Iraqi insurgents fight to control the oil industry

Rebels fund their campaign against the energy sector by stealing from it, writes David Everett

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By  David Everett Published  March 2, 2006

Iraq's Insurgency|~|Iraq200.gif|~||~|Last month Iraq’s government said sabotage to oil infrastructure and lost export revenues cost it more than US $6 billion in 2005 — and insurgents are funding the campaign by stealing oil industry cash and crude and controlling a lot of the oil and petrol smuggling.

In the social disorder that has come to define daily life in Iraq, where money slips around virtually untethered by the strictures of accounts, accountants, or accountability, it came as little surprise when Iraqi and American officials announced detection of a pattern of government corruption permitting the flow of oil money and, indeed, oil itself, into the coffers of the insurgency in quantities threatening to undermine Iraq’s struggling economy.

In Iraq, which relies almost solely on oil for its revenues, the officials say that any draining of money to an insurgency bent on murdering its citizens and destroying its infrastructure adds a new and perilous challenge of holding together an Iraq threatened by civil war.

One example: the Sunni lawmaker, Meshaan al-Juburi, a sitting member of the Iraqi National Assembly, has been indicted for the theft of millions of dollars earmarked for protecting a critical oil pipeline against attacks. He is suspected of funnelling some of that money to the insurgency, said Radhi Hamza al-Radhi, the chairman of Iraq’s Commission on Public Integrity. The charges against the Sunni lawmaker, is but one of many indications that the insurgency is profiting from their country’s oil and gas riches.
Iraq’s finance minister, Ali Allawi, has estimated that insurgents reap 40-50% of all oil-smuggling profits in the country. Explaining how illicit oil products are kept flowing on the black market, he said that the insurgents, having infiltrated senior management positions at the major northern refinery in Baiji, routinely terrorise lorry drivers, coercing them into letting the fighters tap the pipeline, empty the lorries, and sell the oil and gas on the black market.
“The insurgents are so deeply embedded at all levels,” said Allawi, “that they pose a serious threat to national security.”
“It’s clear that corruption funds the insurgency, so there you have a very real threat to the new state,” said one US official involved in anticorruption activities, who refused to be identified to safeguard his ability to work with Iraqi officials. “Corruption really has the potential of undercutting the growth potential here.”

In January, a 60-truck convoy of fuel tankers, en route from Baiji to Baghdad to alleviate fuel shortages in the capital, was attacked by insurgents armed with grenades and machine guns, despite the presence of Iraqi security forces.

In some cases Iraqi guards on the Syrian border have been bribed into permitting stolen shipments through, and then the oil is sold on the black market, Radhi said.
Senior officials in Iraq’s Oil Ministry often describe an “oil smuggling mafia” that taps heavily into the profits from the oil industry and also controls allocation of administrative posts in the ministry.

Ibrahim Bahr al-Ulum, former oil minister, told the London-based newspaper Al Hayat that, “Oil and fuel smuggling networks have grown into a dangerous mafia threatening the lives of those charged with fighting corruption.”

In an interview with the TV network Iraqiya, Ulum said that raids on “smuggling dens” in Baghdad had netted forged documents and tanker lorries used by the rebels.
The indictment against Juburi, who is now thought to be hiding in Syria, charges him with stealing money slated for hiring and equipping thousands of guards in 2004 and 2005 to protect an oil pipeline running between Baiji and the northern city of Kirkuk. Iraqi officials also suspect, but have not proved, that some of the money given to Juburi to protect the pipeline was diverted to the insurgents who were
attacking it.

According to a high-ranking Iraqi official close to the investigation, an Iraqi Army battalion commander hired by Juburi, was accused of overseeing insurgent attacks on the pipelines. The official spoke on the condition of anonymity because he was not authorised to speak about the indictment. It is still unclear whether Juburi, knew that the commander was helping plan the attacks, the
official said.

Frequent insurgent attacks on the pipeline have been the major reason Iraqi oil exports have plummeted during the past year. The mortar attack in early February leading to the arrests of oil company and police officials was described by Northern Oil company employees as one of the most destructive in years.

