Iraq: Compliance, Sanctions, and U.S. Policy
A summary of the regulations governing transactions with Iraq is provided in CRS Report
RL30472, Iraq: Oil-for-Food Program. U.S. imports of Iraqi oil have soared since 1999
and reached a high of about 970,000 barrels per day in May 2001 — nearly half of Iraq’s oil
exports. That figure has since fallen to about 600,000 barrels per day in early 2002. In the
107th Congress, S. 1170, introduced July 12, 2001, would bar U.S. imports of Iraqi oil. A
measure introduced in the 107th Congress (H.R. 742), seeks to ease civilian sanctions while
preserving military sanctions and would have eased the licensing procedures for U.S. sales
of goods to Iraq under oil-for-food.
Prior to the oil-for-food program, funds for civilian goods and the implementation of
U.N. resolutions on Iraq were drawn from frozen Iraqi assets transferred — or direct
contributions — to a U.N. escrow account pursuant to Resolution 778 (October 1992). Total
U.S. transfers to the escrow account, which matched contributions from other countries,
reached $200 million, the maximum required under Resolution 778. These transfers were
being repaid to the United States from proceeds of the oil-for-food program. Resolutions
1284 and 1302 (June 8, 2000) suspended reimbursements until the end of 2000; about $173
million was due back to the United States. Repayments resumed in 2001.
Iraq’s Illicit Trade with Its Neighbors
As regional fears of Iraq have eased and sympathy for the Iraqi people has grown, the
United States has had difficulty persuading regional governments to enforce the sanctions
regime. Improving sanctions enforcement by Iraq’s neighbors is key to the U.S. targeted
sanctions proposals, although this part of the U.S. plan has run into significant resistance in
the region. See CRS Report RL30472, Iraq: Oil-for-Food Program.
Jordan. Since 1992, despite Jordan’s economic linkages with Iraq and its advocacy
of easing sanctions, the United States has considered Jordan’s compliance with the U.N.
sanctions regime on Iraq satisfactory. In October 2000, Jordan dismissed Lloyd’s
International from its role as inspector of goods bound for Iraq and arriving in Jordan at the
port of Aqaba, a role enshrined in an agreement between Jordan and the United States in
1993. Recognizing Jordan’s economic need, the Sanctions Committee “takes note of”
Jordan’s purchases of discounted Iraqi oil and oil products, which is exchanged for Jordanian
goods (approved under the oil-for-food program) and write-downs in Iraqi debt to Jordan.
This relationship was renewed in November 2001 at a level of about $500 million for the
year, which translates into about 100,000 barrels per day of Iraqi oil exports to Jordan.
Every year since FY1994, foreign aid appropriations laws (P.L. 103-87, P.L. 103-306,
P.L. 104-107, P.L. 104-208, P.L. 105-118, P.L. 105-277, P.L. 106-113, and P.L. 106-429),
have denied U.S. aid to any country that does not comply with the sanctions against Iraq,
though these laws do not mention Jordan specifically. The Administration has routinely
waived sanctions in order to provide aid to Jordan, which is a key U.S. ally in the Middle East
peace process; Congress has not objected to that waiver. Secretary of State Powell has
pressed Jordan not to proceed with a planned “free trade agreement” with Iraq that, some
fear, could increase the flow of dual use goods to Iraq. It should be noted that virtually all
trade with Iraq is, in practice, duty free. (See CRS Issue Brief IB93085, Jordan: U.S.
Relations and Bilateral Issues). In December 2001, Jordan approved a project to build an
oil pipeline from Iraq to Jordan, to be operational by 2005.
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