WASHINGTON (News Agencies) -As director of central intelligence four years ago, John M. Deutch headed up American efforts to overthrow Iraqi President Saddam Hussein. Today, Deutch sits on the board of Schlumberger Ltd., a multinational company that is helping Baghdad service its oilrigs.
Richard B. Cheney, formerly U.S.secretary of defense during the Bush era, played a key role in the U.S.-led military coalition that forced Iraq to retreat from Kuwait during Desert Storm. He is now the chief executive officer of Halliburton Co., a Dallas-based maker of oil equipment. He recently held a major stake in Dresser-Rand and Ingersoll-Dresser Pump Co., two American players in the reconstruction of Iraq's oil industry.
At a time when the United States and the United Kingdom wage almost daily air strikes against military installations in northern and southern Iraq, U.S. companies, executives and even some architects of American policy toward Iraq are doing business with Hussein's government, and helping to rebuild its battered oil industry.
Albeit perfectly legal, the growing U.S.-Iraqi commerce has been kept quiet by both sides because it seems to fly in the face of Washington's commitment to "regime change" in Baghdad and Saddam Hussein's claim to be defying the world's lone superpower. The United Nations also helps both countries avoid embarrassment by treating the business arrangements as confidential.
Such trade is permitted under the "oil for food" deal, a humanitarian exemption from the U.N. trade embargo imposed on Iraq after the 1990 invasion of Kuwait. It allows Iraq to sell oil and use the proceeds, under U.N. supervision, to purchase food, medicine and other humanitarian goods, as well as spare parts to keep the oil flowing.
According to diplomats, industry officials and U.N. documents more than a dozen U.S. firms have signed millions of dollars in contracts with Baghdad for oil-related equipment since the summer of 1998. Placing bids through overseas subsidiaries and affiliates.
"The United States is the cradle of the international oil industry," said James Placke, who tracks Persian Gulf oil production for Cambridge Energy Research Associates, a consulting firm. "A lot of the equipment in Iraq's oil industry was originally made in America, and if you want spare parts, you go back to the original supplier."
According to Larry Goldstein, president of the Petroleum Industry Research Foundation, most U.S. oil companies have been prohibited by Baghdad from directly purchasing Iraqi crude since the United States bombed Iraq during Operation Desert Fox in December 1998.
But Iraq nevertheless has emerged in the past year as the fastest growing source of U.S. oil imports. American companies, he said, now purchase about 700,000 of the 2 million barrels of oil-exported daily by Iraq, mainly through foreign middlemen who load the Iraqi crude and transport it directly to American ports, primarily in the Gulf of Mexico.
"The Chevrons and the Exxons of this world have to buy from the Russians, the French and the Chinese traders," said Goldstein. But, he added, "The U.S. spare parts industry is too dominant to ignore."
After approving the oil-for-food exemption in 1996, the U.N. Security Council gradually raised the amount of oil Iraq was allowed to sell, and on Dec. 17 it removed the ceiling. And in June 1998, the 15-nation Security Council voted to allow Iraq to buy up to $300 million in spare parts every six months. The council is considering a proposal to double that limit.
According to U.S. government figures, American firms account for only a tiny share of the nearly $10 billion in trade that has been conducted under the oil-for-food exemption. U.S. citizens have received licenses to export about $15 million of oil-related spare parts and $400 million of food, medicine and water treatment equipment to Iraq, according to the State Department.
Those figures do not count most products purchased by Iraq from American subsidiaries abroad. This indirect U.S.-Iraqi trade is tracked by the United Nations, which must approve all the contracts. But little information about it has been made public.
