Thread: Archive Latest News - Think Tank - 16/08/07 - 03/11/07

Iraq welcomes further Czech help in reconstruction: FM

Iraq welcomes further help from the Czech Republic in its reconstruction, particularly in training police, visiting Iraqi Foreign Minister Hoshyar Mahmud Zebari told local media Monday.

Zebari appreciated the contribution the Czech Republic has made in recent years to the reconstruction of Iraq.

Czech experts have helped Iraq train diplomats, judges and police, while Czech doctors have treated Iraqi children, and there has been investment from the Czech Republic in Iraq's oil industry, Zebari said.

He hoped the Czech Republic would offer further training. The question of training is vital for Iraq, he added.

The foreign minister also expressed concern over a recent U.S. decision to withdraw some of its troops from Iraq.

The Iraqi people must have the ability of safeguarding their own security, otherwise the withdrawal of U.S. troops and their coalition allies will be a disaster for the country, he said.

Zebari hoped the gradual reduction of U.S. troops announced by President George W. Bush last week will not affect the security situation.

Bush has approved a plan by Gen. David Petraeus, the top U.S. commander in Iraq, to gradually withdraw U.S. troops from Iraq as of September and reduce the force from 20 combat brigades to 15 brigades by next July.

People's Daily Online - Iraq welcomes further Czech help in reconstruction: FM

New term in Iraq and Turkey’s role

New developments in Iraq have been overshadowed by debates on the draft constitution. Yet, the Iraq issue is moved towards a new stage.

Everybody has different responses to the question of “What will happen to Iraq with the gradual withdrawal of American forces from the country?” But two countries find themselves at the intersection of all responses -- Turkey and Iran. Iran’s sphere of influence over Iraq is no doubt wider than that of Turkey. Yet Turkey holds different advantages in terms of its international position. Ankara played a significant role in the encouragement of Sunni groups’ participation in Iraqi legislative elections in 2005.

Though Turkey may seem to have lost ground in foreign policy in the last few months, it has no other choice than to reintegrate in global issues. This time Turkey will be more determined and effective in foreign affairs because the factors rendering it volatile have been eliminated with the July elections.

From now on, the president will be directly involved in foreign policy. This advantage may allow Turkey to handle the Iraq issue with a more holistic approach.

http://www.todayszaman.com/tz-web/de...ay&link=122354

Demand for dollar up, exchange rate stable in daily auction

Demand for the dollar was higher in the Iraqi Central Bank’s auction on Monday, reaching $86.270 million compared with $54.405 million on Sunday.

In its daily statement the bank said it had covered all bids, including $11.970 million in cash and $74.300 in foreign transfers, at an exchange rate of 1,235 dinars per dollar, unchanged for the third session running.
None of the 16 banks that participated in Monday's session offered to sell dollars.

Ali al-Yasseri, a trader, told the independent news agency Voices of Iraq (VOI) that the hike in demand for the dollar was due to the increase in governmental remittances, while cash bids suffered a drop.

The Iraqi Central Bank runs a daily auction from Sunday to Thursday.

Demand for dollar up, exchange rate stable in daily auction | Iraq Updates

LUKoil still willing to develop Iraq's oil fields

LUKoil's management has expressed hope that the company's agreement with Iraq on the Western Kurna-2 project would remain effective even after Baghdad passes a new law on oil, Andrei Kuzyaev, President of LUKOil Overseas, told journalists today. He pointed out that cooperation with Iraq was vital for the Russian-Arabic dialog. Kuzyaev also noted that an active political dialog between Russia and Iraq would promote the development of the Western Kurna-2 project.

However, LUKoil's report for the first six months of 2007 states that prospects for the contract between the company and Iraqi government on the development of Iraq's oil fields remained unclear.

http://www.tradingmarkets.com/.site/...20News/617999/

Basra oil fuels fight to control Iraq's economic might

It could be an "empire," says one Shiite militia leader. For the provincial governor, Basra's future is shimmering skyscrapers. He wants the Iraqi port city to be another Arab metropolis, perhaps the next Dubai.

Many Iraqis – businessmen, criminal bosses, militia commanders, political leaders – have designs on the city, that is vitally important to Iraq's national economy.

