Iraq's Black Market

The Bloody New War Zone

By Cheryl Seal
23 February 2004

In the past few weeks, attacks on Iraqi police stations have escalated, becoming deadlier and better organized. In the recent attack in Fallujah, just west of Baghdad, over 20 people died. Who is responsible? The Bush administration hints that Al-Qaeda is behind the violence, thereby perpetuating the Iraq-bin Laden connection myth that most veteran intelligence agents are certain has never existed.

Some observers blame anti-American rebels. But, according to reporters on the ground, there was no sign of American forces anywhere in the town. Why would anti-American rebels attack an Iraqi-run facility, especially when such an attack would only serve to perpetuate the American presence in the country? Still others suggest the attacks are the work of warring religious/political factions. But the prisoners freed from the Fallujah jail represented a mix of different factions; in any case, none of them were political or religious figures. Conspiracy theorists could more convincingly argue that the 'Bush machine' engineered the attacks. After all, Bush and his corporate cohorts stand to benefit greatly from a destabilized Iraq: the perpetuation of his 'war time president' image; the prolonging of Dyncorps and Halliburton's juicy contracts for policing Iraq and supplying the troops; and the diversion of media attention away from John Kerry and the Bush 'AWOL' scandal.

But so far no-one has suggested the most obvious and most likely culprit -the one with the most commonplace of motives: organized crime.

War is Good for Black Market Business

Every war zone or destabilized country spawns a black market. Although there was an active black market in Iraq -especially for weapons of all types- before the ousting of Saddam, that activity has paled in comparison to the black market that has exploded since the US invasion. Everything from gas, cigarettes, videos, and food, to sophisticated military electronics and weaponry and museum loot is now traded on the Iraqi black market. Some dealers are smalltime operators -many are just people trying to survive. But others are part of highly organized, multi-million dollar networks. And, if recent history is any indication, at least a few western corporations are already involved in the action in some way or another.

The Lesson of the Balkans

The wars in the Balkans in the mid-1990s spawned an aggressive black market that persists even today. The prime commodity was, and remains, cigarettes. The 'mysterious' widespread availability of cigarettes in the region during and after the war has had a devastating impact on public health.

As a 2002 report observed, the legion of new smokers was "a dream come true for global tobacco giants eyeing the region, where tobacco control is a low priority in the struggle for growth and stability. It is a nightmare for doctors and especially police, because a decade of wars, sanctions, chaos and corruption have turned the Balkans into a hugely lucrative cigarette smuggling center [...]. The irony is that tobacco research and policy had been fairly enlightened and smoking was tailing off until the old Yugoslavia began to fall apart in the Balkan wars of the 1990s. Now laws forbidding advertising and public smoking are ignored." (see "Cigarettes Keep Smoke Rising from the Balkans").

But cigarettes, alas, were not the only commodity traded on the Balkan black market. DynCorps -which had essentially the same 'security' contract in Bosnia/Kosovo as it now does in Iraq- was embroiled in a shocking scandal in 2000 when two employees revealed that several of their colleagues had colluded in the black-market trade of women and children. Disturbingly, DynCorps seemed just as upset at being caught in the act as it was by the act. The two whistleblowers who undoubtedly saved some misery for at least a few women and children were soon afterward fired on trumped up charges, as a court later agreed (see this reference). Now DynCorps is back in the 'post-war reconstruction' business. Will whistleblowers dare sound the alarm again if that business isn't doing just what it is supposed to do?

Black Gold and Devil Siphons

The horror of 'white slavery' may soon find its way into Iraq -if it hasn't already. At present, however, the most lucrative black market commodity in Iraq appears to be gasoline and oil. In December 2003, the American Forces Press Service reported that "coalition personnel are working with the Iraqi Ministry of Oil to head off gasoline smuggling, sabotage of the oil industry infrastructure and black-market profiteering. Officials said these continue to be among the greatest problems facing the Iraqi people." The primary cause of the highly publicized "gas shortage" in Iraq is the diversion of gas supplies by smugglers. To combat the problem, the military has launched an anti-smuggling initiative called Operation Devil Siphon.

