The Report
of the Iraq Inquiry
•
Iraq’s
ability to use cuts in oil supply or threats of such disruption to
cause spikes
to world
energy market prices is likely to be temporary and limited by the
extent
to which
Saudi oil production can make good any loss of Iraqi
supplies.
•
Iraq uses
economic levers to put political pressure on Russia for support,
whilst
Russia sees
its political importance to Iraq as a means to extract
economic
benefit.
But Russia remains the dominant partner. At present Russia is able
to
exercise
the greater leverage.
•
Russian
policy on Iraq will continue to be heavily influenced by its
determination
to protect
its economic interests. The status quo provides the benefit of
a
privileged
commercial position; but contracts which can only be realised
after
sanctions
are lifted may not be honoured by a post‑Saddam
regime.
•
Iraq’s use
of trade to further its political influence will be limited in
future by its
inability
to significantly expand oil production.”
264.
Other points
from the Assessment are set out in the Box below.
The
Assessment concluded that Iraq deliberately used “trade with
other countries as
one way to
achieve strategic goals”.
“It had
worked hard to build up trading relations, legal and otherwise,
both with its
neighbours
and influential countries on the UNSC. The
granting of future oil/gas
extraction
rights for the post‑sanctions period is also a source of
leverage.”
In
addition, “Iraq
manipulates OFF contracts to obtain political support from
other
countries.” The
lifting of the ceiling on OFF contracts in 1999 had “increased
Iraq’s power
of
patronage significantly”. Iraq had “used the OFF programme to
divert funds illegally to
Baghdad
using a number of schemes, the most important being a 10 percent
commission
on all OFF
contracts for goods coming into Iraq and the imposition of a
surcharge on
exports
of its oil”.
Iraq was
also pursuing illegal trade which was described as “typically”
involving “the
transfer of
Iraqi oil at below world prices”. That gave the Iraqi regime
“direct access to
foreign
currency” and allowed it “to procure goods prohibited by the UN
from countries,
firms and
individuals willing to break sanctions”.
The JIC
assessed that Jordan and Syria were the two countries most
dependent on Iraqi
trade. For
Jordan OFF and other trade with Iraq accounted for “about 20
percent” of its
GDP; Syrian
trade with Iraq was estimated to account for about 10 percent of
its GDP,
not
including earnings of firms and individuals who dealt with Baghdad
directly or some
revenues
derived from the use of Syria as a major transit route for illegal
Iraqi trade. Illegal
oil exports
from Iraq through a pipeline with Syria began in 2000. Syria was
the largest
purchaser
of illegal Iraqi oil which it used for domestic consumption
allowing it to increase
exports of
its own oil.
With Egypt,
Turkey and the United Arab Emirates, trade was “relatively
significant”.
140