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Update No: 046 - (22/02/07)

An oil disaster
More details are emerging about the massive size of oil thefts in Iraq. Due to the apparent inability of the Oil Ministry to repair oil meters or install new ones, monitoring what is effectively going on is very difficult. The most recent informed estimates of how much oil Iraq is losing every day to smugglers, range between 200,000-500,000 bpd or 10-25% of production, which is mostly taken out of the country through the overloading of tankers in the country's oil terminals. Of course, this can only happen systematically as it does, with the complicity of some senior officials of the ministry. It is also estimated that between 10-30% of Iraq's production of refined fuel goes straight into the black market. Typically, the state oil export organisation refuses to show its export contracts and to allow any transparency in its operations. It is no wonder that the post of oil minister is so keenly competed for in Iraqi governments.
The government tries to cope by creating the premises for a future increase in production. Despite the inability of the government to get the final version of the oil law approved yet, the oil ministry has been moving towards reaching deals with Kuwait and Iran over cross-border oil fields and plans to issue contracts for the exploration and assessment of about 60 wells during 2007. Another 20 are already being explored at present. 
Production was stagnant at 1.9 million bpd at the end of 2006.

Wars within the war
Iraq's slide towards sectarian civil war continued over the last couple of months, increasingly drawing neighbouring countries into the conflict. The feeling that the Iranians are heavily involved and increasingly so, has been pushing the Saudis to issue unusual statements, implying that the country might start supporting the Sunnis in the event of an American withdrawal from Iraq. Iraqi Sunni politicians go as far as issuing endorsements of the armed resistance, like deputy president Al-Hahimi did in February. The evidence of Iranian weapons being smuggled into the country is by now overwhelming, although it is not quite as clear which agencies of the Iranian state are involved and whether the motivation is political or economic. In the Kurdish region, tension is also simmering up, particularly over Kirkuk. In February Iraqi Higher Committee for the Normalization of Kirkuk decided that thousands of Arabs transferred there under Saddam will be relocated to their place of origins and offered compensation. These are mainly Shias from the south, a fact which might embitter the relations between the Kurdish and Shiite alliances. Turkey has already been issuing blunt warnings about the status of Kirkuk, but it is not clear how far the Turkish government is ready to go in supporting its local Turkoman allies. The Sunni Arabs of Kirkuk are on quite good terms with the Kurds because they are originally from the region and do not face relocation.

An American debate
In the US, the debate continues about what approach to adopt with regard to Iraq. Many in the intelligence agencies argue that the attempt to woo at least some of the Iraqi insurgents over to the American side has clearly failed and should be abandoned, otherwise the risk will be of completely alienating the three times as numerous Shias. The Bush Administration, on the other hand, continue to refuse making real strategic choices and pins all its hopes on the chance of starting a virtuous cycle by securing at least some parts of Baghdad from the factional violence. The operation rests on the deployment of additional troops to Iraq for a few months, hoping that a decrease in the violence will legitimise the government and increase popular support for it. However, there is strong opposition in Congress to the plan.

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