Iraq Oil Report

PLUS:
*Oil and the Basra battle
*The northern pipeline protector
*Power grid still a target
*Kirkuk deadline looms large
*Baquba violence increases

Iraq oil production decreased in March, along with OPEC as a whole, as Baghdad was pressed by Washington to spend more of its revenues, United Press International’s Ben Lando reports.

Oil flow has been steady at as much as 350,000 bpd according to Iraq’s Oil Ministry. Exports from the south have been around 1.6 million bpd. The rest is consumed domestically.

During hearings this week on Capitol Hill, General David Petraeus, commander of multi-national forces in Iraq, and U.S. Ambassador to Iraq Ryan Crocker, have been scolded by members of Congress for not requiring Iraq to spend more of its funds.

All of Iraq’s oil sales are collected in an account of the Central Bank of Iraq at the Federal Reserve Bank of New York, per U.N. mandate to prevent theft and misuse after Saddam Hussein’s toppling.

The money is then transferred from the CBI’s account to the Iraq Finance Ministry to be disbursed as part of the budgetary process. Iraq, however, not only lacks the institutional capacity to spend the money, but is hampered by politics, fears and reality of corruption, and violence and spends only a fraction of its capital budget.

Members of Congress have suggested legislation requiring the funds be spent or U.S. expenses incurred since the invasion to be repaid by Iraq.

Iraq’s budget for reconstruction both this year and last year is larger than the U.S. budget for Iraq reconstruction.

More by The Associated Press’ Anne Flaherty.

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, Sam Dagher writes in this excellent piece for The Christian Science Monitor.

Excerpts:

“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. …

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 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. …

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.

Iraq’s electricity sector continues to be a target as violence in Baghdad takes aim at power plants, UPI reports. A power plant in Sadr City, the poor neighborhood and Shiite stronghold of Moqtada Sadr, was reportedly attacked.

Sheikh Abu Saif al-Jubburi is a man to be reckoned with in Iraq’s northern oil hub, where the tribal leader and his 800 men protect strategic pipelines and US troops in the volatile region, Herve Bar reports for Agence France-Presse. After the US-led invasion of Iraq in 2003, Jubburi left a lucrative trade “selling potatoes” which he says earned him “up to $10,000 a day” to devote himself to guarding roads in areas where there are oil pipelines and keeping the precious crude flowing. The pistol-toting father of 18 is now the uncontested master of 885 men and 80 checkpoints on the Hawija-Kirkuk highway that runs alongside pipelines that transport Iraq’s black gold north to Turkey.

The question of who will control Iraq’s disputed oil province of Kirkuk is looming large as a UN-brokered deadline for a vote on its future approaches amid continuing ethnic and political tensions, AFP reports.

Security, Society & Politics

In Iraqi Shiite Factionalism and Iran’s Role in the Basra Fighting, Reidar Visser in The Jamestown Foundation’s Terrorism Focus also explains the internal cohesion and disputes that give better context to last week’s Basra battle and the ongoing fighting.

Visser is research fellow at the Norwegian Institute of International Affairs and editor of the Iraq-focused site Historiae.org.

The author of “Basra: The Failed Gulf State” also on Tuesday held a Q&A session on Washington Post .com

As violence rises again in Iraq, negotiations to institutionalize US economic dominance continue unabated. While the battle of Basra raged last week, a series of talks between the Bush administration and the US-backed Maliki government rolled forward. These negotiations may have at least as many implications for Iraq’s future as the violence on the ground, Maya Schenwar writes for Alternet.

The official spokesman for the Iraqi government said that the cabinet decided to allocate $100 million to Basra, $100 to Mosul, and $150 million to Baghdad, mainly Sadr City and al-Shuaala, the Voices of Iraq news agency reports.

An Iraqi military document has revealed important details of a security draft representing current talks between the government of Iraq and the US concerning an agreement between the two states, senior military officials said, Basil Adas reports for Reuters.

Iraq disapproves Blackwater contract renewal, Alsumaria TV reports.

Last month’s Winter Soldier hearings, testimony by veteran and active duty U.S. service members in the wars in Iraq and Afghanistan, received zero coverage by The New York Times. After pressure from Fairness and Accuracy In Reporting (FAIR), NYT public editor Clark Hoyt explains why.

The Transportation Ministry announced that the cost of rehabilitating and constructing transportation system is estimated to be about 50 million dollars, Alsumaria TV reports.

As violence continues in Baghdad and southern Iraq, it seems quiet on the surface in Baquba, the volatile city 40km north of Baghdad. But few believe truce between the U.S.-backed Awakening Groups and the government security forces can last, Ahmed Ali and Dahr Jamail report for Inter Press Service.

Iraq’s humanitarian crisis has worsened, and decades of conflict and deteriorating basic services are reducing people’s ability to cope with the hardships they face, a senior U.N. aid official said on Monday, Suleiman al-Khalidi reports for Reuters.

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