July-August 2001, pp. 23-7
Whether or not the world is ready, Saddam Hussein is back. With oil income now reaching the levels he enjoyed before the Gulf war, Iraq’s president is beginning to buy his way out of the “box” in which former Secretary of State Madeleine K. Albright famously declared we had confined him.
What Saddam chooses to spend his money on is of cardinal importance. During the decade before the 1991 Gulf war, when he could buy what he wanted, his weapons scientists imported factories to make poison gas, strains of microbes for germ-warfare agents, missiles that during the Gulf war would kill U.S. troops in Saudi Arabia, and equipment that, had the war not intervened, would long since have produced an atomic bomb.
But the Gulf war did intervene, and as a consequence, after its troops were routed in Operation Desert Storm, Iraq pledged to disarm. To verify that it had done so, a UN inspection regime was put into place, coupled with a ban on international trade with Baghdad that had been imposed in 1990. The inspectors were in for a big surprise. They uncovered a complex of secret sites in which virtually every kind of weaponry of mass destruction was being fabricated. Iraq had purchased giant magnets and centrifuges for enriching uranium, had imported German components to enhance the range of Scud missiles purchased from the Soviet Union, had bought plants for producing chemical and biological agents, and had actually loaded those agents into warheads. (The record of these purchases can be found in our online publication, IraqWatch.org.)
It was these discoveries, and the resulting friction with Saddam’s regime, that led in 1998 to the UN inspectors being forced out. The sanctions on international trade, however, remained in place, though increasingly they had come to resemble what President Bush last January characterized as so much “Swiss cheese.” Now a joint British-American proposal has been put forward that would replace the current broad-based sanctions with prohibitions only on the sale of arms and some civilian “dual-use” items. The new arrangement would also continue the current “oil-for-food” system, under which Iraq can sell as much oil as it wants but is supposed to deposit the revenue in a UN-supervised escrow account and use it only to buy civilian goods that the UN has specifically approved.
The new proposal—whether adopted by the UN or not—has little hope of stopping the Iraqis from sneaking in what they need to rebuild their weapons sites and sneaking out the oil to pay for it. For the truth is that even when the UN inspection regime was in place, the Iraqis had already figured out how to do just that.
Here is how the system works. Suppose an Iraqi site needs a new computer-controlled machine tool, one especially capable of making the high-precision parts needed for long-range missiles or nuclear weapons. Since such a purchase would be vetoed at the United Nations, the order goes instead to a middleman in Jordan. The middleman contacts the manufacturer, who cannot export to Iraq without the approval of the UN but is perfectly free to export to Jordan, unhampered by any embargo. The machine goes to the free-trade port of Aqaba, where the middleman—listed falsely as the final user—loads it on a truck and illegally sends it to Iraq.
The international community’s export-control system operates on the assumption that, in such cases, at least some steps will be taken to stop goods at the border, or, failing that, to punish malefactors later. But neither is happening. The only trucks that stop at the border between Jordan and Iraq are the ones carrying goods bought under oil-for-food contracts that have been authorized by the UN. These come to rest inside Iraq itself so that UN monitors can check the paperwork, thus enabling the seller to get his money. Other trucks, carrying contraband cargo, simply cross the border unchecked.
And how does the contraband cargo get paid for? According to the latest estimates, Jordan imports, at discount prices, about $300 million worth of Iraqi oil per year outside the UN oil-for-food program. (Jordan argues that it has no other source of affordable oil, so the UN and the United States have chosen to ignore this continuing breach in the embargo.) To get reimbursed for his hot cargo, the smuggler or his agent presents an invoice to the commercial attaché at Iraq’s embassy in Jordan, who pays him out of the proceeds of the sale of Iraq’s oil shipments. In effect, cut-rate oil is being bartered for whatever Iraq wants to buy.
There is, of course, a reason why Jordan does not police its borders or track what goes through its free-trade zones. If machine tools stopped coming out of Jordan, discounted oil would stop coming in. Jordanian middlemen, officials, and others who live off the discount would be hit hard. Besides, in addition to the $300 million in unregulated oil, Iraq directs oil-for-food contracts through Jordan. The money gives Baghdad enormous leverage.
