Sleeping With The Devil

by Robert Baer

  I saw Yuri come out of the elevator. Dressed in a pair of pressed Levi’s, suede Italian loafers, and a diaphanous white linen shirt, he could have passed for a well-heeled tourist. Slim and sandy haired, he looked younger than his forty-five years.

  We settled in a restaurant where Yuri waited glumly for his coffee. My chitchat about the weather, Caesarea, whatever I could think of that might keep the conversation from sinking into silence, barely got a nod out of him. I stopped talking and took a closer look. His waxy yellow skin told me he hadn’t been spending his time on the beach or the links. To judge by the spiderweb of broken blood vessels in his cheeks, he liked to relax with a bottle of vodka.

  My business with Yuri, if you want to call it that, was to do a favor for a friend who wanted to know if Yuri was interested in financing an oil contract, a perfectly legitimate one. My friend figured that the Russian, with all his loose cash, might want to get out of the arms trade and clean up his reputation.

  As soon as Yuri finished his second espresso, I popped the question. I was halfway through it when he held up his hand to stop me. “You’re on your way to Syria, our friend tells me,” he said.

  He was right. The next day I was flying to Amman, Jordan, and from there to Damascus. The borders between Syria and Israel had been closed ever since Israel’s independence over half a century earlier. You had to touch down somewhere else before setting foot in Syria.

  “I’m in the market for Syrian oil,” Yuri said. “I’ll take as much as they’ll give me. And you know what? I’ll pay two dollars above market price.”

  That was a curveball I hadn’t seen coming. I didn’t need to be a professional oil trader to understand that Yuri didn’t have legitimate Syrian oil in mind - no one pays two dollars a barrel over world market for any oil. What Yuri was after, I had little doubt, was sanction-busting Iraqi oil, currently selling for a discount of ten to fifteen dollars a barrel in Syria. It was impossible to nail down the exact amounts involved - Syria obviously didn’t publish figures - but I’d seen estimates that put the total trade above $3 billion a year, a business big enough to attract Yuri and lots of other vultures of the global economy.

  Iraq was glad to have another market for its illicit oil, even at a steeply discounted price. It was thanks to smuggled oil that Saddam Hussein had stayed afloat since the end of the Gulf War. Saddam used the revenues to feed and equip his elite troops and intelligence services - his brutal praetorian guard. The clandestine trade in oil had started as soon as the last American M-16 fired its last round in February 1991. At first the oil moved via small barges hugging either side of the Persian Gulf coast and traveling at night, thereby avoiding detection by the American fleet. Iraq then started smuggling it out by truck, mostly to Turkey and Iran. I had seen miles-long truck convoys when I was in Kurdistan in 1994 and 1995. Syria came late to the game but was more than making up for that in sheer volume. Most oil went through an old pipeline to the Syrian port of Baniyas. Some came in by truck.

  With all the revenue from Iraqi oil sold outside the United Nations-imposed oil-for-food regimen, Saddam did quite nicely. Not only could he pay for the forces that kept him from being overthrown, he had even started reequipping his regular army. Shipments of new Russian goodies were arriving every day. There was also enough money left over to keep Saddam’s inner circle, including his vicious son Uday, who ran the oil business, from worrying about a shortage of Cuban cigars, sports cars, and prostitutes. The Iraqi in the street never saw a penny of it.

  Syria didn’t do badly, either. By selling the illegal Iraqi oil on its domestic market, Syria freed up the oil it pumped from its own fields to sell abroad at world prices. The country’s oil exports rocketed from 320,000 to 450,000 barrels a day. Syria, of course, denied that the increase had anything to do with Iraqi oil, insisting against all evidence that the extra 130,000 barrels were squeezed out of its own fields. The fact is, Syria was making hundreds of millions of dollars a year off illicit Iraqi oil. For a country whose economy had been about to crater, that was a godsend.

  As for the commission agents and traders - the WD-40 of this lovely end run around the United Nations sanctions on Iraq - there was plenty of money to treat themselves to new estates in Saint-Tropez or on Spain’s Gold Coast. Maybe that’s what Yuri was after: He seemed to have taken a liking to sweeping views of the Mediterranean.

