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1.2  |  Development of UK strategy and options, September 2000 to September 2001
326.  The record of Mr Blair’s discussions with President Putin in the margins of the
G8 meeting in Genoa on 21 July verifies Mr Blair’s and Mr Sawers’ accounts.178 The
priority was to stop Iraq acquiring nuclear weapons. Mr Blair observed that Iraq had
rejected proposals to allow UN observers to return as a first step to lifting sanctions,
and that the proposals on the table were to move to interim arrangements before UN
inspectors returned and sanctions were lifted. In addition, the issue of whether an
“outside enemy” led to people “rallying round and allowed Saddam to justify his strict
internal regime” was raised. Mr Blair was concerned about the humanitarian impact of
sanctions; and that the situation in Iraq made stabilising the Middle East more difficult.
Mr Sawers concluded that Russia was looking for a way out of the impasse.
JIC Assessment, 25 July 2001
327.  On 25 May, the JIC assessed Saddam Hussein’s strategy and “the continuing
erosion of sanctions”.179 That Assessment is addressed in the Box below.
JIC Assessment, 25 July 2001:
‘Iraq: Continuing Erosion of Sanctions’
The JIC assumed, for the purposes of its Assessment, that there would be no change to
the existing sanctions regime until the end of the year. It did not assess the prospects for
achieving P5 unity and the UK’s “new approach” in that timescale.
The JIC’s Key Judgements included:
Most Governments around the world still respect UN sanctions. Around
80 percent of Iraq’s overall revenues are controlled through [the] Oil-for-Food
[programme] … There is broad international consensus to maintain the arms
embargo at least as long as Saddam [Hussein] remains in power. This severely
limits Iraq’s ability to re-build its military threat.”
Nevertheless, the effectiveness of sanctions continues to erode … Iraq’s
illicit earnings are likely to exceed US$3bn this year …”
Syria, Jordan and Turkey benefited “from cheap Iraqi oil and associated trade
with Iraq. In the absence of compensation or P5 unity, they will remain reluctant
to support revised sanctions or allow closer monitoring of trade.” Regional
support for revising sanctions would be “increasingly difficult to achieve” as
Iraq extended “trade benefits to more Arab states” and the Palestinian crisis
continued.
“… Russia blocked a revised UN sanctions regime because it believed its trade
prospects would be severely curtailed. But Russia may not feel able to stand in
the way of a further resolution on sanctions.”
Iraq’s isolation has diminished … Wider Arab sympathy for Iraq is bolstered
by Saddam’s championing of Palestinian rights, the widespread Arab perception
178  Letter Sawers to McDonald, 21 July 2001, ‘Prime Minister’s bilateral with President Putin, Genoa,
21 July – Iraq’.
179  JIC Assessment, 25 July 2001, ‘Iraq: Continuing Erosion of Sanctions’.
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