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Squandered Wealth: Oil Smuggling in Basra - ASHARQ AL-AWSAT English Archive
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Basra, Asharq Al-Awsat- While the debate on whether or not the US war in Iraq was motivated by oil, as stated by former US Federal Reserve Chairman Alan Greenspan in his recently published memoirs, what is absolutely certain is that Iraqi oil is being smuggled into neighboring countries  particularly Iran.

Furthermore, the oil is being smuggled in a systematic manner and in quantities up to hundreds of thousands of barrels, according to Iraqi officials, which has resulted in squandering billions of dollars annually.

The smuggling of Iraqi oil is now a primary occupation for the media and international organizations, whereas the three Iraqi governments have not flinched [when it comes to the issue]. In fact, the four governors who were appointed over Basra and the city’s two local municipalities [since the fall of the regime] failed to elicit any change, whilst dozens of illegal ports and companies have been set up to smuggle this vital commodity. This is undertaken by what has become an organized mafia that actively engages in these practices.

Meanwhile, the residents of the city have become enslaved by fear of the multiplicity of the centers of power, their situation deteriorating fast as the conflict between the dominant parties continues to escalate over their struggle for the country’s wealth, including oil.

A resident of Basra voicing the discontent of many told Asharq Al-Awsat that, “It is unjust for the majority to live in misery while the oil tankers continue to audaciously smuggle oil.” Others uphold that Basra’s local authority continues to adopt a “see no evil, hear no evil, speak no evil” approach rather than confront the scandals relating to the rampant oil smuggling in the city.

The shared coastline between Iran and the Shatt al Arab waterway* is considered the most active area for smuggling, and it extends from the south of Abu Khaseeb and reaches the mouth of the Persian Gulf. This stretch is approximately 120 km long and there are over 64 small illegal ports that have been set up by the smugglers who fill up their boats using oil tankers.

According to Brigadier-General, Abdul Hakim Jasim, head of the Iraqi coast guard, “Today, the Iraqi Coast Guard Inland Waterways Department (CGIWD) does not possess any real force except for some small boats with limited speeds and the coast guards are armed with Kalashnikovs, as opposed to the smugglers who have fast, armored boats and are armed with launchers and long-range machine guns.”

Iraqi army spokesman and the head of the committee assigned with the task of monitoring security in Basra, Major-General Rashid Falih, said: “the smugglers are readily equipped with armored boats and armed gangs. They disperse into the coastline in close proximity to Iran whenever they are pursued by the Iraqi coast guard, which is working to intercept smuggling operations.”

Evidence of this took place on 26 April of this year when the Iranian coast guard killed two members of the [Iraqi] police force and took seven others hostage when they entered the line of fire whilst trying to track smugglers in Shatt al Arab. Such confrontations are not unusual in this area.

Asim Jihad, a spokesman for the Iraqi Ministry of Oil said, “One of the biggest pipelines in the south of the country has been subjected to over 52 sabotage attacks during the span of this year alone. This has resulted in a suspension of the pumping of crude oil and its derivatives between the southern and central provinces.”

Abdul Rasul Neema Khalf, the head of the local judiciary council in the village of Abu Khasib said that, “Thirty residential houses in the judiciary center had been converted into storage facilities for oil to be smuggled out of, and this fact is known to all.” Furthermore, he accused officials of complicity in these operations and added that, “many of them are arrested red-handed only to be released shortly after.”

“Although the distribution of fuel is restricted to the Iraqi National Oil Company (INOC) in accordance with specific regulations [and a special force appointed by the Interior Ministry currently monitors the distribution at most all filling stations in the capital] yet, the smugglers still manage to gain access to the state’s filling stations through other means,” said Khalf.

Moreover, he pointed out that, “over 130 tanks are involved in transferring smuggled oil… However, the Customs Court does not seize any of them and yet it seizes the wagons drawn by horses or donkeys that are implicated in this operation.”

Tamer al Fatlawi, advisor to the Minister of Transport in the southern province said the presence of the multinational naval forces in the territorial waters has encouraged the smugglers to carry out extensive operations. He added that the Iraqi security forces are not permitted to interfere in the area since the region is under the control of the multi-national forces.

“Closing down the borders and preventing smugglers from crossing would be difficult, especially since the border in southern Iraq is a long stretch of land and sea that spans over three neighboring countries. The entrances cannot be controlled by the rudimentary methods currently used; however the smuggling phenomenon can be limited and reduced. Smuggling is rampant and ongoing, particularly oil, animal wealth and minerals. Also, relying on modern monitoring equipment, there is a drug trade as well,” said the head of the border centers in the southern province, Colonel Zafir Sabah al Tamimi.

The colonel said that border centers in Safwan, al Shalamaja, Umm Qasr and al Khur have long been suffering from administrative corruption. He added that the fault lies with the CGIWD and the British Forces for recruiting incompetent elements some of whom were officers who were expelled from the former army and some recruits were admitted despite having previous criminal records. He said that they were given military ranks without being qualified or having the prerequisite degrees for the positions.