  The problem with Iraqi oil wasn’t buying; it was unloading. Although the trade in Iraqi crude was an open secret, Syria didn’t want to give anyone the chance to make a case by seizing a tanker full of the stuff. Syria never knew when some powerful congressman might hammer the State Department and the navy, forcing them to do something about the oil. With the screws turned, it wouldn’t take the navy long to find a Syrian oil tanker on the Mediterranean. Sobered by such an ugly prospect, Syria wouldn’t allow a drop of Iraqi oil to be exported. Yuri would have to come up with a damn serious sweetener to change Syria’s mind. Illegal oil trading isn’t my thing, but curiosity is, so I played along. They’d taught us at Langley that involvement is the first step to understanding.

  “How are we going to make any money if we pay two dollars more than we have to?” I asked.

  Yuri cut me off before I could continue. “Leave the numbers up to me.” He didn’t say anything for a minute, probably deciding how much he could risk telling me. Like espionage, the oil and arms business is run on a strict need-to-know basis: Give up only what you have to.

  “What I’ll tell you is this,” Yuri went on. “I intend to wrap up my offer in a nice, neat package. I’m talking about PMU-300s. Tomorrow I could put my hand on twenty TELs and a hundred pencils. You open the door in Damascus, and I’ll convince the Syrians this is a deal they can’t refuse.”

  Now things were starting to get interesting. In the arms lingo, a TEL is a transporter-erector-launcher, and a pencil is a missile, but this wasn’t just any TEL. The PMU-300 is a sophisticated Russian mobile surface-to-air missile system. I wasn’t surprised Yuri was offering it for sale - he sold Russian arms for a living. What did surprise me was that he was pitching it here in Israel. Technically, Syria and Israel are at war. Syria’s possession of PMU-300s would upset the balance of force between the two countries. I couldn’t imagine Israel would be pleased to find out that sophisticated arms were being sold to its archenemy on its own soil, one sunny morning halfway between Tel Aviv and the Lebanese border. Then again, money helps disguise a lot of unpleasant truths.

  I wasn’t going to buy illegal Iraqi oil, and I wasn’t going to buy arms for Syria, but I was closing in on the answer to a question I’d had for a long time. If Yuri was prepared to sell PMU-300s from a luxury resort hotel in Caesarea, armed with an international cell phone and a fat Rolodex, what else could he sell? And to whom? You don’t need to be ex-CIA to know that globalization isn’t just about Diesel jeans, Sony PlayStations, and Mercedeses. What I intended to find out was exactly how globalized the shady side of the arms business had become.

  In all my years in the CIA, I saw very few borders you couldn’t get arms through, around, or over. [text omitted]Through the 1990s, arms were coming across the Amu Darya, the river that separates ex-Soviet Central Asia from Afghanistan, in raft loads. A few Stinger surface-to-air missiles found their way into the former Soviet Union. One errant Soviet-designed missile even made it to Mambasa, Kenya, where it misfired trying to bring down an Arkia Israeli Airlines passenger jet in late November 2002.

  Western Europe hasn’t been immune, either. On September 2, 2001, two young North African immigrants decided they’d had enough of France, or at least French authority. Armed to the teeth, they launched a military assault on the Beziers municipal office. After gunning down a mayor’s aide with a Kalashnikov assault rifle as he sat in a car, they fired a rocket from a Russian-made launcher at an empty police car, which exploded in flames. They tried to do the same to a second police car - this one with four gendarmes inside - but the grenade turned out to be a dud. The police were left shak
ing their heads. Buying military munitions on the black market, it seemed, was easier than buying dope. Ten years ago an enterprising French criminal would have been lucky to put his hands on an unregistered handgun, and it would have cost a fortune. Today he could buy a Kalashnikov for five hundred dollars in one of Paris’s ghetto suburbs, or a rocket launcher and grenade for three hundred. Don’t forget: France has one of the most restrictive gun laws in the world.

