issue 221 - July 1991
Selling to Saddam
Former arms dealer Said K. Aburish describes how -
with his help - the West started supplying Iraq.
This is the story of Iraq's first major arms deal with the West - the deal that broke Russia's monopoly.
During 1975 it became apparent to the rulers of Iraq that Russia was not supplying them with its most sophisticated military equipment, particularly advanced fighter and bomber aircraft. They complained, without success.
Iraq's generals hit back at the Russians by requesting that their government purchase an Anglo-French fighter, then one of the most advanced aircraft in the world. In my London office I received the call to begin unofficial negotiations with a British aircraft manufacturer. My exact mission was to determine this company's possible interest in supplying Iraq and to secure a six-per-cent commission agreement for my Iraqi associates.
A London friend of mine gave me the name of the company's director of the military aircraft division, John Hannay, whom I telephoned, telling him not that the decision was already made, but that our people' could help make it. His answers were polite, but non-committal until I mentioned the number of aircraft needed; 60 ($400 million worth). All pretence of disinterest vanished and the man's enthusiasm surfaced. He promised an answer after consulting his colleagues. Two days later the company confirmed its interest in working with us. I mentioned the six-per-cent commission and the need for an agreement. John Hannay is a model RAF officer and one of the finest gentlemen I have ever met. I gave him a full briefing on all I knew and undertook to arrange a meeting for him with my contact in Baghdad as soon as I received a written agreement. I also gave him the name of the company to which it should be assigned, Arab Resources Management (ARM) of Beirut, Lebanon. I declined to explain who and what Arab Resources Management were. Hannay promised to sound out the Foreign Office about their attitude towards supplying arms to Iraq.
My contact in Baghdad was delighted with the progress I had made but annoyed at the delay in processing the agreement. He was doing his best to delay the arrival in London of an Iraqi Air Force delegation whose job was to make an 'official' inquiry about the purchase to the company. Danger loomed. If the delegation made direct contact before a signed agreement was in our hands, then the company could do without us.
A few days later the proposed agreement arrived and I arranged a meeting between Hannay and Dr Ramzi A Dalloul, the chairman of ARM. The agreement was deposited in a Swiss bank for safe keeping because the company was haunted by the spectre of scandal. To them selling military aircraft was the same as selling cars but they still craved secrecy, insisting on calling the agreement a 'consultancy'.
Much to my surprise the initial response from the Foreign Office arrived before the Iraqi Air Force delegation did. The British Government 'would view with favour' such a request from the Iraqi Government. This was too good to be true. But the euphoria vanished into thin air when the Iraqi delegation made it known that they wanted a guarantee of uninterrupted flow of spare parts under all conditions'. Anxious to win the $400 million contract, the British Government stated they would 'endeavour to guarantee'. In reply the head of the Iraq delegation snapped, 'my English is not good, but either you endeavour or you guarantee' and with that he packed his bags and announced his departure for sunny Baghdad.
The atmosphere of crisis was suffocating. I saw $24 million slip through our fingers. I kept pleading with the company to think of a way out of the impasse. They kept pressurizing the Foreign Office, who wouldn't move. Would this so discourage the Iraqis as to throw them back into the arms of Russia?
It didn't. Instead, Dalloul pushed them towards the French Mirage Fl plane. And when the guarantee question was presented to the French manufacturer, Dassault, the company persuaded its Government to sign a document in 24 hours. Difficulties with the deal appeared later on when the Iraqis suspected the French of overcharging them by four million dollars an aircraft. This time Dalloul's message to me bridged the distance between intermediary and espionage work. 'Drop everything you are doing,' he screamed, 'and find out what the bastards charged other countries. You have unlimited expenses, use them to bribe, buy or bully anyone but get the prices at which the French sold the Fl to others.'
It was like going from the frying pan into the fire. The Institute of Strategic Studies would not help. Whatever contacts I had with intelligence establishments wanted more in return for their help than I was willing to offer. A CIA chum, however, recommended I tap the Peace Institute in Stockholm. They kept thorough files, he advised. To get at them I bribed the correspondent of an American weekly. This young man went to Stockholm and came back with the prize; he had copied all the price data they had on Mirage Fl sales. The Institute files were complete.
The French had overpriced the plane. The Iraqis began to stall. Jacques Chirac, the French Foreign Minister, was to visit Iraq shortly. When it was time to do business, Chirac asked about the Mirage Fl deal. Saddam Hussein, who was then Vice President, pushed a large sheet of paper in front of him. It showed an obvious attempt by the French to overcharge the Iraqis.
The imperturbable Chirac examined the document and volunteered - on the spot - a reduction of $1,750,000 on the price of each plane. Saddam Hussein accepted, and the gentlemen shook hands.
Later Saddam Hussein learned about Dalloul's commission agreement. To him this was betrayal because he considered Dalloul a trusted advisor who received a healthy retainer. He expelled Dalloul from Iraq, and furthermore claimed and got the commission from the French.
The winner was Saddam Hussein. He got his planes at the lowest possible price. It's not difficult to identify the losers.
Said K Aburish is a Palestinian living in London. He gave up dealing in arms and wrote Pay Off: Wheeling and Dealing in the Arab World (André Deutsch) - from which this piece comes - in 1985.