It is perhaps quite significant that the same month that the Pentagon revealed the depth of the smuggling problem, it also revealed that Halliburton had made a cool $61 million by selling gasoline to the military at an outrageously jacked up price ($2.27 per gallon when the going rate was about $1.18). Given Halliburton's established willingness to engage in illegal activities -price gouging of US troops, for starters- I cannot help wondering if the company is making more of a killing off its gasoline supply contract than anyone yet knows -as in selling 'diverted' gasoline it gets for free at a premium. After all, Halliburton not only supplies gas to the troops, it also is contracted (d.b.a. Kellogg, Brown and Root) to restore oil fields and refineries in southern Iraq to pre-war levels, to run pipelines, and to truck propane to Iraqi consumers. The company has certainly had all infrastructure and opportunity it needs to put a nice black market operation in place (see here). I suspect the Pentagon has already uncovered something along these lines, but as it they are dealing with Halliburton, the apple of Dick Cheney's eye, I doubt such revelations would see the light of day for some time to come -if ever.

In any case, the stakes are high. "Gasoline imports are one of the single largest expenditures of US reconstruction efforts in Iraq," Henry Waxman and John Dingell wrote in a recent report on the situation. "To date, nearly $450 million has been spent on gasoline imports and additional $690 million has been appropriated for gasoline and other fuel imports in 2004. Literally hundreds of millions of taxpayer dollars are at stake." Can you imagine the kind of profit you'd turn if you just pocketed most of that 'import' money? You would indeed have quite a 'Devil's Siphon.'

The evidence for black market involvement in at least some of the attacks on the Iraqi police and military is mounting. As of 2/16, three of the masked gunmen who attacked the Fallujah police station had been identified. Two were from Lebanon, one was a Kurd. Lebanon is notorious for its high level of black market activity in a wide variety of commodities, including pirated intellectual property such as trademarks, patents, and copyrights.

It would not be surprising to discover that many of the videos, CDs, DVDs, and computer games being peddled to US troops by "independent businessmen" (wink-wink) originate in Lebanon. There is some evidence that the Lebanese black market in Iraq may be even more sinister than that. If you put "Lebanese black market" into the Google search engine, you will come up with a long list of XXX-rated sites touting "Lebanese girls." Given the rapid rise of the white slave trade in the Balkans after the war, it would not be surprising to see a new version raise its ugly head in Iraq.

The Kurds were the most active of all black marketers in Iraq before the US invasion, and continue to be more active on the black market than other Iraqi groups. They were also the first group to whom the Bush administration promised autonomy, which has seemed odd to many observers, not least of all to Iraq's Shiite majority. Observers in northern Iraq claim that black market cigarettes, alcohol, and other commodities are coming into Iraq from Turkey through Kurdish territories.

Black marketers on both the corporate and native sides of the 'fence' have motivations for knocking out Iraq's security forces. First, the obvious reason: fewer police make easier going for the black marketer. Second, one of the primary consumer pools in Iraq right now is the US military: tens of thousands of US soldiers trapped in a war zone with lots of time and at least some money on their hands. The longer chaos can be perpetuated in Iraq, the longer these consumers will be around.

Corporate Godfathers

War zones -official or unofficial- are gold mines for corporations and black marketers. Any place there is an armed conflict, you will find them circling like vultures. In the 1990s, the US Justice Department under Clinton uncovered a massive drug-money laundering operation in Colombia called the Black Market Peso Exchange. Phillip Morris and the British American Tobacco (BAT) company made millions off the operation. Philip Morris was indicted on charges that it understated the value of imports between 1996 and 1998 in order to evade tariffs. Over two-dozen Colombian provinces filed a racketeering suit against both Philip Morris and BAT in a US federal court.

