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Analysis: Iraq's oil smuggling -- Part 2

By BEN LANDO, UPI Energy Correspondent   |   Dec. 15, 2006 at 8:31 AM   |   Comments

WASHINGTON, Dec. 15 (UPI) -- When a joint British and Danish force launched a security raid last week in Basra, Iraq's second-largest city and home of the second-largest oil refinery, it also arrested alleged leaders linked to a petroleum smuggling ring.

Both smuggling and security are a growing problem in Iraq, not always mutually exclusive, but fueling the post-Saddam Iraq.

"It all ties together," said Juan Cole, professor of Middle East and South Asian history at University of Michigan and an Iraq expert, who warns that if Basra spirals downward, the whole country will follow.

An estimated 100,000 barrels of oil is smuggled from Iraq each day, according to Saad Rahim, manager of PFC Energy's Country Strategies Group, and an unknown amount of petroleum products, like gasoline, is lifted as well.

Controlled by Shiites experiencing an increase in power struggles, Basra is Iraq's main legal oil export and smuggling port.

The Basra Provincial Council is mostly comprised of members of three Shiite parties that also compete on the national level: al-Fadila, Supreme Council for the Islamic Revolution in Iraq, and the Sadr Movement.

And they face off with Marsh Arabs, a long disenfranchised and sidelined people, not to be overlooked in either the smuggling or the fighting.

Living on stilts in the marshes outside Basra, Marsh Arabs had key access to the Persian Gulf and Iran. "A lot of their activity was smuggling," Cole said.

But then a drought sucked much of their water at the turn of the century, and Saddam Hussein finished it off, expelling them into area shanty towns and into Basra. This created tensions with the local Shiite factions, which are still playing out.

The estimated 500,000 Marsh Arabs, previously a mostly isolated community, live by their own rules still, Cole said, "acting like a mafia family in Basra ... competing with party militias who are also engaged in the same type of smuggling."

Some Marsh Arab factions have aligned with the Mahdi Army, the militia of Moqtada al-Sadr, leader of the Sadr Movement.

The Los Angeles Times reports the operation last week in Basra netted five leaders of various tribes or factions. There are more than 7,000 British troops in the province, who are having an increasingly difficult time as smuggling turf wars intensify.

Although none of the detainees' names were released, Sadr's top Basra official said the head of a Marsh Arab tribe was among them and vowed revenge.

The parties are all jockeying for control of Basra and the country, as well as its oil reserves, and are reported to have begun infiltrating oil companies.

The oil infrastructure isn't being attacked, though, like in the north, where militias of the Sunnis, who have little to no oil, are bent on hurting Kurds who have oil resources and are pushing for autonomy. They sabotage the main pipeline to Turkey as well as smuggle petroleum headed to cities like Baghdad.

Iraq produces about 2 million barrels per day and exports 1.7 million of that.

The competition in Basra has furthered security issues, either directly or indirectly. Oil revenues fund more than 96 percent of Iraq's budget; smuggling -- a $700 million monthly toll, the Oil Ministry estimates -- weakens the central government and prevents it from funding both security and reconstruction projects.

"You can't do anything unless you get the security," Cole said.

He said security can be maintained by strengthening the central government.

"Unless that happens nothing good is going to happen in Iraq," he said.

"And you can't strengthen the central government if it's being denied petroleum," he said. "It's a political centrifugal force. It's chaos."

It's a situation pegged on both political and economic developments, and the reactions of armed leaders alternately empowered or backed against a wall.

Seemingly no one knows where it will end up, John Pike, director of GlobalSecurity.org, told UPI.

"Anybody who thinks they do is in for a rude surprise along the way," he said. "All of the organizations there, all of the institutions are fragile because they're new."

He said there are a mix of interests engaged in Basra that will play out in its future: militia factions and criminals -- and "the interface between those two"; an eye on the outcome by both Shiite Iran and Sunni Saudi Arabia; the city, provincial and central governments; and the coalition troops on guard.

All this operates under the umbrella of "shifting allegiances and uncertain alliances ... intensely competitive and playing for keeps" in the power vacuum created since 2003, after "the system of violence that had been created under Saddam," Pike said. "Then it fell apart."

The fight over oil -- between regions and the central government; among Shiites, Sunnis and Kurds; between rival smugglers -- "highlights the insecurities that are ingrained in Iraqi society" after decades of corruption and oppression, Qubad Talabany, the Kurdistan Regional Government's representative to the United States, told UPI.

"Every community is insecure," he said. "Every community is mistrustful of each other."

--

(This is Part 2 of a two-part series on the relationship between oil smuggling and security in Iraq.)

--

(Comments to energy@upi.com)

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