Some Iraqi Oil Is Slipping Through Embargo, U.S. Says

With the help of unscrupulous truck drivers, clandestine tramp steamers and compliant Iranian customs officials, Iraq has succeeded in selling between 80,000 and 100,000 barrels of oil a day, despite a U.N. economic embargo, Clinton Administration officials said Thursday.

But they said the sales are a tiny fraction of Iraq’s volume of 2.5 million barrels a day before the Gulf War.

“Embargoes or sanctions are seldom perfect, and there unfortunately is almost always a certain amount of leakage,” Secretary of State Warren Christopher said. “But the important thing overall is to understand how much pressure we have put on the Iraqis, how important those sanctions are.”

Another official said: “Iraq has worked actively to evade the sanction regime. They have developed several channels, all of them rather small.”

Officials said smugglers have taken oil by ship through the Persian Gulf to Iran, where it is falsely labeled as Iranian in origin.

Another scheme takes advantage of a provision in the sanctions that permits Iraq to import food, medicine and other humanitarian goods. Trucks from Turkey enter Iraq carrying legal humanitarian cargoes, but some smuggle oil on the return trip.

Officials said the largest volume, perhaps 65,000 barrels a day, goes to Jordan in officially sanctioned sales. Sales to Jordan have been permitted since 1991 to alleviate the hardship the sanctions had caused for the economically strapped Hashemite kingdom.

White House Press Secretary Mike McCurry stressed that Iraq’s oil sales have plunged dramatically since its invasion of Kuwait in 1990.

“It is nonetheless troubling that Iraq is finding ways to evade the sanctions regime that has been in place,” McCurry added.

But McCurry said that Iraq’s shipments are less than half the 200,000 barrels a day reported Thursday by the New York Times.

Although Iraq has been trying to circumvent the embargo since it was imposed after the Gulf War, officials said Baghdad launched a major push to sell its oil last October, about the time it provoked a brief crisis by shifting military units south toward the Kuwaiti border.

For a time, the Iraqis enjoyed some success in finding ships willing to run the blockade.

But officials said a renewed effort by U.S. Navy ships has been so successful that Iraq’s clandestine oil export program is no longer economically viable.

Sources in the U.S. petroleum industry agreed with the government officials that Iraq is selling some oil, but not much.

Meantime, the Justice Department said the Administration had agreed to pay $400 million to cover the last of a series of bad debts by the Iraqi government to U.S. and foreign banks for purchases of U.S. grain and other agricultural products in the 1980s.

The Justice Department decision closes an embarrassing chapter in the history of U.S. relations with Iraq, in which the Ronald Reagan and George Bush administrations provided guarantees for billions of dollars in loans that let Iraq buy food and related products during its war with Iran and its military buildup for a 1990 invasion of Kuwait.

Almost $2 billion worth of the Iraqi loans went sour when Iraqi troops crossed Kuwait’s border.

The invasion led the United Nations to impose an embargo of international trade with Iraq; that, in turn, led Baghdad to refuse to repay the debts.

U.S. taxpayers subsequently got saddled with the bill when banks sued Washington to make good on its guarantees.

The $400-million U.S. payment on Iraq’s behalf is to go to the Banca Nazionale del Lavoro, an Italian government-owned bank initially suspected by Washington of complicity in loans that its Atlanta branch illegally made to Iraq.

Times staff writer Michael Parrish in Los Angeles contributed to this report.