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Who is stealing Iraq's oil?
18.5.2007
By Robert Baer
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This
week a Norwegian company will announce it will start
pumping oil in Iraq's Kurdistan; never mind that
there is no legal framework yet to do so. The Kurds
know as well as anyone that without oil they will
starve.
May 18, 2007
It took quite a while, but it appears that the Bush
Administration has finally gotten around to
acknowledging that Iraq has an oil problem. The
Government Accountability Office is about to release
a report that estimates 100,000 to 300,000 barrels
of oil goes missing every month. According to the
New York Times, the GAO will not offer a conclusion
about what specifically is happening to the missing
oil, other than it is probably lost to corruption,
smuggling or just bad accounting.
Iraqis oil traders, on the other hand, tell me they
think they know exactly where the stolen oil is
going — the militias appropriate it to arm and feed
the rank and file. The same traders also tell me
there's a lot more pilfered oil than the GAO
acknowledges, and that the practice started as soon
as Saddam fell. And why would anyone be surprised?
Saddam's regime itself survived off stolen oil
during the 12-year U.N. embargo.
The oil traders tell me the principal market for
stolen crude is Basra, Iraq's only access to the
Gulf. Fadhila, the strongest Shi'a militia in the
city, pretty much monopolizes the trade. Fadhila
currently offers pilfered oil for $10-12 a barrel.
Buyers have to arrange for small freighters to ship
it to Dubai, where it is sold at the dock for around
$30 a barrel.
The oil is sold on the international markets,
commonly using a false certificate of origin or
blended with other oil to disguise its origin. More
and more frequently, however, co-opted employees in
Iraq's Ministry of Oil help document the oil.
Traders can expect to make a 4% return on the oil
for themselves, with the rest of the money going to
Fadhila and other militias.
Needless to say, the importance of oil revenue
hasn't been lost on Iraq's other ethnic groups. This
week a Norwegian company will announce it will start
pumping oil in Iraq's Kurdistan; never mind that
there is no legal framework yet to do so. The Kurds
know as well as anyone that without oil they will
starve.
As for the Sunni, they have virtually no proven
reserves, nor do they sit on a main export route as
do the Shi'a and the Kurds. Since the invasion they
have resorted to stealing and smuggling from
government facilities small amounts of finished oil
products, such as fuel oil and condensates. Sunni
tribes in Anbar province do most of the smuggling.
According to the tribes themselves, the American
military looks the other way in order to keep the
tribes on their side in the war against al-Qaeda.
In the run-up to the Iraq invasion, then Deputy
Defense Secretary Paul Wolfowitz assured Congress
that Iraqi oil would pay for the country's
occupation and reconstruction. If my Iraqi oil
traders are right, it's one more thing we need to
add to the long list Wolfowitz and his neo-con
friends in the Administration got wrong: oil is
helping pay for Iraq' s destruction.
Robert Baer, a former CIA field officer assigned
to the Middle East
Time com
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