[R-G] Basra strike against Shiite militias also about oil

[Anthony Fenton]

Basra strike against Shiite militias also about oil
Iraq's oil minister says the assault helped curb oil smuggling.
By Sam Dagher | Correspondent of The Christian Science Monitor
from the April 9, 2008 edition
http://www.csmonitor.com/2008/0409/p01s03-wome.html?page=1

Baghdad - The recent fight in Basra between Iraqi forces and Shiite  
militiamen was about more than a government bid to reassert itself in  
a city where Moqtada al-Sadr's Mahdi Army was digging in. It was also  
about oil – and smuggling.

Before the assault began on March 23, the Iraqi government drew up a  
list of about 200 suspected oil smugglers it hoped to round up –  
including the brother of the governor of Basra Province and, according  
to Iraqi Oil Minister Hussein al-Shahristani, several leaders linked  
to Mr. Sadr's militia.

For the government, which relies on oil revenues to fund most of its  
budget, the financial stakes are immense. While there are no accurate  
figures, an Iraqi parliamentary committee says that losses from oil  
smuggling run $5 billion a year.

"We have cleansed large swaths on both sides of Shatt al-Arab that  
were being used to smuggle oil products and other materials," says Mr.  
Shahristani, who spoke during an interview at the Oil Ministry in  
Baghdad on Monday, describing the government achievements in Basra so  
far.

"Many of the gangs are colluding with local officials, powerful  
parties, or militias; it's a web of interrelations," he says.

Shatt al-Arab, a haven for smugglers, is the 120-mile waterway formed  
by the confluence of the Euphrates and Tigris rivers at Qurnah in  
Basra Province and runs to the Persian Gulf.

Shahristani says the Basra assault, which was led by Iraqi forces and  
backed up by the US and British militaries, will allow better control  
of vital oil resources and facilities, curb smuggling, and help boost  
production to 3 million barrels per day (b.p.d.) by the end of the  
year, which would be the highest level in 20 years.

For rival Shiite groups – from Iraqi Prime Minister Nouri al-Maliki's  
coalition to the members of Sadr's movement – the equation is simple.  
Whoever controls the oil speaks in the name of the Shiite south and  
has the leverage to map the country's future and work out deals with  
the two other competing groups: the Sunnis and the Kurds.

The potential income from Iraq's vast oil is only beginning to be  
realized. Already, more than 90 percent of the revenues of this year's  
budget of $48 billion will come from oil exports. And just three  
months into the year, the government is reaping a $5.4 billion  
windfall on top of this from rising oil prices that are now hovering  
above $100 per barrel.

US lawmakers estimate that Iraqi oil revenues for 2007 to 2008 will  
total $100 billion. Iraq now produces an average of 2.5 million  
b.p.d., the bulk of it in Basra. Of that amount, an average 1.6  
million b.p.d. is exported via the southern province and only 0.3  
million b.p.d. via the northern pipeline, according to Shahristani.

To be sure, many question the government's power and will to stop oil  
theft and smuggling since the botched operation in Basra. The  
government would also have to convince average Iraqis that its  
crackdown on smuggling is being done for their benefit – and that of  
the economy as a whole – and not to serve the agenda of ruling Shiite  
political parties.

Shahristani says responsibilities for protecting oil facilities and  
guarding against smuggling and theft in Basra shifted at the start of  
the year from the Oil Ministry's Oil Protection Force (OPF), which has  
been abolished, to a newly created unit of the Interior Ministry known  
as the Oil Police. The Interior Ministry is widely viewed as being  
dominated by Mr. Maliki's Shiite allies.

The OPF in Basra was under the sway of the Fadhila Party of Gov.  
Muhammad Mosabeh al-Waeli. Shahristani says tribesmen loyal to the  
government are being actively recruited now into the Oil Police.

The governor's brother, Ismail al-Waeli, was believed to be Basra's  
No. 1 smuggler, says Shahristani. "He has fled outside Iraq … his name  
was among the gangs involved in oil smuggling, in fact he was at the  
top of the list."

The word in Basra is that Governor Waeli is under some sort of house  
arrest and that his brother Ismail has fled to Kuwait. The head of the  
local provincial council, Muhammad Sadoun al-Abadi, who belongs to a  
branch of Maliki's Dawa Party, is now running day-to-day affairs in  
close coordination with Maliki, according to a Basra-based scholar  
familiar with the situation.

Shahristani says among those arrested so far are Yussif al-Mussawi,  
the head of a small party in Basra called Thaar Allah (God's Revenge),  
because of his involvement in "kidnapping, extortion, and several  
smuggling rackets including oil."

The Basra-based scholar, who spoke on condition of anonymity for  
security reasons, says that while government forces control Basra's  
center and several other areas, the Mahdi Army remains largely intact  
in its traditional strongholds – poor working-class areas of the city.

"I expect lots of assassinations and sleeper cells to act up. There is  
a strong desire for revenge now," he says.

The intra-Shiite struggle for power and resources in the south is  
nothing new and has been under way since the fall of Saddam Hussein in  
2003. But the battle in Basra has now drawn a clear line between those  
Shiites in the ruling coalition – including Maliki and the powerful  
cleric Abdul-Aziz al-Hakim – and two main rivals that split from it  
last year: Sadr's movement and the Fadhila Party.

Although Basra is largely quiet at the moment, the fighting between US- 
Iraqi forces and the Mahdi Army militia has intensified again in  
Baghdad, with at least 30 people killed since Sunday. The government  
is demanding that the Mahdi Army disarm; Sadr is refusing this before  
US troops leave Iraq and is now threatening to escalate the fight  
further.

Muhammad-Ali Zainy of the London-based Center for Global Energy  
Studies, says it's a positive development for Iraq's future – and its  
oil industry – that Maliki is targeting militias and exerting control  
in Basra. But it remains to be seen, he adds, whether Maliki is  
willing to go all the way or whether he's just carrying out the agenda  
of Mr. Hakim's Islamic Supreme Council of Iraq (ISCI) party, which  
sees Basra's economic might as giving it greater influence in the south.

"The government must act evenhandedly and make sure the smuggling  
enterprise is not simply taken over by other militias," he says,  
adding that smuggling continues to be a highly lucrative business. The  
average price of one gallon of gas in Iraq is $0.40 versus $2 to $3 in  
Iran and neighboring countries.

Shahristani, who is very close to Maliki, says the security situation  
in Iraq continues to prevent foreign companies from doing much-needed  
repair work to facilities nationwide, not just in Basra. He says vital  
pipelines linking the country's largest refinery in Baiji, in the  
Sunni heartland, with Baghdad and Mosul are badly damaged by sabotage.

He says a substantial number of fuel tankers leaving Baiji end up  
falling prey to insurgents and gangs. Maliki's government is also at  
loggerheads with the Kurdish regional government over the authority to  
sign oil contracts, thereby stalling the passage of a new oil law.

The Ministry of Oil itself is in a fortress-like compound in Baghdad  
on the edge of Sadr City. Three mortar rounds fell on the nearby home  
of the interior minister Monday, sending a thick black plume of smoke  
into the air.