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"Mark.Galloway" <Mark.Galloway@seamec.net wrote:
> There were pluses and minuses for the suppliers.
> For example, sugar prices can move quite quickly.
Mark, your comments are most interesting. But you
seem to speak from a "supplier's" perspective, which
is fair enough I suppose. In fact, you wrote about
this on February 28, 2001 (Re: Cash component - comment.)
Back then, you longed to "open the country" [Iraq]
and looked forward to "see some glorious capitalist
tendencies in the near future (Ibid). This of course
is a sentiment you share with Mr. Bush et al.
Nationalized industry is even bad for the mind,
you felt: "the average Iraqi has been brought up
without any possibility of thinking for himself or
taking responsibility in a way which the average
Westerner assumes is normal." (Ibid)
Hmm... The great "Western" mind is highly over-rated,
I believe. Just consider the impossible things these
average western minds believe before breakfast - in
the most sheep-like fashion. Besides, such prejudice
might prevent one from considering the situation fairly.
In any case, the purpose of my post was concern
with the denials of the sanctions' effects. I was
not concerned with the suppliers' fortune in this
catastrophic situation.
> Any sanctions regime is likely to produce abuse.
> Witness South Africa, Rhodesia and others. It is
> just one of the reasons for seeking their removal.
Comparing the sanctions against South Africa or
Rhodesia to the total embargo against Iraq seems
an extraordinary leap. Peter Haines, I believe was
fond of making the South Africa vs Iraq comparison.
Even Colin Rowat once implied that the two could be
compared. On November 29 1999 he wrote:
"The suffering caused by sanctions in South Africa
does not seem to have been on the same level as that
in Iraq." (Re: Fwd: dsanet: Iraq and UN Sanctions)
Quite an understatement, that!
By comparison, here is a statement made as early
as 1991 (before the 'Gulf war') by Zbigniew Brzesinski
- who can't be accused of being a 'bleeding heart':
Thus spoke Brzesinski:
"Sanctions, un-precedented in their international
solidarity and more massive in scope than any ever
adopted in peacetime against any nation - I repeat -
ever adopted against any nation, are inflicting
painful costs on the Iraqi economy".
[137 Congressional Record, Proceeding and Debates of
the 102d Congress, First Session (No. 6, 1991) at S162
> Iraqi sanctions effectively created a whole industry
> devoted to their manipulation and control.
No one would deny that. And it would hold true if
the same sanctions had been inflicted on the UK,
say. In fact, the Bossuyt Report of June 21, 2000
points out that this invariably happens:
"Under sanctions, the middle class is eliminated,
the poor get poorer, and the rich get richer as they
take control of smuggling and the black market."
http://www.globalpolicy.org/security/sanction/unreports/bossuyt.htm
But you seem to suggest that these "black market"
conditions existed also within the OFF regime. And
I still find this a bit difficult to fathom, given
the bureaucratic nightmare that it was.
> Suppliers and insurers also lost from claims for
> shortage of cargo. It is astonishing how many
> hundreds of thousands of bags of rice and sugar
> allegedly went missing between the port of shipment
> and Umm Qasr. Those of us who dealt with Iraq before
> 1980 can recall that this was a major problem at
> Basrah before the closure of the Shatt el Arab.
Again, you seem to be speaking from a (UK) supplier's
perspective. And by "allegedly went missing" you
seem to imply dishonesty on part of the 'average'
Iraqi - as opposed to the 'average' honest Westener.
I don't believe one can stereotype human beings
like that. I live in an English-speaking country
where only 28 percent is of British Isles stock.
The rest if French and les autres. And in my experience,
honesty doesn't depend on ethnicity - nor does
independent thinking.
But more to the point, you drag in a time "before
1980". This can't have anything to do with OFF.
The UN hired an inspection firm, Cotecna, to
verify the cargo upon arrival. So there couldn't
have been "many hundreds of thousands of bags" of
anything been declared missing. I can see that
I must write to Cotecna to ask if they didn't
do their job.
> Since the OFF scheme managers did not choose to
> question the invoice value of goods shipped, as did
> the US and UK governments in respect of the oil prices
> which were easier to monitor, unscrupulous suppliers
> were no doubt able to provide inflated invoices.
Where is the evidence that "OFF scheme managers"
(OIP?) didn't "choose to question..."? Were they
in cahoots? That "unscrupulous suppliers were no
doubt able to provide inflated invoices" is an
assumption, I take it.
> However, the process of OFF scheme purchase could
> take so long before the cargo was actually loaded on
> board ship that the supplier took the risk of serious
> loss if the market price moved against him.
Compared to the total devastation and traumatization
of a whole society, the supplier's risk of monetary
loss must surely be trivial - to my mind at least.
Besides, one can hardly blame the GOI for these delays.
> The suppliers were unable to perform the actual
> delivery since the regime controlled the land transport.
Another supplier grievance. It was my understanding
that Cotecna controlled all entries points. And this
has been confirmed by people (not suppliers) entering
Iraq by land.
> However, the Iraqis generally refused to accept
> anything which they did not consider to be 100% sound,
> and this led to many complaints from suppliers that
> the Iraqis rejected cargo unreasonably.... On occasion,
> rejections were blatantly political. The Australian
> government suffered badly from this.
