Basra Oil FirePosted on 05/16/2007 8:38:13 PM PDT by humint
Corruption is killing Iraq’s future. In a recent report released by the U.S. Government Accountablity Office entitled; REBUILDING IRAQ, Integrated Strategic Plan Needed to Help Restore Iraq’s Oil and Electricity Sectors, the section detailing corruption is particularly disturbing. As a conscious member of the human race, I am unashamedly concerned about the black market trade in petroleum. Why? Because hundreds of millions of dark dollars are going to projects unlikely to benefit U.S. national security, or the security of America’s allies. Under the circumstances, these illicit funds are more than likely funding America’s enemies. A reasonable solution would be to sting the black marketeers. The area around Basra would be a good place to start. Who could do it better than an Iraqi version of Eliot Ness? Wouldn’t it be wonderful if the U.S. Department of State had a nationwide PA system in Iraq --- “PAGING MR. NESS, PAGING ELIOT NESS, PLEASE REPORT TO BASRA FOR A STING… Thank You.”
Eliot Ness Basra Oil Fire
Corruption in Iraq is reportedly widespread and poses a major challenge to building an effective Iraqi government and effective institutions. A World Bank report notes that corruption undermines the government’s ability to make effective use of current reconstruction assistance. A 2006 survey by Transparency International ranked Iraq’s government as the second most corrupt in the world.
U.S. and international officials have noted that corruption in Iraq’s oil sector is pervasive. In 2006, the World Bank and Ministry of Oil’s Inspector General estimated that millions of dollars of government revenue are lost each year to oil smuggling or diversion of refined products. According to State Department officials and reports, about 10 percent to 30 percent of refined fuels are diverted to the black market or are smuggled out of Iraq and sold for a profit. According to State Department reporting, Iraqi government officials may have profited from these activities. The insurgency has been partly funded by corrupt activities within Iraq and from skimming profits from black marketers, according to U.S. Embassy documents. One factor that had stimulated black market activities and fuel smuggling to neighboring countries was Iraq’s low domestic fuel prices, which were subsidized by the government. However, under the IMF’s Stand-by Arrangement with Iraq, the government has already increased domestic fuel prices five times, significantly reducing the subsidy for many fuel products. The Iraqi government intends to continue the price increases during 2007, as well as encourage private importation of fuels, which was liberalized in 2006. The purpose is to decrease the incentive for black market smuggling and to increase the availability of fuel products.
Illegal connections to existing power lines and nonfunctioning meters negatively affect the Iraqi Ministry of Electricity’s ability to manage its electricity system and finance the improvements needed. According to U.S. and international donor officials, electricity meters may be old, intentionally damaged, inaccurate, nonfunctioning, or nonexistant for some businesses and households. As a result of illegal connections and lack of metering, the Ministry of Electricity cannot obtain an accurate measure of the electricity consumed by households and businesses, which contributes to inaccurate billing and low cost recovery.
Ness was born in Chicago, the youngest of five, to Norwegian bakers Peter and Emma Ness. As a boy, Ness was interested in reading, especially Sir Arthur Conan Doyle's Sherlock Holmes. He was educated at the University of Chicago, graduating in 1925 with a degree in business and law. Ness was a member of Sigma Alpha Epsilon fraternity. He began his career as an investigator for the Retail Credit Co. of Atlanta. He was assigned to the Chicago territory, where he conducted background investigations for the purpose of credit information. He returned to the University to take a course in criminology, eventually earning a masters degree in criminology. In 1926, his sister's husband, Alexander Jamie, a Bureau of Investigation agent (this became the FBI in 1935), influenced him to enter law enforcement. He joined the Treasury Department in 1927, working with the 300-strong Bureau of Prohibition in Chicago.
Following the election of President Herbert Hoover, Andrew Mellon was specifically charged with bringing down Al Capone. The federal government approached the problem from two directions: income tax evasion and the Volstead Act. Ness was chosen to head the operations under the Volstead Act, targeting the illegal breweries and supply routes of Capone. With Chicago's corrupted law-enforcement agents endemic, Ness went through the records of all the treasury agents to create a reliable team, initially of fifty, later reduced to fifteen and finally to just ten men. Raids against stills and breweries began immediately; within six months Ness claimed to have seized breweries worth over one million dollars. The main source of information for the raids was an extensive wire-tapping operation.
