Global Policy Forum

Iraq's Neighbors Feel Pain of Sanctions


By John Ward Anderson

Washington Post
July 2, 2001

To truck drivers standing in a sliver of shade cast by an aging tanker truck waiting to enter Turkey with a load of embargo-breaking diesel fuel, the U.N. sanctions against Iraq are not a vital foreign policy matter loaded with global strategic significance, but an intensely personal issue.

"This is Turkey and there is Iraq with three kilometers between us, and America is on the other side of the world stopping us from doing our trade," said Seyfettin Inan, 42, a Turkish truck driver who has hauled oil from Iraq to Turkey for 15 years. These days, he supports his family of eight by making about one trip a month, which earns him perhaps $ 100.

"I could make 10 trips a day, but we have to respect all these concepts," he complained, as other truckers nodded. "The big states should come and see how we live and see if they could bear this type of poverty. But they just keep asking Turkey to do more and more."

Trade has been conducted for decades between the Kurdish areas of northern Iraq and southeastern Turkey. But the diesel fuel trade violates international sanctions imposed on Iraq after its 1990 invasion of Kuwait. Those sanctions require that all proceeds from Iraqi petroleum exports go to a U.N.-controlled escrow account to pay for humanitarian assistance for Iraq's 22.6 million people and to compensate victims from the Persian Gulf War.

Oil analysts say the illegal trade here -- and similar sanctions-evading trade between Iraq and its neighbors Jordan and Syria -- puts as much as $ 1 billion a year directly into Iraqi President Saddam Hussein's pockets to buy and develop weapons and to build ornate palaces. The neighbors are enticed into the transactions, experts said, because they receive the oil and fuel at deep discounts -- perhaps 40 percent below market value -- and the trade has become a critical part of their economies.

Trying to control this black market is a key goal of a U.S.-British plan to revamp the U.N. sanctions, which have become hugely unpopular because of their devastating effect on Iraqis, particularly children. The U.N. Security Council must vote on the matter by Tuesday.

The joint proposal for "smart sanctions" aims to revitalize the sanctions by lifting restrictions on civilian goods and tightening controls on weapons-related materials. The idea is to alleviate the widespread suffering and malnutrition of Iraqis by giving them greater access to food, medicines and other consumer goods, while preventing Hussein from developing weapons of mass destruction and rebuilding an army that could threaten his neighbors and destabilize the region.

Iraq, protesting the new sanctions proposal, stopped selling oil under the existing U.N. program on June 1, withdrawing about 2.3 million barrels a day from the world market. It continues to sell outside the sanctions regime to Turkey, Jordan and Syria.

The U.S.-British proposal has run into intense criticism -- particularly from Russia, which has been awarded billions of dollars in future contracts to develop Iraq's oil fields. Russia has threatened to veto the proposal -- and analysts say it now looks unlikely to be approved by the Tuesday deadline, which would be a serious political setback for the United States. Many critics say that even if the new sanctions were adopted, they would not stem Hussein's weapons programs or raise Iraqi living standards.

Furthermore, Hussein has threatened to cut off the oil trade to Jordan, Syria and Turkey if they implement the "smart sanctions," leading to a groundswell of opposition in frontline countries whose support is critical to the success of any sanctions program.

There are no official figures for the amount or price of unregulated oil seeping across Iraq's border. There are also no figures on how much money goes to Hussein. But oil industry analysts say that Turkey, Jordan and Syria import about 100,000 barrels a day from Iraq. Oil experts are skeptical of Turkey's claim that it imports only 12,500 barrels a day, although they acknowledge that the illegal trade with Turkey has recently declined.

Stopping this trade would be particularly devastating to Jordan, which has urged the Security Council to defeat the new sanctions proposal, even though the oil it imports from Iraq is permitted by the United Nations outside the oil-for-food program.

In a memo to U.N. Secretary General Kofi Annan two weeks ago, Jordanian Prime Minister Ali Abu Ragheb said that his country imports $ 750 million worth of oil a year from Iraq, its largest trading partner, and that 37 percent of Jordanian industries are dependent on trade with their neighbor. If trade were cut off, he warned, Jordan's economy might collapse.

