June 9, 2001

HABUR, Turkey (AP) -- More than 100 flatbed trucks haul huge canisters of Iraqi fuel into
Turkey almost every day, part of a massive operation that spans several countries and
funnels an estimated $1 billion a year into Saddam Hussein's pockets.

The United States is pressing to crack down on that trade, which violated U.N. sanctions.
But at the bargain price that Saddam is offering his buyers, the effort may be futile, Turkish
oil transporters and analysts say.

"If they cut it one way, it will come out the other way," said Bulent Aliriza, an analyst at the
Washington-based Center for Strategic and International Studies. "It is almost impossible to
nail the door shut."

Ending the trade would hurt U.S. allies like Jordan and Turkey and devastate the economy
of an autonomous Kurdish enclave in northern Iraq, where the revenue is one of its only
sources of income. Washington has long regarded the Kurds, who have fought Saddam for
decades, as key to any anti-Saddam coalition.

"The Americans are caught," said Ilnur Cevik, the editor in chief of the Turkish Daily News.
"The U.S., while trying to stop the border trade to scuttle Saddam, has to allow the trade to
help the Kurds."

If you cut the trade 'you finish off the Kurds and the so-called opposition," Cevik added.

The importance of the sanctions-busting trade to Iraq was highlighted Monday, when Iraq
announced that it was cutting off its U.N.-monitored oil exports but would continue to ship
to neighbors who pay the government in violation of U.N. controls.

At Habur, the only border crossing between Iraq and Turkey, hundreds of trucks laden with
Iraqi diesel waited Tuesday in a 2-mile-long line. In the first five days of June, 600 of the
trucks crossed the border, said Abdullah Erin, the official in charge of the gateway. Each
truck carries about 1,300 gallons.

"Iraq has a very successful program of sanctions-busting," said Toby Dodge of the Royal
Institute of International Affairs in London. "It's partially how the regime gets its money."

Before the cutoff, Iraq sold some 2 million barrels per day under the U.N.-monitored
program, which requires that the money be spent on humanitarian goods like food and
medicine, and as reparation for Iraq's 1990 invasion of Kuwait.

Some 150,000 barrels a day flow through Syria, while another 100,000 barrels of oil per
day go to Jordan and Turkey, estimates Nathaniel Kern, an analyst with Foreign Reports
Inc. a Washington-based oil consultancy company.

Kern said Iraq charges around $16 per barrel, a 30 percent discount to the price that the
nation charges through the U.N. program. Traders said the discount was not that great, but
gave no figures.

The Turkish trade has been falling recently, but truckers and analysts say that is due more to
Turkey's economic crisis and complaints from oil companies about unfair competition than
due to any crackdown.

Syria denies that it is illegally importing Iraq oil, saying that is it only bringing in Iraqi crude
to test an old pipeline from Iraq. Oil analysts, however, say that Syria is importing Iraqi oil
and masking those imports by using the oil at home and exporting an equal volume of its
own oil.

Turkey emphasized its dependence on the trade, which is estimated to support some 45,000
truck drivers in the southeast, when Prime Minister Bulent Ecevit visited the region on
Sunday and vowed to increase the trade.

"We know that the primary way to increase the region's income is the diesel trade," Ecevit
said in Sirnak, an impoverished town near the Iraqi border where many of the truckers live.
"We have decided to expand this, not narrow it," Ecevit added.

Turkey claims to have lost $30 billion to $40 billion in trade since sanctions were imposed
in 1990.

A new border gate is expected to be opened within two years, Foreign Minister Ismail Cem
said Thursday.

"If they close the border, we will die of poverty," said Yasar Evim, a Turkish truck driver
who hauls crude oil from an Iraqi refinery in Mosul.

He said he drives to Mosul each month to pick up the crude, which he must deposit at a
refinery owned by the Turkish government. Turkish businessmen say they pay for the crude
in bartered goods and not cash.

Diesel traders buy their fuel from the Kurds, who purchase it from Iraqi refiners. Turkish
truckers pay the Kurds about 45 cents a gallon for the fuel, which they can sell at a
government-owned depot for roughly $1.30 a gallon.

U.S. warplanes that patrol a no-fly zone over northern Iraq are based in southern Turkey,
and U.S. diplomats said that Washington is looking at ways to tighten the sanctions without
jeopardizing the border trade and angering Turkey. The U.S. has tolerated the oil trade in the
past because of its benefits to Turkey and Jordan.

In one scenario, truckers would continue to bring in the oil and diesel, but would have to
deposit the money they pay to Iraq in a monitored bank account.

Analysts, however, say Iraq is almost certain to reject that proposal and insist on being paid
directly.
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The Kurdistan Observer
www.kurdistanobserver.com