An attempt by Capone to bribe Ness's agents was seized on by Ness for publicity, leading to the media nickname "The Untouchables". There were a number of assassination attempts on Ness, and one close friend of his was killed. The efforts of Ness and his team had a serious impact on Capone's operations, but it was the income tax evasion which was the key weapon. In a number of federal grand jury cases in 1931, Capone was charged with 22 counts of tax evasion and also 5,000 violations of the Volstead Act. On October 17, 1931, Capone was sentenced to eleven years, and following a failed appeal, he began his sentence in 1932.
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EXCERPT: Additionally, the U.S. government, in coordination with the Iraqi Government, recently installed state of the art ultrasonic meters to further enhance metering capacity at both platforms. Ultrasonic meters typically have accuracy levels of 1% or better. These new technology meters confirm measurements taken by the turbine and PD meters. Sickman says the existing meters and the ultrasonic meters are more than adequate because they are only there as a check on the meters utilized by vessels that come to load oil. “What ABOT does not have but needs is continuous sampling to determine the average API (American Petroleum Institute) gravity weight of the blended crude loaded. This would provide the quality of the oil, which, combined with the volume of oil, helps to determine the value of the oil sold, “says Sickman. Currently, the Iraqi government has to depend on the vessel analysis for quality.
The International Monetary Fund reported in August 2006 that it does not have any concerns about the immediate replacement of the export metering at ABOT for the Standby Agreement. Between January and November 2006, the loading of 345 oil tankers has been metered at the ABOT, with total exports averaging 1.595 million barrels per day. Third party verification of exports is performed by SGS, a widely known industry expert in inspection, verification, testing and certification. SGS certifies that systems or services meet the requirements of standards set by governments, standardization bodies or by SGS customers. Purchasers of crude oil employ SGS to verify and certify loaded volumes for every tanker embarking from ABOT.
EXCERPT: Dubbed the "lung of Iraq" because it is an entry point for goods from wheat to cars, Basra was the port from where fictional Sinbad sailed off on his seven voyages. But its strategic position on the Gulf also makes it a paradise for oil smugglers. On Saturday, the New York Times cited a US government accountability draft report that said as much as $15 million worth a day of Iraq's declared oil production was unaccounted for, possibly siphoned off through corruption or smuggling. The power struggle involves militias and politicians loyal to young Shi'ite cleric Moqtada al-Sadr, the Fadhila party and the Supreme Islamic Iraqi Council (SIIC).
Locally powerful Fadhila, which controls key oil industry jobs in Basra, opposes the creation of a Shiite "super-region" espoused by SIIC, the dominant Shi'ite faction in Iraq. Basra Governor Mohammed Al-Waeli, from Fadhila, wants a Basra region of its own, independent from Najaf to the north, seat of the Shi'ite political establishment but bereft of oil. "Federalism is a large factor behind the dispute," said one Fadhila official who declined to be identified. Waeli could not be reached for an interview despite several requests by Reuters. One of Waeli's main opponents, former governor Hasan Al-Rashid from SIIC's Badr Organisation, said his allies had received death threats warning them against deposing Waeli. "There are several points why we are opposed to him, including Basra's worsening security and his constant absence from the provincial council," Rashid told Reuters.
EXCERPT: The political tension in the predominantly Shiite province that includes Basra, Iraq's second-largest city, 550 kilometers (340 miles) southeast of Baghdad, has been a major topic recently in the national parliament, underlying the fierce rivalry between Shiite groups vying for influence as Britain prepares to reduce its forces in the region. On Thursday, legislators held a closed-door session to discuss the situation. A statement issued by the Basra Islamic List, an alliance of Shiite parties that oppose Fadhila, said its members would vote no confidence.
The Basra Islamic List, which includes the Sadrist Movement of radical anti-U.S. cleric Muqtada al-Sadr, the Supreme Council for the Islamic Revolution in Iraq, the Badr Organization, the Master of all Martyrs Movement and Hezbollah, holds 19 of the 41 provincial council seats, while Fadhila has 12. The other major group in the council is the Center Bloc, which holds eight seats and includes former Prime Minister Ayad Allawi's secular Iraqi National Accord, the Basra-based Islamic Dawa Movement and the independent bloc.