A similar situation is developing in Syria. Last November, oil began to flow through a newly repaired Iraq/Syria pipeline, all of it outside UN control, at a value estimated at $1 billion a year. Although Secretary of State Colin Powell recently announced a Syrian pledge to bring this revenue under UN jurisdiction, Syria has taken no discernible action. As billions of dollars in unregulated cash pile up in Damascus, smuggling can be expected to explode. And Lebanon, which this past April was offered a deal similar to Jordan’s, appears to be next.
Since Saddam could sell his oil at a much higher price by operating through the UN, he is obviously expecting something in return from the slush funds he has been creating around his borders. What is he getting, and from whom?
Before being forced out in 1998, the UN inspectors compiled a series of confidential reports detailing what they knew about Iraq’s foreign suppliers. We have been able to see these reports, which have never been published. What they recount is an ongoing effort to build weapons of mass destruction. Throughout the 90’s, in violation of the UN embargo and in the teeth of the inspection regime, the Iraqis were continuing to “import goods . . . from at least . . . twenty different countries.” On Iraq’s shopping list were “turnkey facilities, full-sized production lines, industrial know-how, high-tech spare parts, and raw materials.” The success of this import program depended on “a disturbing proclivity on the part of several countries and companies to supply Iraq with missile technology and assistance, despite the sanctions maintained by the United Nations.”
The core of Iraq’s present supply network dates from the early 1990’s. As the result of a decision to concentrate its shopping expeditions in Eastern Europe, Iraqi delegations fanned out to Belarus, Ukraine, Romania, and Russia, waving petrodollars in front of these countries’ once proud but now starving missile and military plants. They returned with suitcases full of illicit contracts for virtually every kind of equipment a missile-maker might need.
The experience in Belarus was typical. In July 1995, a high-level Iraqi delegation arrived in Minsk. It came from the Badr State Establishment, which had achieved renown before and during the Gulf war. Badr’s machine tools had turned out components for the high-speed centrifuges that Iraq was counting on to process uranium for its first atomic bomb. Badr also made parts for the Al Hussein missile, one of which killed U.S. troops in Saudi Arabia during the Gulf war and several of which landed in Tel Aviv. Today, the plant still retains a line of powerful machine tools.
The main attraction in Minsk was a company called Belstroyimpex. There the Iraqis looked at high-end machine tools, a production line for making diamond-cutting tools, and another production line for powder metallurgy. Iraqi records show that a contract for these machines, or for an even longer list of equipment, was then being carried out. The final shopping list included the diamond-cutting tools, which can be used to make precision parts for nuclear weapons and long-range missiles, and a highly sensitive plasma spray machine that can be used to protect nuclear-weapon components from corrosion. The list also included design work for integrated circuits destined for a military electronics plant that, before the Gulf war, had produced military radars, missile components, and equipment for making nuclear-weapon fuel. The deal was obviously not submitted to the United Nations as required; if it had been, it would never have been approved.
Like so much other contraband entering Iraq, the machines traveled first to the free-trade zone in Aqaba. There they lay until word was given to transfer them to the buyer. An outfit in Amman called the Firas Trading Company served as broker. The confidence Iraq placed in its Jordanian arrangement was a marvel to the UN inspectors. As one of them (a non-native speaker of English) put it colorfully, “Iraq does not consider goods laying in a Jordanian free zone being threatened to loose control.”
Indeed not. During visits to the Badr site in 1996 and 1997, UN inspectors discovered both the powder-metallurgy line and the plasma spray machine (the latter manufactured by the Belarus firm Visoky Vacuum). Obviously the contracts had been fulfilled.* As far as anyone can tell, moreover, the Belarus connection is still active: when inspectors visited the Saddam State Establishment—known also as the Saddam Artillery Plant—in 1998, they observed the Iraqis installing fourteen new machines for manufacturing 75-millimeter lenses. The crates were marked “Republic of Belarus, Vitebsk Machine Building Plant” and “Free Trade Zone, Zarka, Jordan.” In light of the fact that the plant was making optical sights for artillery, one inspector remarked: “You can bet the lenses were not for eyeglasses.”
