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Iraq is smuggling oil into Turkey

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Iraq is smuggling large volumes of oil into Turkey in violation of U.N. sanctions, U.S. and Turkish officials say.

The officials say the Clinton administration has chosen to look the other way, aware that the smuggling benefits Turkey, a crucial ally in the U.S. policy toward Iraq, and Kurds who deny the Iraqi government of President Saddam Hussein control over northern Iraq.The operation involves thousands of trucks openly traversing roads that U.S. and allied warplanes fly over in northern Iraq, officials acknowledge.

The smuggling conduit into Turkey is enriching Saddam's government and family, these officials say, at a time when he is chafing under U.N. restrictions on official oil exports, which have been in place since the end of the Persian Gulf War eight years ago.

But the Clinton administration has decided not to try to stop the smuggling even though the United States is trying to hold together a coalition in support of economic sanctions against Iraq.

One energy expert in the Turkish government who spoke on condition of anonymity estimated that Iraqi smuggling now accounts for about 25 percent of the Turkish fuel market, making it a significant concern to international oil companies trying to compete in Turkey.

Turkish government officials, meanwhile, have been meeting to discuss ways to control the smuggling, in conjunction with their efforts to deregulate the country's fuel markets, Turkish officials said.

Officially, the U.N. prohibits all Iraqi oil exports except those that generate money for humanitarian aid in Iraq as well as for Gulf War victims.

In May, U.N. Secretary-General Kofi Annan approved Iraq's plan for distributing food and medicine purchased under this program, paving the way for Iraq to increase the amount of oil that Iraq could export under the plan from $2 billion to $5.2 billion worth of oil over the next six months.

All other Iraqi oil exports are officially banned, but in addition to smuggling through Turkey and the Persian Gulf, Iraq ships about 100,000 barrels of oil a day to Jordan.

Jordan is almost completely dependent on Iraqi oil, and the shipments to Jordan have been informally accepted by the United Nations, U.S. officials say.

Meanwhile, Richard Butler, chief U.N. arms inspector for Iraq said Thursday that a plan for ending sanctions that he and the Iraqis agreed to last weekend would collapse if the Iraqis withheld documents or other evidence, something they threatened to do even while the talks were in progress.

Butler sent a report to the Security Council Thursday that paints a much less optimistic picture than he or Iraqi officials presented when the Baghdad meetings ended on Sunday and it appeared that the Iraqis were within striking distance of the lifting of an oil-sales embargo.