However, as Bill Moyers reported, "the cigarette companies are not the only large US companies involved. US Government money-laundering investigators set up hundreds of sting operations during the 1990's where they followed drug funds from the streets through the brokers and into the bank accounts of hundreds of legitimate companies and their distributors. US Authorities have seized drug money from the bank accounts of Bell Helicopter, Intel Corporation, Merrill Lynch, Price Waterhouse and from the distributors of Philip Morris, British American Tobacco, General Electric and dozens of other US companies."

The corporations, of course, have loudly proclaimed their "innocence" and "ignorance" -the stock excuses for every corporazi criminal who ever got caught from Ken Lay to Richard "I Am Not a Crook" Nixon.

This is as good a time as any to point out that Bush's top advisor Karl Rove -the man who tells Bush what to think, say and do- was a highly paid "political intelligence operative" for Phillip Morris from 1991-1996. That's the same period when the company was involved in drug money laundering. And, while Rove was thus engaged , he was also working as a political advisor to Bush. What a small world the world of corporate intrigue must be!

Today, while the Bush Justice Department goes relentlessly after Muslim mom and pop businesses suspected of laundering terrorist money, it seems to be turning a blind eye to the terrorist money chains that may lead to western corporations. Are corporate-connected black marketers ruthless enough to engage in terrorism and murder? Corporate black marketers don't have to get their own hands bloody: someone else takes care of untidy details.

In 1995, 38-year-old Tommy Chui was bound, gagged, tortured, murdered, then thrown into Singapore Harbor. Turns out Chui was about to testify as a key witness in a case that exposed a $1.2 billion smuggling operation to China and Taiwan -a case that implicated three former British American Tobacco executives. However, Chui's high-profile death, an obvious hit coming as it did before a major trial, is just the tip of a murderous iceberg.

A report released by the Center for Public Integrity reveals that "tobacco company officials at BAT, Philip Morris and R.J. Reynolds have worked closely with companies and individuals directly connected to organized crime in Hong Kong, Canada, Colombia, Italy and the United States. One Italian government report obtained by the Center states that Philip Morris and R.J. Reynolds licensed agents in Switzerland who were high-level criminals running a vast smuggling operation into Italy in the 1980s that was directly linked to the Sicilian Mafia. Corporate documents, court records and internal government reports -some going back to the 1970s- also show that BAT, Philip Morris and R.J. Reynolds have orchestrated smuggling networks variously in Canada, Colombia, China, Southeast Asia, Europe, the Middle East, Africa and the United States as a major part of their marketing strategy to increase profits" (i.e., they use the black market to hook the population on tobacco, then move in as a 'legitimate' consumer product later, with a huge pool of new consumers already 'preconditioned').

But, you protest, would the Bush administration allow such things to occur in Iraq or Afghanistan? Well, consider the following information, provided by the Center for Public Integrity: "US President George W. Bush is considered a friend of big tobacco as is his attorney general John Ashcroft. Deputy attorney general-nominee, Larry D. Thompson, comes from the Atlanta law firm of King and Spalding, which represented the Canadian Tobacco Manufacturers Council, a defendant in Canada's racketeering lawsuit against RJR. Members of Bush's cabinet and inner circle are also considered pro-tobacco. Karl Rove, a longtime Bush friend who now holds the title of senior adviser to the president, was a paid political consultant for Philip Morris for five years." And, as the National Center for Tobacco Free Kids reported the week of February 16, 2004, over 70% of all tobacco industry money given to political campaigns since 1997 went to Republicans.

Add to that the connection Bush's Vice President Cheney has to Halliburton of gas-price-fixing fame, the favors conferred by Bush on Dyncorps of Bosnia/Kosovo black market white slave trade fame, and the picture gets uglier by the minute.

Copyright © 2003 by the News Insider and Cheryl Seal

Copyright notice

The use of the editorials published on this site is free, as long as News Insider is notified and referred to as the source of the information cited. We believe in the free sharing of information, but we do not encourage plagiarism. If our editorials are of use to you, please contact us to let us know. Thank you for your cooperation.