Although it has been over five months since the US Parsons Company and the Iraqi South Oil Co. (SOC) had installed 22 state-of-the-art meters to measure the crude oil that is exported through the southern port, there are still concerns about smuggling among members of the oil and gas committee in parliament.

“The meters are still under development,” al Fadhila party [Islamic Virtue party] MP, Jaber Khalifa Jaber said, “it’s true that they have been installed, but they have not been operated to this day.”

“The other problem is that the meters have only been installed in one export point at Basra port when there are two points; one in Basra post and the other in the former al Bikr port. Also, there are no meters or monitoring over the deep al Khur port,” he continued.

According to the Federation of Oil Unions of Iraq, which was dissolved by the Iraqi Oil Minister [Hussein al Shahristani] last month: “The smuggling of petroleum derivatives is spread throughout all of Iraq; however it has substantially decreased in the south. The more serious form of smuggling is that of crude oil and the loss of huge qualities is estimated at hundreds of thousands of barrels daily.”

An informed source confirmed the likelihood of the presence of international organized crime syndicates implicated in the oil smuggling operation in Iraq, stressing that Iraq was on the brink of an oil crisis. Meanwhile, a governmental source stated that one of the reasons smuggling operations are rampant is due to the lack of modern tracking and surveillance equipment.

He added that other factors included: “the fact that rudimentary methods are still used, the prevalence of administrative corruption, the close proximity of the neighboring countries, the security services’ lack of competence and the sabotage attacks on the main pipelines that transport oil from Basra to other provinces and between the ports and the pumping stations. Also, tanks and cars are mobilized to smuggle oil into neighboring countries and the presence of pipelines in the remote desert locations has become increasingly difficult to locate and control.”

The same source added that, “If we were to calculate the number of tanks loaded with oil derivatives that have been intercepted and stopped by the customs circles, they would number hundreds. However, no one knows the fate of the detained vehicles, they are nowhere to be seen on customs grounds and the same applies to boats.”

Basra’s al Dakir island has gradually been transformed from a place that manufactures and repairs ships, by virtue of its location in the middle of the Shatt al Arab waterway, into the biggest illegal port for smuggling oil, which is then sold in the markets in Iran and some of the Gulf States. Despite the government’s efforts and the security service arrests, the reality is that the national economy is being bled dry and the smugglers still continue their operations despite threats and pressure.

Following the fall of the former regime, commercial activities flourished in al Dakir; offices run by businessmen who had their brokers and branches emerged, all of which smuggle oil. Moreover, these offices also smuggle natural gas, which is in high demand in the neighboring countries.

If the US invasion of Iraq in 2003 was indeed motivated by oil, as Alan Greenspan had stated, then it seems that the local political parties and trends are hungrier for it.

Sailors working on ships arriving into Iraqi ports told Asharq Al-Awsat that they “are able to refuel their boats using stations that are set up by smugglers in the Arab Gulf waters in proximity to the United Arab Emirates (UAE).”

A veteran customs officer who agreed to speak on condition of anonymity said, “Those who smuggle oil belong to the centers of power, both presently and formerly during the old regime, and they are capable of filling the mouths of anyone who opposes them with bullets.”

But even the ordinary residents of Basra are equally hungry for oil as they queue in petrol stations waiting to fill their tanks during the fuel shortages that occur from time to time, while others await natural gas.

Moreover, employees in oil products distribution companies uphold that, “smuggling oil is not restricted to trafficking it abroad. Locally in the provinces there are smuggling activities; the Ministry of Oil imports over 10 million litres of oil on a daily basis from the neighboring countries at a price of 65 cents per litre and sells it to consumers at 25 cents per litre, however a quarter of this quantity is sold to consumers on the black market,” he said

Observers anticipate oil smuggling activities to continue in Basra, especially to Iran where it reaches approximately 300,000 barrels of crude oil per day and which it resells back to Iraq in its various derivative forms. This can only lead to interference in the country’s affairs not to mention the blatant squandering of Iraq’s wealth.

Basra is the leading oil-rich city in Iraq; according to statistics it has 15 fields, of which 10 are productive, and it is still pending further development and production. A recent International Crisis Group report revealed that, “the political arena in Basra is in the hands of players who are involved in a bloody competition over the sources of wealth, which undermines what remains of governmental institutions.” It added that, “the local residents have no choice but to seek protection under one of the dominant camps.”

The United Nations (UN) has recently questioned the accuracy of figures stated for the quantities of oil leaving Iraq. A UN-affiliated agency recently issued a report in which it said, “an audit of Iraq’s oil revenues has found that the supervision of oil production and its sales lack the appropriate monitoring tools, which leads to the mismanagement of funds.”

Furthermore, according to the Special Inspector General for Iraq Reconstruction (SIGIR), Stuart Bowen, the Iraqi oil revenues during the first 51 months of the occupation had reached US $9 billion and they were spent without any real monitoring or supervision. Meanwhile, according to Transparency International – Global Corruption Report 2007, Iraq ranks high by virtue of money laundering activities, administrative corruption and the blatant large-scale smuggling of its natural resources.

* The Shatt al Arab waterway is a merge of the Tigris and Euphrates Rivers flowing from northern Iraq, through Basra and the into the Gulf

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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