In Ukraine, the Iraqi focus was more specific: missile components. In September 1993, a Ukrainian trader with a Ph.D. in electronics named Yuri Orshansky arrived in Baghdad. He was accompanied by Dr. Yuri Ayzenberg from a Ukrainian firm, Khartron, well known for its ability to design missile-guidance systems. Within two months, an Iraqi delegation would travel to Ukraine to follow up.
The Iraqi delegation was led by Brigadier General Naim Bakr Ali, head of Iraq’s Scud missile-guidance program. With him were two officials from Iraq’s Missile Research and Development Center, and rounding out the team were Brigadier General Safa from Ibn Al-Haytham, Iraq’s largest missile-manufacturing site, and Major Raad from Al-Karama State Establishment, another such site. Their mission was clear: to negotiate agreements for as much help as they could get. As General Naim would himself tell the UN inspectors, his instructions were simple: “If you find something good, sign; if you do not find something good, then don’t sign.”
He signed. In Ukraine, Orshansky, Ayzenberg, and Naim executed a “protocol”—amounting to an outline of future cooperation—that promised Iraq the keys to a trove of missile technology. Ukraine would sell guidance components for surface-to-surface missiles, help Iraq develop batteries of the latest anti-aircraft missiles, provide equipment for missile research, and even establish a college to train missile experts. To get things started, Iraq asked for price quotes on a test stand for rocket motors, a series of gyroscopes and accelerometers for missile-guidance systems, and high-precision machine tools for making missile parts.
Under questioning, General Naim later claimed that the deal was supposed to take effect only after the embargo was lifted, and hence did not violate UN resolutions. As the inspectors pointed out to him, however, the agreement expressly stipulated that it would come into effect “from the moment it [was] adopted by the governments of Ukraine and Iraq”—that is to say, almost immediately. (Both Naim’s superior and the Ukrainian cabinet approved the deal in 1994.) General Naim also claimed that Iraq intended to work only on missiles that could fly under 150 kilometers, permitted under certain UN resolutions. But an appendix to the agreement described a system for “separating the warhead from the bus”; only long-range missiles, which Iraq is not permitted to possess, have warheads that are separated during flight from the rocket engine (or bus) that carries them aloft. In short, Saddam Hussein was aiming to project his power as far as possible.
In November 1994, General Naim led another Iraqi delegation to Ukraine. Aided by many of the same experts, he signed a second protocol as ambitious as the first. Khartron was now to provide four different types of missile guidance, two of them for separable warheads. According to the protocol, Iraq had already given Khartron the data needed to build the first type, and a schedule was included for receiving the data for the other three. Khartron also helped the Iraqis work on missile-guidance problems during the visit itself.
Iraq has always sought independence in missile production, and so the second protocol, like the first, took into account the ability to manufacture. To help the Iraqis do the necessary research toward that end, Ukraine agreed to supply laboratories, a wind tunnel, computer software, technical assistance, and training. For developing guidance systems themselves, Iraq would get raw materials, a production line for key parts, testing equipment, and a “clean room” to allow assembly of delicate parts in an atmosphere free of dust or dirt. Iraq would also get a production line to build rocket engines, plus equipment to test the engines and their sub-assemblies.
All in all, Yuri Orshansky would travel to Iraq at least six times between 1993 and 1995, and Iraq would send at least four delegations to Ukraine. But under questioning by the UN inspectors, General Naim claimed that Iraq had never actually received a single import. “No deals were ever finalized, no money was ever transferred, and not one penny was made” by the company he had set up to handle the missile deals. The inspectors, who concluded that Naim “was rarely honest,” did not believe his story. Nevertheless, they were unable to find any of the equipment listed in the protocols. None of it turned up at the missile sites they were monitoring, nor could they develop any evidence showing that it might be elsewhere.
