Lando on Oil Insecurity in Basra
Ben Lando of UPI gives us a 2-part report on oil security [part 1 here] in Iraq, or rather the lack thereof. This problem is often ignored in the press, but it is at the center of the inability of the new government to establish itself. You don't need 20,000 troops in Iraq, you need 20,000 accountants.
In part 2, Lando looks specifically at the paramilitary factions and Marsh Arab tribes that are contending for a slice of the lucrative petroleum smuggling trade in Iraq's southern port city. Hmmm. 100,000 barrels a day are smuggled, worth $62 a barrel on the open market. Aren't we talking about $6.2 million a day? Isn't that $2.26 billion a year? Imagine what criminals and militiamen can do with that kind of money. And, don't kid yourself that it stays in Basra. Also note the sectarian implications-- these resources are going in the main to Shiite paramilitaries and clans. Note that the Shiites also dominate the government, which gets the revenues from petroleum not embezzled or smuggled.
Note also that the petroleum smuggling is a double-edged sword. It weakens the central government by bleeding it of resources. And it strengthens paramilitaries and criminal elements against the central government. Iraq will never amount to anything unless this hemorrhaging of national resources can be halted.
posted by Juan Cole @ 12/16/2006 08:05:00 AM
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4 Comments:
Please tell us how someone smuggles 100,000 barrels of oil a day out of a country. There must be another word for what is being done.
If you want to know how to smuggle 100,000 barrel per day you might want to peek into the US General Accounting Office (GAO) 'oil for food' report. You don't need hundreds of clandestine tankers kicking up dust on remote desert roads but overpricing, bribes and faulty meters are just as effective for hauling off what tribal and militia leaders consider their fair share of the booty or 'al-ghanima' as they call it.
They've been doing it in Chechnya for years.
I sort of doubt that any "one" is smuggling that much oil, any more than any one organization has an absolute monopoly on the illegal medical pharmaceuticals trade in the U.S.
As a guess, what is actually going on is far more damaging than the smugglers getting market price for the oil. As with any type of illegal goods trafficking, several different groups are probably getting 5%-25% (depending on how many transactions are in the chain) for selling it to a "legitimate" oil trading company, who then make insane profits for laundering the crude, so to speak.
This is a much more disabling form of illegal activity, since ostensibly law-abiding segments of the economic structure are participating in the process of destabilization, and competing groups are getting very good at working around what authority exists in Iraq. Not that we haven't seen this sort of thing before, with the active complicity of the regulatory interests involved.
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