And yet another - unconfirmed - supplier grievance.
But my concern is still with the suffering of the
Iraqi people - inflicted by the sanctions regime,
the massive bombing, and now by the illegal occupation.
Sorry, I have no feelings left for the financial
losses - perceived or real - of the Australian
government or any other supplier.
And despite all this interesting, if unsubstantiated,
information, I still can't see how it validates the
claims made in the Reuter article. Perhaps I am
missing something.
What worries me most are the attempts by USUK,
the media, and the public to sweep the effects of
the genocidal sanctions regime under the carpet.
To me, this is adding insult to the injuries
inflicted on the Iraqi people
Best regards,
Elga Sutter
-------------Original Message-------------
[casi] OFF and the cash syphon
From: "Mark.Galloway" <Mark.Galloway@seamec.net>
Subject: [casi] OFF and the cash syphon
Date: Thu, 29 May 2003 09:53:06 +0100
Greetings,
The OFF scheme provided cash to the regime in a number of ways. As the
scheme developed in the late 1990s, trade was increasingly conducted by
quotas awarded to countries such as Egypt and Russia, or by contracts
awarded to friends. Thus for example, an Egyptian company had contracts
for
supply of large quantities of steel which could not be sourced from Egypt.
They bought elsewhere, typically Russia or Ukraine, but issued a complete
new set of documents for the cargo showing its origin as loaded at Suez.
The unknown middlemen who appeared as purchasers of Iraqi oil also gained
contracts for supply of goods to Iraq. Since the OFF scheme managers did
not choose to question the invoice value of goods shipped, as did the US
and UK governments in respect of the oil prices which were easier to
monitor, unscrupulous suppliers were no doubt able to provide inflated
invoices. When the supplier was paid by OFF, kickbacks were payable to the
regime. The extent of this is not certain, but it is not difficult to
compare prices paid to OFF suppliers against typical prices available in
the commercial world.
There were pluses and minuses for the suppliers. For example, sugar prices
can move quite quickly. However, the process of OFF scheme purchase could
take so long before the cargo was actually loaded on board ship that the
supplier took the risk of serious loss if the market price moved against
him. In the hard commercial world, this is just tough. However, from my
enquiry, I understood that the regime was prepared to allow traders to
escape obligation to deliver. The delays might also explain occasional
high
pricing. For example, if it took 6-9 months from the date of contract to
the date of delivery, the market price could drop for a particular
commodity, giving a supplier a large potential profit. However, such
fluctuations and delays do not explain consistent high pricing.
The "land transport" cost is another major unknown. The regime asked its
suppliers to quote a price inclusive of delivery to "All Iraqi
Governorates." The suppliers were unable to perform the actual delivery
since the regime controlled the land transport. Therefore, the regime
dictated the cost of the land transport to the supplier, who included this
in his invoice to OFF. Prior to discharge of the cargo at Umm Qasr, the
supplier was required to pay the land transport cost to an Iraqi
controlled
company in Jordan. The basic principle was not unreasonable. Iraq had to
purchase and maintain an enormous fleet of trucks and provide the
warehousing for distribution. There were never enough trucks. Given the
idea of the "cash component" in the OFF scheme, it was reasonable for Iraq
to ask that they recover from OFF the cost of land transport and
distribution. However, there was no control of the land transport
payments,
and I doubt it is easy now to establish how much Iraq was able to cream
from this system or how the cash which it produced was channelled.
There were other ways of making money from oil sales. Sale prices vary
according to destination. Thus the purchaser might declare a low price
destination in his purchase, but actually send the ship to a destination
where a much higher price could be obtained. There were also accusations
that ships loaded additional oil after Cotecna had completed their load
quantity check and issued documentation. The UN caught some of these
problems.
The complaints about quality and specification and lack of recourse
against
suppliers require a mixed response. It is true that there were plenty of
instances of shipment of sub-standard or off-specification material.
However, the Iraqis generally refused to accept anything which they did
not
consider to be 100% sound, and this led to many complaints from suppliers
that the Iraqis rejected cargo unreasonably. On many occasions, rejected
cargoes were taken back to the port of shipment or discharged at UAE
ports,
leaving many of us scratching our heads to know why they had been
rejected.
On occasion, rejections were blatantly political. The Australian
government
suffered badly from this.
In normal trade, problems of specification are invariably dealt with by
inspection and certification at the loadport. The Iraqi government
apparently refused to trust any inspection system at loading. It is wrong
to state that the Iraqis had no recourse. Normal trade letters of credit
put the consignee in exactly the same position as the Iraqi government. If
there is a dispute in respect of specification, the consignee claims
against the supplier in accordance with the terms of the sale contract.
Nothing prevented the Iraqi government from so doing.
Suppliers and insurers also lost from claims for shortage of cargo. It is
astonishing how many hundreds of thousands of bags of rice and sugar
allegedly went missing between the port of shipment and Umm Qasr. Those
of
us who dealt with Iraq before 1980 can recall that this was a major
problem
at Basrah before the closure of the Shatt el Arab.
Any sanctions regime is likely to produce abuse. Witness South Africa,
Rhodesia and others. It is just one of the reasons for seeking their
removal. Iraqi sanctions effectively created a whole industry devoted to
their manipulation and control.
Mark Galloway
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