Thursday, April 21, 2016

Money Has No Smell by Pierre Razoux

Iran and Iraq took advantage of the lull in fighting on the front  beginning in the spring of 1984 to restock munitions and acquire new weapons, as well as spare parts and motors. The latter market quickly became lucrative, as harsh weather conditions and the nature of the terrain led to countless breakdowns. The price of oil was still high enough to give both the Iranians and the Iraqis some room to maneuver, though their financial reserves were running out, forcing them to make drastic choices.

Iraq did not have as much difficulty getting supplies, given that some thirty countries were willing to directly sell the it the military equipment it required. These countries were comfortable openly selling weapons to Iraq because it had been presented as the victim of the Republic of Iran’s warmongering fanaticism since the summer of 1982. Three of these countries – the USSR, France, and China – met 85% of Iraq’s needs. Initially, the Iraqi regime was primarily concerned with making its suppliers compete with each other to offer better prices. Once its resources began to diminish, its priority was to retain their trust. Tariq Aziz multiplied diplomatic tours to convince his creditors to stagger the Iraqi deb. He did not always succeed; some states, such as Spain and Portugal, quickly turned to Iran when Iraq was no longer able to promptly honor its debts. Fortunately, Baghdad could count on the Gulf States financial support [Saudi Arabia forgive Iraq its debt at the conclusion of the war.] This allowed the Ba’athist regime to avoid buying weapons from parallel-market arms dealer.

Iran, on the other hand, was in a far more delicate position. Though the country was not subject to a formal UN embargo, it was under embargo from the United States, which threatened any nation that shipped war equipment to Tehran with economic retaliation. Only those who really had something to gain and knew they had nothing to fear or expect from Washington openly braved the American prohibition.  These countries could be counted on one hand: Syria, Libya, China, and North Korea. Yet these four countries only met a third of Iran’s military needs. Tehran was forced to be creative to find the other two-thirds. Alternating seduction, pay-offs and veiled threats, Iranian leaders managed to convince twenty-five other nations to provide them with military equipment or, failing that, to turn a blind eye to the activities to the activities of their corporations. In many cases they had to purchase supplies on the parallel markets at significantly higher prices. This put them in business with more or less reliable traffickers, as well as a few high-flying crooks who brazenly cheated them. One such individual was Benham Nodjoumi, who managed top sell the Iranians thirty-four crates of scrap iron by making them believed they contained TOW antitank missiles. Nodjoumi, who lived in London, chose to surrender to British authorities and serve a long prison sentence rather than face the Iranian assassins sent on his trail.

The Iranian government was in most need of ammunition and spare parts, but also light weapons to arm its masses of newly recruited infantrymen. The Iranians dappled the same method to get their supplies, no matter who they were dealing with.. The Supreme Defense Council convened in Tehran every week to examined the bids received. The Pasdaran (Revolutionary Guards) were overrepresented because the knew that most of the equipment would wind up in their hands. Decisions were taken by consensus. When the council agreed to a bid, the Iranian bureau closest to the bidder was ordered to initiate negotiations with the dealer or his middleman. Tehran was apprised of the progress of discussions and arbitrated disagreements. Business in Europe was subcontracted through Tehran’s backrooms in Frankfurt and London, with the knowledge that the British and German authorities would be indulgent towards Iran for the sake of their own commercial interests.

In this shadow market, London became the hub of arms sales to Iran. Tehran had decided to use London as a base for an important branch of thye National Iranian Oil Company, which served as a screen to pay for European purchases. The Iranian regime also perated through two shell corporations ,both of which were well established in London: JSC International, registered in the Caribbean; and Metro International, 51 percent of whose capital was held by Iran, with the other 49% belonging to a group of Arabs and Pakistani financiers. The system was operated by three individuals. Aziz Nezafatkhan, who was close to Ayatollah Khomeini, served as the commercial attache to the Iranian embassy in Great Britain, and was known as ‘Mister 10%”; Sadegh Tabatabai, who was the Supreme Leader’s son-in-law and Ahmad Khomeini’s close friend, and shuttled between London and Tehran; and Houshang Lavi, an Iranian businessman with far-reaching connections in the city. In the United States the Iranians relied on Balanian Hashemi, an extremely rich businessman who had fled Iran after the fall of the Shah and was now trying to redeem himself by serving as the new regime’s intermediary.