With its oil proceeds, Basra Province provided Baghdad nearly 90 percent of its budget of $40 million this year. And there is more money to come, if Iraq fully repairs and expands its war-ravaged oil infrastructure. Basra sits on some of the world's largest untapped reserves. In fact, the bulk of Iraq's estimated 200 billion barrels in potential deposits are here.
The fight for a stake in Basra's riches is often desperate and violent. Whoever comes out on top, they will hold great sway over the country, and much influence in the Middle East. Now that British forces have left Basra city, and are preparing for a full withdrawal from Basra Province by year-end, many Basrawis worry that this fight for control of Basra's petroleum wealth will further increase, perhaps growing into an all-out war.

Militias vie for control

At the entrance to the headquarters of the South Oil Company (SOC) in Basra, a sign dating from when Saddam Hussein nationalized the oil industry in 1972 reads: "Our oil is ours."

Inside, an exasperated senior official, who did not want to be identified for fear of retribution, describes the onslaught by parties and militias intent on controlling the company by forcing their loyalists into key management positions. Some are beholden to the Ministry of Oil in Baghdad, which is controlled by the United Iraqi Alliance (UIA), the dominant Shiite coalition to which Prime Minister Nouri al-Maliki belongs.
"There is an invasion by parties and militias … we are a mouthwatering prize," he says, adding that recently 8,000 people, most of them illiterate, were pushed on to the company's payrolls.

The power plays extend to Basra's ports, too, often contributing to anger and a sense of injustice among the province's estimated 3 million people. In the town of Abu Al-Khaseeb, south of the city, the newly rich are building palatial homes next to mud huts. The mansions often belong to those who have been able to cash in on the brisk business in the town's Abu Flous port, which is one the province's main four ports and is widely considered to be controlled by the mafialike family, Bayet Ashour, and certain militias.

"You can only work at the port if you join a militia. I thought about it, but then my two cousins who had joined were badly wounded in a clash. So now we just sit home and shut up," says resident Jalal Ali.

Last month, armed tribesmen forcefully brought oil production to a standstill at the Majnoon oil field, 38 miles north of Basra city, after the SOC refused to meet their demands for jobs in the area. An official at the company, which controls oil exploration and production throughout southern Iraq, confirmed the incident.

Many are also profiting off the oil by tapping right into the pipelines.
SOC's oil pipelines are regularly sabotaged and drilled into to steal crude and smuggle it outside Iraq, says the unnamed official at the company. Many in the province even accuse Gov. Muhammad Mosabeh Waeli's Fadhila Party, whose partisans dominate the oil protection force, of colluding with the smugglers. Mr. Waeli has vehemently denied the charges, calling them "a smear campaign orchestrated by pro-Iranian parties."

$90 billion daily

SOC, which employs more than 30,000 people, is in charge of oil production and exploration in an area of about 45,000 acres in southern Iraq. By most estimates, potential Iraqi reserves account for nearly 16 to 20 percent of Middle East reserves. "Producing at full prewar capacity, Iraq can generate about $90 million a day through exports to support its own reconstruction," says a US Army Corps of Engineers slide presentation dated July 2004. "Immense potential exists to generate prosperity, employment, and economic stability for all Iraqis."

Basra oil fuels fight to control Iraq's economic might | csmonitor.com
Production at the time the presentation was made was about 2.35 million barrels per day (b.p.d.). Exactly three years later, in July 2007, it stood at 2.1 million b.p.d., of which 1.8 million b.p.d. is from the south alone. About 1.6 million b.p.d. of this oil was exported exclusively via Basra terminals.

In order to regain the estimated 3.8 million b.p.d. reached in 1990, $2 billion to $3 billion of investment would be required over three years to rehabilitate existing oil fields and infrastructure, according to Muhammad-Ali Zainy, a senior oil economist and analyst at London's Center for Global Energy Studies.

Mr. Zainy blames the state of Iraq's oil industry on insecurity, corruption, government incompetence, and unfinished work by the US company KBR (formerly Kellogg Brown and Root), which was hired after the US-led invasion to do the engineering work to ramp up production.
He says the Ministry of Oil was allocated $4 billion last year, but spent perhaps only 3 percent of it on rehabilitation.