  Still, there had always been exceptions, borders that even the Yuris of the world couldn’t violate. Listening to him now, I wondered if that was still the case.

  Facts in the arms business aren’t easy to come by. Arms dealers run a closed shop. They don’t talk to journalists or researchers, put out a trade journal, or register with the chamber of commerce. To find out what’s going on, you almost have to enlist an arms dealer - recruit him as an agent to take a look where you can’t. During the first half of my career, the CIA put a high premium on such assets. Sniffing down the trail of Semtex, SA-7 shoulder-fired surface-to-air missiles, and Kalashnikovs was part of the job, just as following the money had been for the Watergate investigators. No longer.

  That attitude changed completely in the 1990s, when the CIA’s Office of General Counsel started to put in overtime worrying about arms dealers “graymailing” the agency. A mild form of blackmail, graymail works like this: An arms dealer will volunteer his services to the CIA, claiming he’s a patriot who wants to run out the bad guys in the business. He provides a couple of tantalizing tidbits about some deal or another, but they end up being dead ends because the arms dealer is really after an insurance policy. He’s counting on using the CIA as an umbrella that will cover him for anything he does, legal or illegal. If one day he’s unfortunate enough to get caught selling arms to an embargoed country like Syria or Iran, he can falsely claim that his CIA handler (someone like me) had given him a go-ahead. Since CIA officers undercover cannot testify in court, the arms dealer walks.

  Was it a legitimate worry? Sure. Arms dealers don’t go into the business because they’re patriots. But intelligence gathering is like investing in the market: You can stick your neck out and take your losses with your gains. Or you can clip T-bill coupons with the AARP bluehairs, clearly Langley’s preference.

  To give you an idea of how crazy it got, not too long before I resigned from the CIA in December 1997, I had the opportunity to recruit an arms dealer who, like Yuri, sold Russian weaponry in the Middle East. It was at a time when the CIA was beginning to understand what a disaster the old Soviet strategic-weapons labs and testing facilities were. Stocks were missing everywhere. During a routine visit to a former Soviet weapons site called Vozrozhdeniye, on an island in the Aral Sea, we found weaponized anthrax lying on the ground. Anthrax! The site was unguarded, and anyone could have picked it up. That’s the kind of thing I wanted to turn this arms dealer loose on.

  Times were hard in the arms trade. Supply and demand had gotten out of whack. My guy was happy simply to have the CIA pay his travel and expenses. He would do his business on the side - legitimate, he assured me - while giving me a heads-up when things like anthrax were being put on the market. I thought this operation would be fairly clear-cut, and inexpensive, too, but as soon as my bosses heard what I intended to do, the hand wringing started. At first they flatly refused to let me meet the guy. They relented only when I agreed to drag along a lawyer from the general counsel’s office.

  You can imagine the chill that put on the operation. Informants, by nature, work in the dark. Turn a government lawyer’s spotlight on them, and they scurry back to their rat holes. The seventh floor at Langley had its priorities, though. If the guy tried to play us, the CIA brass wanted to be able to produce the lawyer in court. No one seemed to care that, in the end, we wouldn’t learn a damn thing about the anthrax at Vozrozhdeniye or any of the other stuff missing from the ex-Soviet strategic-weapons sites. After I resigned, I heard that the informant was dropped - terminated, as it’s called in the business - and the CIA went back to treating arms dealers like the clap, closing the best window we had into the international arms market and the deadly scourge of proliferation.

  In Caesarea, face-to-face with a true titan of the arms trade, I wasn’t about to let another opportunity slip by. More than anything else, I wanted to hear what Yuri could tell me about Saudi Arabia and arms.