Turkey faces a similar, but less severe dilemma. Officials say that the diesel fuel trade through Habur Gate -- the only border crossing between Iraq and Turkey -- has become the economic lifeline for southeastern Turkey, a region that is still emerging from 16 years of civil war that left it economically ravaged.

The diesel fuel trade here is a mom-and-pop business. Caravans of colorful, decrepit tankers -- as well as trucks with homemade tanks wedged and tied in their beds -- line up in the brutal desert heat and wait for days to cross into Iraq. They then spend days coming back through Turkish customs and waiting to unload their fuel at a central government depot, where the product is marked up, taxed and resold to distributors who haul it to market.

"When there's a 10-day holiday here, it's like a dead city, so imagine what would happen if the trade is stopped completely. It would kill people all across the southeast," said Ahmet Uzen, who operates an oil distribution franchise near the depot.

"The U.S. wants to close the border, and it looks like they're only doing it for their own interests. But they should also take into account the people living in this region," Uzen said. "We are all suffering from the embargo. Doesn't America know that? Particularly the people in Iraq. For 100,000 lira [about 8 cents] they are ready to die for you, those people are so desperate."

"If this border is closed, we'll all go hungry," said Gaffur Dagdelen, 31, who with three other family members owns a tanker that is their sole source of income. He was one of several truckers on the 12th day of a trip to the Iraqi diesel fuel loading station and back to the unloading depot in Turkey -- about 30 miles round-trip. He said that after expenses, he expected to make a $ 12 profit. "I'm very angry because these sanctions are not against Iraq but Turkey," he said.

Last Monday, there was a two-mile backup of 228 trucks and tankers waiting to unload their fuel at the Turkish depot outside Silopi, the first town inside Turkey on the road from Habur Gate. Officials said the backup was caused by a lack of capacity at the depot. They also said they are trying to ease the problem by allowing only about 250 trucks a day to enter Iraq.

"Everything we earn is from this gate," said Huseyin Akyuz, 24, a driver who said he had been waiting in the line for five days. "This is the economy for the whole southeast, and if anything blocks this gate, we'll all be very poor and hungry."

Government officials said that the diesel fuel trade and related businesses -- truck repair shops, tire dealers, restaurants -- are the region's main employers.

"This is the only source of income for people -- there are no factories here," said Abdullah Erin, the top Turkish official at the border crossing. He said that because of sanctions, Turkey has lost about $ 40 billion in trade with Iraq in the past 11 years. Independent observers said the figure is substantially less -- perhaps $ 15 billion.

Erin said the diesel fuel trade would be impossible to stop, even with tougher sanctions. "It would still go on. Nobody can tell a country to stop its border trade, and this is not even trade between Iraq and Turkey. It's one region to another."

That creates an additional problem, analysts said, because a key beneficiary of the illegal diesel fuel trade here is the Kurdish region of northern Iraq, which has been declared a "no-fly" zone and is protected by U.S. and British air patrols to ensure that it is not attacked by Hussein.

Oil officials and drivers said Hussein sells diesel fuel to the Kurdish-administered area of northern Iraq for 4 cents a liter -- about 15 cents per gallon. Kurdish middlemen mark up the price and sell it to Turkish truck drivers for 14 cents a liter. That 10-cent profit, according to Safeen Dizayee, the representative to Ankara for the Kurdistan Democratic Party, one of the main political parties running northern Iraq, helps pay for the local Kurdish government to administer the region -- from paying police to building new schools.

"The bulk of the local [northern Iraq] government's annual budget of about $ 170 million a year comes from border trade with Turkey, and the diesel fuel is a huge part of that," he said. "The question is, can the free world allow this to collapse overnight?"

The United States has said that a main focus of the new sanctions is to ensure that Iraq's neighbors are not harmed. U.S. and British officials have mentioned compensating them for any losses they might suffer from enforcing the proposed smart sanctions and losing the Iraqi trade. But for some, that promise rings hollow.

"I don't think anybody gives a damn if we are compensated or not," Ugur Ziyal, a top official in Turkey's Foreign Ministry, said in an interview in Ankara. Besides, he said, "The guys who are there are simple rural peasants. You can't compensate for that. To keep the activity going is very important. I don't see any alternative."

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