The man hired by Juburi, according to one Iraqi official, was identified as Ali Ahmed Al Wazir, commander of the second battalion of the first brigade of the Special Infrastructure Brigades, based in the Wadi Zareitoun district. According to Juburi, Wazir fled Iraq just before a warrant was issued for his arrest in late December. Juburi’s son, Yazen Meshaan Al Juburi, has also been charged in the case and is believed to have fled with him.

Juburi’s party, the Conciliation and Liberation Bloc, won three seats in December’s elections. But the charges against him are unlikely to affect the current negotiations over forming a new Iraqi government, Radhi said, because the party Juburi formed can nominate someone to replace him in the newly elected National Assembly.

Juburi has long been a controversial figure in Iraq. Once intimate with the family of Saddam Hussein, he joined other Iraqi exiles in calling for Hussein’s overthrow after fleeing Iraq in 1989.

He claimed that he worked covertly with American Special Forces to undermine the Iraqi military, broadcasting calls from a TV station in Kurdistan to military commanders in Iraq to lay down their arms. He claimed to have taken control of Mosul by the outbreak of the war, but he was later ousted by US commanders.

Juburi’s tribe, the Juburis, is powerful and influential in the Salahuddin Province, through which the oil pipeline from Baiji runs. Juburi was asked in 2004 to organise 17 battalions to protect the pipeline. In January 2005, Juburi was elected to the National Assembly, becoming one of a few Sunni Arab members and a harsh critic of the government led by Ibrahim al-Jaafari. Iraqi and US officials say they believe that some members of the Juburi tribe are involved in the insurgency.
After attacks on the pipeline intensified in 2005, a three-month investigation learned that Juburi had hired only a few commanders, paying them to appoint hundreds of ghost soldiers on paper and then funnelling the salaries back to him, Radhi said. Juburi’s son, Yazen, was in charge of supplying food for the ghost soldiers and seems to have pocketed much of that money, he alleged.

Oil smuggling is only one part of an endemic corruption problem ranging from small-scale kickbacks to major fraud, such as recently revealed in Iraq’s Defence Ministry, where last August investigators identified more than $1.3 billion in misspent military contracts. Hazem Shaalan, who was defence minister under former Prime Minister Ayad Allawi and who had given Juburi the job of protecting the Baiji pipeline, was charged with public corruption last year. Shaalan has taken up residence in London.

Not all the corruption, of course, is related to the insurgency. Greed still plays its traditional role as a corrupting force in society, but its intent is not to destroy, but to shave off a layer of its wealth, whereas the ideological corruption in the oil fields and the refineries is designed to embezzle money, steal oil and gas, and with these assets buy the weaponry and explosives for crippling refineries, detonating pipelines, and, finally, for destabilising the government and polarising society.

The Commission on Public Integrity has referred about 450 cases to the courts for prosecution, while another 1,000 cases are still under investigation by the authorities.

These figures have spurred major reform efforts with US advisers assisting internal investigations and promoting guidelines, such as financial disclosure forms for government officials. But such efforts have been beset by intimidation and violence. Iraq set up internal monitoring posts in each government ministry, but two officials were assassinated last year before they were to publicise the results of investigations. Six other employees of the Commission on Public Integrity have been killed, and the rest live in fear of retaliation.

Some officials empowered to fight corruption seem drawn into it instead. The Iraqi inspector general program has been described as suffering from “significant missteps and lapses in progress,” and several inspector generals have been relieved of their jobs pending indictments, according to a State Department report on Iraq’s reconstruction efforts.
When the Iraqi government began requiring all high-level officials to fill out financial disclosure forms, according to Radhi, 40% refused, saying such forms are equivalent to telling kidnappers what ransom to charge.

There have been some successes, he said: eight government officials have been convicted on corruption charges and sentenced, though many more have escaped prosecution by fleeing to other countries.

However, in February a UN-headed watchdog said it was investigating why Iraq’s installation of metering equipment to measure oil production as a safeguard against smuggling has been delayed.

The International Advisory and Monitoring Board, created by the UN Security Council three years ago has been calling unsuccessfully for oil production metering.
Also last month, insurgents blew up two pipelines connecting the northern Iraqi city of Kirkuk to the Ceyhan terminal in Turkey in what an executive with the North Oil Co has called the “most severe attack we have ever faced on an oil installation.”

The battle for oil wealth and infrastructure continues, and there is no winner in sight.
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