Under the sanctions resolutions, the only exports that are exempt are oil exports to Jordan for its domestic consumption. Jordan's total annual imports of crude oil before the Gulf War averaged around 17 million barrels, and its annual import bill for the commodity was around $320 million (United Nations, 1992, UNCTAD Commodity Yearbook 1992). It can be safely assumed that nearly all of Jordan's oil imports originated from Iraq. Indeed the total value of Jordan's imports from Iraq as reported in IMF sources was around $300 million. This pattern remained unchanged after the Gulf War and the sanctions except for one year (1993) when Jordan's imports from Iraq are recorded as nil. In subsequent years the pattern of trade appears to have been revived. It is likely that Jordan's domestic oil consumption has risen in recent years because of economic growth.
Even allowing growth, Jordan's domestic consumption would still be a tiny fraction of Iraq's pre-sanctions estimated oil output of over one billion barrels per year. Current industry estimates put Iraq's output at under a fifth of that level. In 1994, for example, the Organisation of Petroleum Exporting Countries (OPEC) reported that Iraq's output stood at 570,000 barrels a day (or over 200 million barrels a year). Even at the current low levels, Iraq's output far exceeds its exports to Jordan.
The difference is consistent, however, with Iraq's pre-sanctions patterns of domestic consumption. Between 1987 and 1990, Iraq consumed on average 173 million barrels of oil per year. Whether domestic consumption has substantially declined is far from clear. Industrial recession certainly would have lead to lower demand for power, and thus for fuel oil. Similarly, with massive declines in income the demand for oil by motorists and other consumers ought also to have reduced. But the prices of petroleum products have declined dramatically, so that petrol is now virtually free in Iraq. This is one commodity for which prices have fallen. Petrol now costs 1.5 Dinars per litre, or the equivalent of 0.15 cents at the May 1996 exchange rate. This reduction in price is likely to have counteracted somewhat the effects of low incomes and low demand from industry. It is possible, of course, that actual output is substantially higher than OPEC estimates. It is interesting to note, however, that Iraqi government figure for oil production in 1993 and 1994 were over 30 per cent higher than OPEC estimates. This would not be consistent with a government which is trying to conceal the level of output.
It is useful to consider the implications of the most extreme case of leakage from the sanctions regime. If we take the higher figure supplied by the government of Iraq, the country's total output in 1994 would have been around 270 million barrels compared to the OPEC estimates, using secondary industry sources, of 208 million barrels. Even under the extreme assumption that this entire amount was exported, at the improbably high return to Iraq of $10 per barrel, total export revenue in 1994 would have been $2.7 billion. "Improbably high", because the average price of crude oil in 1994 was US $15.5 per barrel (IMF International Financial Statistics Yearbook 1995). It is highly unlikely that smuggled oil would fetch anything close to its market value. Iraq's return per barrel, after subtracting the cost of extraction is likely to have been lower than $10. In per capita terms this would have been the equivalent of $150 per person. This is still lower than the value of imports per person of the three poorest Arab countries (see Table 2).
There are severe limits to the amount of oil Iraq is able to export. Prior to the imposition of the sanction, the principal conduits for Iraqi oil exports were the pipeline from Turkey to the Mediterranean coast and the oil terminals in Basrah. Export from either of the two is easy to police and there is no evidence to suggest either have been used for exports. Exports through land route is the only possible option. The possible land routes are very limited. Three of the six states neighbouring Iraq, Saudi Arabia, Kuwait and Iran are large oil producers and the first two have been strong supporters of the sanctions, and the relations with Iran have been strained, if not absent. With the remain three states, Iraq has had no relation with Syria, which supported the military action against Iraq, and the relations with Turkey, which too supported the military action, have been minimal. The route through Jordan is the only possible channel for significant oil exports. All of Iraqi oil fields are far away from the Jordanian border and Iraqi oil exports to Jordan has to be transported over a distance of 600 to 700 kilometres [we should check the distance] by trucks. Supplying oil to Jordan for domestic consumption is a large logistic operation. Even if Iraq succeeds in transporting sufficient oil to Jordan, any significant re-export of oil through Jordan, which is not an oil producer, would be easily detected. In sum, some seepage of oil to neighbouring countries cannot be ruled out, significant breaches in the embargo on oil exports is technically infeasible.