In interviews with us, the inspectors have offered two possible explanations for this outcome. Either Iraq bought the equipment and hid it for future use, presumably when the inspection regime would be lifted, or Iraq may have been only shopping—comparing prices in Ukraine to those in Russia and Romania, where it was looking at the same kind of equipment. The latter possibility seems unlikely after so many trips, so much consultation, and so many contracts for specific items. More likely by far is that Iraq received some of the Ukrainian equipment it tried so hard to buy, and that the equipment is in use today.
As it turned out, moreover, Orshansky was offering more than just missiles. At an Iraqi site called Al Kawthar, the inspectors found a 300-page file detailing an illegal February 1995 deal for Russian aircraft. The agreement, with Orshansky’s firm Montelect, included Mi-17 helicopters and Su-25 fighter planes—military hardware that the embargo unquestionably banned—as well as engines and guidance systems for remotely-controlled drones. The drones were every bit as disquieting an item as the tanks and planes; they could be used to deliver poison gas or germ-warfare agents.
This Iraqi file did not reveal whether the helicopters and fighters were to be sent directly from Russian factories or were to be assembled in Iraq. A firm called the Russian Aviation Trading House was supposed to do the buying in Russia, and a Lebanese company, Amsar Trading, was to handle the shipping of arms into Iraq and of oil out. Livinvest, a Russian company, would obtain the needed “approvals” from the Russian government.
Whether this deal went through is likewise uncertain. The Iraqis claimed it did not, and that they never paid Orshansky anything. Whether or not that is true, he clearly remains in favor in Baghdad, and Ukrainian companies are still willing to trade. Only this past April, according to a news report from Kiev, more than 100 Ukrainian companies, including makers of space and aviation gear, displayed their wares at a Baghdad trade exhibition. The report quoted none other than “the honorary Iraqi consul in Kharkov,” Mr. Yuri Orshansky.
While Iraqi delegations were signing contracts in Ukraine, they were also signing them in Romania, in some cases for similar equipment. The main place of interest in Romania was Aerofina, a military firm that Iraqis had visited even before the Gulf war. In February 1994, a group of missile experts returned to Aerofina to ask for help with liquid-fueled missiles. This trip led to still further visits; in January 1995, experts from the Ibn Al Haytham and Al Karama missile sites signed a contract with Aerofina for 250 sets of missile-engine parts that Iraq could not produce itself.
This was, of course, egregiously contrary to the UN embargo. Aerofina nevertheless agreed to provide the special valves, sealing rings, needles, and O-rings that Iraq needed. Some of these parts arrived in Iraq around September 1995, intended for a regulator, the part of a missile engine that maintains thrust.
As in Ukraine, the Iraqis were also looking for missile-guidance components. For $1.16 million, Aerofina agreed in July 1995 to supply twenty sample gyroscopes; also included were the tools and equipment needed to produce them, and the equipment needed to test them. Earlier in 1995, Romania’s Industrial Group of the Army similarly agreed to help Iraq develop the propellant for a solid-fueled missile.
In addition to these contracts, the Iraqis managed to get other Romanian firms to sign protocols for an even broader range of assistance. Thus, in March 1995, the company GIA-RA agreed to provide 100 complete missile engines. Another firm, Romtechnica, undertook to provide engine-testing facilities, while a third, Turbomechanica, agreed to sell injectors and turbopumps.
Iraqi missile experts were grilled about all of these contracts by the inspectors. Once again the Iraqis would admit to getting only a small number of items—specifically, the parts for the engine regulators. All the other contracts, they claimed, had been canceled for lack of funds. Although the inspectors opine that Iraq received far more than it admits to, all they know for sure is that none of the contracted items ever turned up at the sites they were monitoring.
But they do know one other thing for sure: a considerable number of Romanian firms stood ready to violate the UN embargo. And it seems they still are. In February, a delegation of Romanian parliamentarians reportedly met with members of the Iraqi secret service to negotiate arms deals. The trip was apparently authorized by a Romanian party leader whose brother, a former Romtechnica employee, has been linked to shady arms deals in the past.
