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Iraqi oil and troubled waters for
Megawati
By Bill Guerin
JAKARTA - Reports in an Iraqi newspaper allege
that Indonesian President Megawati Sukarnoputri is one
of several leading international figures who received
money from a political slush fund aimed at buying
political support for the tyrannical Saddam Hussein
regime.
Megawati has yet to respond to the
allegations, though a palace spokesman has confirmed she
is aware of them. The president appeared on a list of
more than 270 public figures, politicians, companies and
organizations around the world accused of receiving
bribes in the form of commissions from sales of Saddam's
oil.
The Iraqi Governing Council has ordered an
investigation into allegations that Saddam paid millions
of dollars in bribes to foreign politicians and
political organizations. The council is to set up a
commission of inquiry after the allegations in reports
published in the Baghdad-based daily al-Mada.
The Iraqi Oil Ministry also claims the documents
published in the newspaper are authentic and that it
intends to ask Interpol to help with criminal action
against those involved in "the theft of state assets".
The ministry is talking tough and says the documents
show how Saddam squandered the country's oil wealth on
people "who had supported him and turned a blind eye to
the mass graves and injustice inflicted on the Iraqi
people".
According to the documents from the
former State Oil Marketing Organization, the bribery
network reached out to some 46 countries, including
Indonesia.
Experts say none of those involved
would have actually received oil, but instead, the right
to buy the oil at a discounted price, which could be
resold to a legitimate broker or oil company at an
average profit of around 50 US cents a barrel. Megawati,
the documents allegedly show, received vouchers for 8
million barrels of oil.
Presidential candidate
and People's Consultative Assembly (MPR) Speaker Amien
Rais is also named on the list. Rais at first refused to
comment but when asked by Agence France-Presse on
Wednesday confessed to being "flabbergasted ... Why am I
included in the list out of the blue? It's big slander,"
Rais was quoted as saying. The report says Rais received
4 million barrels of oil.
Yet another highly
placed member of the Jakarta elite, Arifin Panigoro,
deputy chairman of Megawati's Indonesian Democratic
Party of Struggle (PDI Perjuangan), was quoted as saying
this week that Megawati and the Ba'ath Party in Iraq had
a close relationship. "It was normal. They were very
close to Megawati," the tycoon said.
Panigoro
admitted that his oil company Medco had bought oil from
Iraq but said it was "pure business" and was done with
UN permission. "The oil purchase from Iraq had nothing
to do with President Megawati," he was quoted as saying.
The relationship between Indonesia and Iraq goes
back a long way. International trade sanctions were
enforced on Iraq after its 1990 invasion of Kuwait.
Prior to the ensuing 1991 Gulf War, Jakarta had signed a
memorandum of understanding for a counter-trade deal
with Baghdad through which Indonesia would import 30,000
barrels of oil a day from Iraq in exchange for
commodities such as textiles, timber, tin and crude palm
oil. A similar deal is now being implemented with Libya.
But the Iraqi agreement was frozen after the Gulf War.
Al-Mada said the documents, which cover 1999
only, were recovered from Iraq's State Oil Marketing
Organization, the commercial wing of Saddam's government
responsible for selling oil. The contracts were all
awarded from late 1997 until the US-led war last March
and ostensibly fell within the United Nations-sanctioned
oil-for-food program that allowed Iraq to sell oil in
exchange for humanitarian needs.
Under the UN
deal, Iraq had been entitled since 1996 to export crude
oil in six-monthly intervals to finance imports of
humanitarian supplies such as food and medicine.
Although a major exporter of crude oil,
Indonesia imports some cheaper higher-sulfur crude to
feed its refineries. It bought oil from Iraq and in
return sold Indonesian-made goods, mostly foodstuffs, to
Iraq.
The food-for-oil trade deal with Iraq was
very profitable for Indonesia, especially in helping to
boost the latter's export of non-oil commodities. Only
local Indonesian companies could participate in the
program and they first had to acquire the UN's approval
before being able to export their goods to Iraq.
However, despite the great enthusiasm expressed by many
local exporters toward the food-for-oil deal, Indonesia
had never been able to meet the export value to Iraq
completely because of under-capacity in its factories.
Another possible candidate for the Indonesian
presidency is retired Lieutenant-General Prabowo
Subianto, a son-in-law of former president Suharto.
Prabowo had been living in Jordan after being discharged
in 1998 by the Indonesian military in connection with
his role in the abduction of pro-democracy activists in
the last months of Suharto's rule.
Though
Prabowo is not named in the list, a company owned by him
was among nine bidders for part of a newly negotiated
food-for-oil deal between Jakarta and Iraq in 2000.
Baghdad had sought to double the value of its
oil-for-food trade deal with Jakarta to $1 billion.
Under the deal, Indonesia would buy crude oil from the
Basrah oilfield and refine it into fuel in Indonesia.
Iraq holds the second-biggest proven crude
reserves after Saudi Arabia and has developed a mere 15
of its 73 known oilfields. Iraqi oil officials are now
keen to cooperate with foreign companies to find and
exploit new sources of crude, and this year are to
announce the parameters for foreign investment.
Indonesia's state oil and gas company,
Pertamina, has been in from the start. PT Elnusa, a
Pertamina unit, holds a contract awarded by Iraq's Sabah
al-Shammery & Partners, or SAPCO, to drill 60 new
oil and natural-gas wells and will start drilling in
Block III in the Western Desert near Basrah in late
February.
Saddam awarded the block, which is
estimated to contain 3 million barrels of crude oil, to
Pertamina in late 2002. The plan to start exploration
last March was thwarted by the US-led military invasion
that toppled Saddam, and Pertamina now plans to begin
oil and gas exploration in Iraq this month, investing
about $24 million over the next three years.
Pertamina is also keen to explore for oil in the
Tuba Block, which is estimated to hold even larger oil
reserves. Pertamina was concerned that the new
government might suspend the contract, after contracts
with Russia and China were reportedly put on hold, but
the new Iraqi government gave the company the go-ahead
last November to restart the project.
After
resuming crude production last June, Iraq was exporting
an average of 1.54 million barrels a day in December and
by the end of that month had generated $5 billion in
earnings from oil sales. Oil is almost as expensive now
as it was on the eve of the Iraq war, when prices hit a
13-year high of $38 a barrel. Prices have soared by 13
percent, to more than $33, after touching $36.
Oil (and gas) has also been a major revenue
earner for Indonesia, making up 29 percent of the
country's foreign-exchange earnings. Crude-oil
production now stands at 1.16 million barrels per day
(bpd), lower than the 1.317 million bpd quota set by the
Organization of Petroleum Exporting Countries (OPEC).
Though Indonesia's exploration plans are
unlikely to be affected by the corruption claims made by
the Iraqis, the political implications for Megawati
could be troublesome indeed. A senior member of the
Iraqi Governing Council, Naseer al-Chaderji, has warned,
"We asked the Justice Ministry to launch an
investigation, take measures against the Iraqis who took
part and examine what could be done internationally to
pursue foreigners involved."
The allegations are
already having major political ramifications in
Bulgaria, where President Georgi Parvanov, like
Megawati, is one of those named. He has denied the
reports, but opposition figures are calling for his
resignation.
Megawati and her administration
were outspoken and vocal opponents of the US-led
invasion of Iraq, as was Russia, which got the biggest
set of contracts, followed by France. The difference,
however, and one that may prove to be a major problem
for Megawati ahead of the general election, is that
neither Russian President Vladimir Putin nor French
President Jacques Chirac was accused of receiving the
money directly.
(Copyright 2004 Asia Times
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