On the arms market, the Iranian regime stopped at nothing to corrupt those who could bring them interesting deals. It could rely on the cupidity of numerous intermediaries ready to ignore their own governments’ prohibitions. Two individuals played a key role in supplyi9ng Iran while explicitly violating their countries’ poliocies: the Saudi businessman Adnan Khashoggi
[] and the American
Frank Cradock

Another American citizen who hit the headlines for his audacity in similar dealings was Mark Broman, director of the American embassy in Paris’s Office for Military Cooperation. Broman offered to sell the Iranians thirty Phantom fighters in the service of the Egyptian air force, despite the fact that Egypt had taken sides wit h Iraq. His plan was to convince Egypt to purchase an equivalent number of F-16s by offering to buy back their Phantoms. These would then be fictively sold to Paraguay, where the corrupt American diplomat had numerous friend ready to bend any rules for a juicy commission. The deal was exposed and foiled. Its instigator was arrested and given a heavy sentence by an American court. [this is a group that watchdogs the State Dept. offices of Military Assistance which goes by a variety of names:]

Business is Business

Things were much simpler when Tehran dealt with the representatives of states reputed for being neutral and politically respectable. In Europe, Austria, Sweden, and Switzerland improved to be valuable partners who had the good taste not to be fussy so long as the petrodollars flowed into their coffers. Austria sold Iran 140 GHN-45 howitzers along with significant stocks of ammunition.  Switzerland delivered fifteen PCV-6 Turbo Portyer utility aircraft,m forty-seven PCV-7 Turbo Trainer training aircraft, cryptology equipment, as well as large quantities of ammunition and electronic components for radars. Though it has passed legislation prohibiting the exports of arms to nations at war, Sweden provided Iran a turnkey munitions factory, 300 portabvle RBS-70 surface-to-air missiles, and forty light motorboats,, which were allocated to the Pasdaran’s naval forces. This weave of orders was manna from heaven for the Karlskoga military-industrial complex, but also the Bofors Corporation, which indiscriminately sold colossal amounts of ammunition for its famous anti-air gun to both belligerents.

These illegal arms sales spurred a long legal investigation that led to the 1987 indictment of two Swedish CEO’s, Mats Lundberg and Karl-Erik Schmitz, for serving as key middleman on the European parallel market. Over the course of the investigation, Swedish customs uncovered the existence of a European cartel shamelessly supplying the mullahs’ regime. This cartel provided more than 30,000 tons of gunpowder and explosives to Tehran, allowing Iran to manufacture mountains of ammunition in its Swedish-supplied factory. It had branches in the United Kingdom, France, Germany, Belgium, the Netherlands, Italy, Greece, Spain, Portugal, Austria, Switzerland, Finland and even Norway. A variety of European ports served as hubs for sending out the explosives: Zeebrugge in Belgium, Setubal in Portugal, Santander in Spain, Genoa and Talamone in Italy, and Piraeus in Greece. The cartel’s representatives used several shipping companies and chartered two airlines: Scanco, which was headed by Schmitz, and Santa Lucia Airways, which was registered in the Caribbean. Greece proved to be one of the main channels for moving shipments to Iran. A massive explosion that destroyed a factory in the suburbs of Athens in May 1987 was probably no accident: the factory produced munitions for Iran. Many suspected that the Iraqi special services were involved in the explosion. The Greek legal system quickly closed the case.

In order to surreptitiously sell such large quantities of explosives to Iran, the cartel needed to show the existence of a legal buyer who agreed not to cede them to a third party. The cartel drew up and end-user certificate, which enables one to obtain an export license. The Yugoslavs to care of this end of the deal, taking a 3 percent commission on each contract. Concurrently, the Yugoslav government shipped Iraq a training frigate, three minesweepers, one hundred D-30 guns, 300 mortars, tens of thousands of light weapons, and millions of shells, for a total value of over one billion dollars. The Yugoslav authorities had the best of both worlds.