EXCERPT: BASRA, Iraq, May 9 (UPI) -- Iraq's government will respond to oil workers who have delayed a strike that could take 1.6 million barrels per day from the market. In a news release Tuesday, the Iraqi Federation of Oil Unions said it would stop work Thursday in opposition of the proposed hydrocarbons law, as well as other worker conditions. Michael Eisenscher, national coordinator of U.S. Labor Against the War, said the workers postponed the strike until Monday "because they had a conversation with somebody at the Oil Ministry who said they wanted to respond to workers demands and needed time to prepare a response." USLAW is a coalition of labor unions in regular communication with Iraqi workers, including organizing a tour of the United States for Iraqi labor leaders in June.
What are the main points of contention?
Revenue sharing. The precise distribution of revenues from Iraq’s oil production remains undecided and, according to Morrow, there has been “not one single negotiation for revenue sharing in Iraq.” The constitution is vague on the subject; Article 111 states simply that “oil and gas are the ownership of all the people of Iraq,” while Article 112 calls for a distribution of revenues “in a fair manner in proportion to the population,” taking into account regions deprived by Saddam’s regime that would be first in line for payments.
The classification of new versus old oil fields. Kurds maintain that under the Iraqi constitution new production will be under the control of regional authorities. But Verrastro says the definition of “new” varies from region to region. Kurds, he says, would classify a new well in an old field as “new,” as well as any incremental exploration of existing fields.
The role of foreign companies. Iraqis disagree over whether to allow foreign companies to develop their country’s untapped oil fields. Sunnis in particular are worried it would erode Iraqi sovereignty and redistribute oil revenues away from Iraqis and into foreign hands. But many experts say outside investors are needed to stimulate development of Iraq’s dilapidated oil infrastructure. “There’s a question if the [Iraq National Oil] Company has enough heft without foreign help,” Verrastro says.
EXCERPT: Iraq plans to renew oil tanker fleet in S.Korea (23/04/07) Iraq aims to rebuild its aging fleet of tankers to carry its crude oil exports and is planning to form a joint venture shipping company with a South Korean firm, the oil ministry's spokesman said on Monday. "Iraq needs new huge oil shipping tankers to be capable of shipping exported crude oil," Asim Jihad said. "South Korea will provide a fleet of...tankers to form a joint shipping company run by the Iraqis, and South Korea will have a share of profits of transporting crude oil.He said no agreement had been signed, but an "agreement in principle" was struck between Iraq's oil minister and his South Korean counterpart during a visit to Seoul earlier this month.
EXCERPT: On his visit to Seoul, Iraqi Oil Minister Hussain al-Shahristani signed a cooperation deal with South Korea's energy minister, Kim Young-joo, on broadening opportunities for South Koreans to secure oilfields in Iraq. Iraq, a member of the Organization of the Petroleum Exporting Countries (OPEC), has the world's third-largest proven oil reserves and needs billions of dollars to revive its oil sector, which is crucial for rebuilding its shattered economy. Shahristani said last week that a long-awaited draft oil law will be submitted to Iraq's parliament this week but Kurdish officials have rejected aspects of the emerging legislation. An oil law is vital for Iraq to attract investment from foreign firms to boost its oil output and rebuild its economy, but disputes that have dogged the process continue to simmer between regional and central governments.
Baghdad, Sept 22,[2007] (VOI)- The Iraqi health ministry announced on Saturday that a Cholera case was detected for the first time in Basra in southern Iraq. "A Cholera case was confirmed in al-Emdaiynah district in Basra," Dr. Adel Mohsen, the General Inspector of Iraqi Health Ministry, said. Dr. Mohsen added "the tests on a stall sample of a seven-month-infant confirmed a Cholera case." The cause of the disease was contaminated water used for drinking at home of the infant's family, he explained. As for the other members of the family, Dr. Mohsen said "we examined samples of their stall and we waiting the results of the tests." This is the first Cholera case detected in Basra after the epidemic outbreak in northern Iraq. Kurdistan health ministry put the number of confirmed Cholera cases at 1,500 in Sulaimaniya and Kirkuk. Ten people so far died of Cholera, nine in Sulaimaniya and one in Kirkuk.
[EXCERPT] 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.
[EXCERPT] 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.”
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