics PTE Ltd from India (Bombay and Madras) to Aqaba in Jordan. In all the deals:
- Al-Khatib was identified as the consignee.
- All voyages involved transshipment, at least one via Dubai.
- Goods were unloaded at Aqaba port by Al-Khatib and reloaded onto Al-Khatib company trucks for onward transit to Iraq.
- All payments by Iraq were made to Al-Khatib with Al-Khatib paying other players in the logistics and supply chain.
- Iraq submitted tenders to NEC through Al-Khatib.
Smuggling via Syrian Ports
Open sources reveal that a draft trade and security agreement existed between Iraq and Syria that covered a variety of economic and political arrangements. These included the opening of the Syrian ports of Al-Latakia and Tartus for Iraqi imports. It took approximately two weeks to deliver cargo to Al-Latakia or Tartus from Black Sea ports, according to a senior executive in the MIC.
Sources asserted that a heavy pontoon bridge set provided by the Ukrainian arms export firm Ukroboronservice to Syria was ultimately supplied to the Iraqi RG. It was initially delivered from Mykolayev on the Black Sea coast to Beirut in Lebanon on the MV Nicolas A, arriving in early October 2002. The equipment was imported by the Syrian firm SES International, probably covered by a Syrian end-user certificate. A delivery verification certificate signed by Syria’s Customs Department, verified by SES, indicated that the shipment had reached Syria by mid-October. Sources further revealed that elements of the heavy pontoon bridge set had been delivered to RG forces at Fort Rashidiyah, near Baghdad by early November. Other elements were deployed to a river-crossing training site between late October and early November of 2002.
Smuggling via the Arabian Gulf
The Iraqi Regime frequently employed smugglers who used oil smuggling routes through the northern Arabian Gulf. The Iranian Revolutionary Guard Corps Navy facilitated this illicit trade by providing safe passage through the northern Persian Gulf for Iraqi oil smugglers in return for a fee. This arrangement allowed oil smugglers a safe passage through Iran’s northern territorial waters, but smugglers remained subject to being interdicted by Iranian authorities farther south (see figure 68).
By calculating the $50 per metric ton of oil fee, the Maritime Interdiction Force (MIF) estimated in 2000 that Iran was taking about 25 percent of the profit from smuggled Iraqi oil (see figure 69). These high profits resulted from the difference between the market price for crude oil and the low prices Saddam was willing to charge to earn revenue that was not tracked by the UN.
The chart illustrates the facilitation role Iran played in Iraqi oil smuggling. On two occasions in 1998, Iran took actions to stop oil smugglers from using its territorial waters. The figure compiled by the MIF, clearly indicates the impact this action had on the volume of prohibited trade in the Gulf.
Iran and the UAE were the most frequent destinations for Iraqi smuggled oil. The MIF also found that the majority of the smuggling vessels were owned by entities from these countries.
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