Even Belgium let itself be tempted when Iran offered to pay generously for fifty old F-104 Starfighter interceptors the Belgian air force was trying to offload. Though the socialist parliamentarians intervened to prevent the last the last moment, the government merely held onto the planes’ frames and sold the Iranians their jet engines. The engines were fitted to the Iranian phantoms (the F-4 and the F-104 had the same engine). Though the Iranians failed to get the Belgian F-104s, they did get twelve Phantoms (f-4Ds) from South Korea and twelve F--5 Tigers from the Ethiopian government, which was ready to do anything to reap a few million dollars.

Iranian buyers ranged wide to procure weapons, covering Europe, the Middle East, and Asia, but also Africa and South America. South Africa and Brazil; also became favored Iranian business partners. South Africa sold Tehran some thirty ultramodern 155 mm howitzers (G5) with the required stock of ammunition. Brazil provided close to 500 Cascavel and Urutu armored vehicles, as well as large quantities of shells.

In all, some forty nations contributed to the Iraqi and Iranian war effort. At some point or the other, half of them provided material support both the Iran and Iraq - including the five permanent member of the United Nations Security Council. In Europe, only Ireland can boast of having kept itself clean. Every other state was implicated to variouis degrees in selling military equipment to one and often both of the belligerents. It took public disclosure of political-financial scandals to force certain countries, including France and the U.S., to put their affairs in order.

The approximate value of all  official deliveries of war equipment to Iraq by the United States was $250 million, including cooperation in the field of military intelligence, notably in terms of space and radar imagining and ELINT-SIGINT (signal interception and cryptanalysis) data. Delivery of 6 L-100 tans[port planes, 86 Hughes 300/500/530 helicopters and large quantities of fragmentation bombs.

The approximate value of all official deliveries of war equipment to Iran by the United States was $650 million, including spare helicopter parts, F-4, F-5 and f-15 fighters and AIM-54 Phoenix missiles, as of 1981. From 1984 to 1986 they delivered (via Israel) 2,500- TOW antitank missiles, 18 Hawk surface-to-air missiles and spare parts o modernize 300 Hawk missiles, as well as supplies of satellite imagery.

Top supplier for Iraq was the Soviet Union, between 30-45 billion dollars worth. Top supplier for Iran was China, $3 billion dollars.



180,000 dead and missing
     125, 000 military
     5,000 civilians
     50,000 Kurds
520,000 wounded and maimed
70,000 prisoners of war captured by the Iranian army.

500,000 dead and missing
     380,000 military and IRGC
     80,000 Basijis (child soldiers)
     10,000 civilians,
     30,000 Iranian Kurds.
1,300,000 wounded and maimed
45,000 prisoners of war captured by the Iraqi army.

A meticulous analysis of the intensity of human and material losses of this absurd and atrociously bloody war reveals that the pace of military operations more or less followed the price of oil (intense when it was high; mild when it was low). This conclusion provides confirmation of the cardinal importance of the economic war. Due to Iran’s isolation and lack of outside financial assistance, Rafsanjani focused on economizing and waged war like “a good family man” – at least on the financial level. Ultimately, the Iranian regime suffered far more from the combined effects of the collapse of oil prices and the drop in the dollar than from attacks on its oil takers and terminals ( the U.S. part in which the author characterizes as piracy). However, Rafsanjani was far more liberal with the only cheap resource he had in abundance: his soldiers lives. Unlike Rafsanjani, Saddam Hussein waged war on credit, drawing on loans from the oil monarchies, bank guarantees from the United States and payment deferments allowed by the Soviets and he West. He proved more sparing  with his soldiers lives.  The total financial cost of the war is estimated at 1,100 billion 1988 dollars (twice the value they have today), 40% spent by Iraq, 60% spent by Iran., a huge brake on the social and economic development of both countries. To the end Saddam Hussein continued to affirm the wat was wholly justified:

‘I had no choice but to start the war, in order to put an end to Iran’s interference. I must insist on this point, because it is essential . . . All this was done for the good of the people and humanity. The people love men for their actions. It also loves symbols, and I am a symbol given that my portrait can be found in the homes of Iraqis all over the country . . . What is important is not what people say or think of me today, but what they will think in 500 or 1,000 years.”

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