Finally, the Iraqis also tried their luck in Russia. In June 1993, the Al Karama State Establishment, in search of guidance components for Scud missiles, decided to employ a Palestinian middleman named Wiham Garbiyah. That September, Garbiyah shepherded an Iraqi delegation through Moscow on a successful hunt not only for the Scud components but for guidance elements for a much more powerful missile, the Soviet SS-N-18, which, after being launched from a nuclear submarine, can hit targets more than 4,000 miles away. Garbiyah’s first package of missile parts, which seem to have been mainly samples, arrived in Baghdad in December. It contained Scud components plus at least some parts for the SS-N-18.
By April 1995, Garbiyah was back in Moscow searching for more. In Zagorsk, a town near Moscow famous for its monastery and churches, he managed to buy 120 gyroscopes and accelerometers for long-range missiles. The seller was Niikhsm, a missile-dismantlement plant. Another Russian company, Mars Rotor, obligingly tested the instruments before they left the country. On July 15, 1995, Garbiyah shipped the components to Amman and on July 27 got them through to Baghdad.
It is unclear how many of these particular components the Iraqis wound up with. After being tipped off by intelligence sources, the UN inspectors intercepted one of Garbiyah’s subsequent shipments in Jordan. They also pulled a number of guidance components from the Tigris river, where the Iraqis had thrown them to avoid detection. Again, the only thing we know for sure is that Russian firms were ready to sell missile parts in clear violation of the embargo.
Can Saddam’s smuggling network be shut down? Only if it is possible to control the cargoes coming into Iraq and the oil going out. Neither will be easy. In addition to the determined leadership of the United States, what is required to control the cargoes is the cooperation of four countries—namely, Belarus, Ukraine, Romania, and Russia—where America’s writ does not exactly run strong. Belarus is trying to re-integrate itself with Russia, while Russia itself is doing everything it can to help Saddam. Ukraine is mired in political turmoil. The only comparative bright spot is Romania, whose government took positive action in the 1990’s when confronted with the Aerofina deals; there may also be some leverage in Romania’s dependence on international loans. But in general the prospects are bleak.
Could controls work at Iraq’s borders? To change things there, Jordan and Syria would have to start sending all the money they pay for oil to the UN, or withhold it from Saddam in some other way that would dry up his smuggling accounts. They would also have to start blocking his illicit imports, for which the oil shipments, whether discounted or actually free, are acting as bribes. Why should they do that? And what would replace the vast amount of money they would lose?
There may be answers to these questions, but behind all of them lurks the larger question of the West’s political will. While pondering that imponderable commodity, one should reflect upon a particularly chilling item turned up by the UN inspectors: a 1996 directive, from Iraq’s powerful Military Industrial Commission, forbidding any personnel associated with Iraq’s nuclear-weapon effort “to retire, move, transfer, change housing, etc., without the permission of the Iraqi Atomic Energy Commission.”† In other words, Saddam Hussein is working to keep his nuclear-weapon teams intact.
Before the embargo began, these teams had the highest claim to Saddam’s resources. Now, as the embargo wanes, and the balances grow in his secret accounts, they can once again buy what they need. Not only is Saddam Hussein back, he is on the way to having nuclear weapons, and the missiles that will deliver them.
* Another piece of evidence that the Jordanian smuggling route was working well turned up in 1998, when the inspectors found a new computer-controlled milling machine at a site that had done missile work before the Gulf war. The machine, built by the Ping Jeng company in Taiwan, had been sent through Aqaba by a Jordanian middleman listed as “Mohanad K. Mohammed.” Documents showed that the machine was built in March 1998, only shortly before turning up in Iraq.
† This was after the defection in 1994 of Khidhir Hamza, the regime’s top nuclear scientist; see the review of his recent book,Saddam’s Bombmaker, by Daniel Pipes in the June Commentary.
GARY MILHOLLIN is the director of the Wisconsin Project on Nuclear Arms Control, where KELLY MOTZ serves as a research associate. This is their first appearance in COMMENTARY.