  By 2001 anyone who understood anything about Saudi Arabia knew it was circling the drain. Per capita income over the last twenty years had fallen by more than 60 percent. Birth rates had soared to among the highest in the world. Meanwhile, the royal family’s grotesque corruption and thousand-and-one-nights lifestyle had started to take a real toll on the Saudi street. Popular preachers all over Saudi Arabia were openly calling for a jihad against the West - a metaphor, I assure you, that includes the royal family. Signs were mounting that the place was beginning to crack wide open. In 1995 the National Guard barracks was bombed, killing five Americans. Under a year later, a second terrorist attack on a U.S. military barracks in al-Khobar killed nineteen U.S. servicemen. In 2000 two Saudi security officers hijacked a Saudi commercial jet bound for London and forced it to land in Baghdad. “We are just ordinary people, and we are calling for the rights of the Saudi people, such as decent education, decent health, and other services,” one of the hijackers told officials when the plane put down in Iraq.

  What I didn’t know and was trying to angle Yuri into telling me was whether anyone had the ability to translate all this discontent into activity, like overthrowing the Al Sa’ud, the semisedentary, unworldly Bedouin clan that traces its lineage back to the eighteenth century. To do that, they would need arms, and a lot of them.

  The Saudi government probably spends more per capita than any other country in the world on arms. (It acknowledges only that it spends 13 percent of its gross domestic product, but half of its revenue is earmarked for the military.) That’s basically without having to provide for its own external defense; U.S. carrier groups and F-15 combat air patrols over the Gulf take care of that. (And the U.S. still manages to spend less than 4 percent of GDP on the military.) Also, Saudi Arabia has never fought in any Arab-Israeli war, from 1948 until today. In fact, the Al Sa’ud’s military hasn’t fought a war since the 1930s. To understand the significance of its spending on arms, look at the French for comparison. Although France has a modern, combat-ready mobile army that fights in a handful of African bush wars and participates in peace missions all over the world, it spends only 2.57 percent of GDP on its military.

  So where does Saudi Arabia’s defense money go? A lot disappears down the depths of corruption, but an equal amount goes for personal protection of the royal family. The Saudi National Guard, as well equipped as the best army in the world and as well paid, is probably the most expensive bodyguard service in the world. Every time you fill up your car with gas that has its beginning as Saudi crude - and statistically, that should be about one in every five or six times you pull up to the pump - you’re contributing something like a dollar toward keeping Saudi royal heads attached to their necks.

  Over the years I served in the Middle East, I always accepted on faith my government’s comfortable assumption that with all the money the Al Sa’ud have dumped into arming their bodyguards, they could keep themselves (and our oil) safe, including preventing average Saudis from acquiring heavy weapons, the kind they would need to unseat the regime. Now I was beginning to have my doubts.

  Yuri probably knew as much about dirty arms trading as any man alive. But why should I expect him to give me a quick refresher course? If he’d wanted to teach, he would have stayed in Moscow and found a job at a school. I’d have to convince him that he stood to make some money. Since I wasn’t in the arms business, I’d need to invent some story, weave it out of whole cloth. Involvement may be the first step to understanding, but to become involved, you sometimes have to be “creative” with the facts.

  “New subject, Yuri,” I started tentatively. “I need some small
stuff, you know, plastic explosives, rocket launchers, rifles.”

  Yuri’s eyes flickered. The “stuff” I was talking about had made him a fortune in West Africa. He couldn’t dismiss it out of hand.

  Before he could answer, I lowered my voice and went on: “I need it delivered inside Saudi Arabia.”

  Yuri waited for what seemed like an hour before answering. He was sitting across the table from an ex-CIA officer whom he had just met. He must have figured he’d already given away too much about his business. Was I still working for the agency? Had I come to the Israeli Riviera to drag him into some dirty game and entrap him?

  “I myself won’t touch it,” Yuri said at last with a zippered smile. “But if you’re serious, I’ll give you the number of an associate in Moscow. He’s done it before.”

  “Done what before?”

  “Delivered weapons inside Saudi Arabia. Like Domino’s, he delivers anywhere, anytime. Even to the crazy Vahabis.”

  “Vahabis” is the way Russians end up pronouncing “Wahhabis.”

  “You’re talking about pistols, rifles, ammunition?” I asked.

  “Yes, and the big stuff, too. You got the cash, he’s got the hardware.”