"There is chaos now in Basra. In this environment you cannot do real work. The [central] government itself run by religious parties is not going to be able to provide the proper environment for rehabilitation of the infrastructure, let alone investment," says Zainy, who is a native of the holy Shiite city of Najaf and was once a senior official at the Ministry of Oil before defecting in 1982 to escape Mr. Hussein's regime.

The southern branch of the General Oil Products Company, which is charged with refining and distributing oil products, is also said to be now under the sway of militias, according to several officials. But that tends to provide little protection from the militia's criminal rivals.

A few months ago, 90 fuel trucks, each with a capacity of 36,000 liters, pulled up at one of the company's depots. They filled up. But it turned out they were smugglers, not legitimate fuel distributors, according to a manager at an oil products transport company.

Zainy says Baghdad has its priorities upside down. It's making a mistake by "rushing" to approve a new oil law, which would open up the sector to foreign investors, as urged by Washington. Instead, he says, Baghdad should first focus on adding value to the sector by increasing production, stamping out corruption and theft, and re-creating the Iraqi National Oil Company, which was disbanded by Hussein in 1987 as an alternative to bureaucratic meddling by the Ministry of Oil.

"The timing is wrong … they are rushing to have the oil law ratified just in order to please the American administration," he says.

In what promises to be a major challenge for the controversial bill being debated in parliament, the industry's main labor union based in Basra says it will order a general strike should the oil law pass.

"We believe one of the main reasons America invaded is oil," says the union's head, Hassan Jumaa al-Assadi. "The law does not serve the people of Iraq but the US administration. History will not be merciful to those who vote for this law."

Revitalization stalled

The struggle over power and resources – which extends to the halls of government in Baghdad – means that any prospect for Basra's riches being used to lift millions of Iraqis out of their misery and give jobs to disaffected youth remains a fiction.

"There is great deprivation and high unemployment. Plants are destroyed. The last 30 years for Basra have been 20 years of war followed by 10 years of economic deprivation," says Hamid al-Thalemi, a member of the local provincial council, who belongs to the secular party of former Iraqi premier Iyad Allawi.

Basra's infrastructure and economy suffered greatly from the impact of the devastating eight-year war between Iran and Iraq in the 1980s that was followed by the Gulf War in 1990.

"The government has no economic development strategy … the government is helpless … it's a catastrophe," adds Mr. Thalemi.
Agriculture and industry are in ruins, and many infrastructure projects such as water and sewerage repairs remain unrealized. Even the once-thriving date business is barely operational, although the province has the highest density of palm trees in Iraq, according to Thalemi.

Britain has pledged about $1.5 billion for reconstruction in Iraq with some of this money spent in Basra, where the last contingent of its troops is still stationed. They laid water pipes at a cost of $18 million and partially repaired electricity transmission and distribution networks, among other projects.

In the meantime, the city's main ho****al is dumping its waste in the Shatt Al-Arab waterway every day. The nearby Al-Bardhia station, one of the city's main water plants adjacent to the palaces vacated by the British, pumps that water to residents. "This is a major crime, people are drinking this water," says Thalemi.

Growing tribal dissent

Inside a tribal guesthouse in the village of Zraiji, sandwiched between the Majnoon and Nahr Omar oil fields, elders from the Bani Malik, a major tribal confederation, gathered late last month to discuss the trouble at Majnoon oil field and voice their anger at the Shiite Islamist parties that rule the province and the country.

Sheikh Manie al-Maliki spoke first, recounting how he was approached by other tribes in the area to join them in stopping work at Majnoon. He refused because they threatened violence and sabotage. "We do not want to descend to that level and that's why we are sidelined," he says.
His village of 3,000 desperately needs the jobs, with only seven of its men employed in oil facilities protection, a 15,000-strong force dominated by partisans of Waeli. The elders say they derive no benefit from oil riches, but also their agricultural lands are fallow and need rehabilitation because they were battlefields in the Iran-Iraq War.

Now, they accuse provincial and central authorities in Baghdad of cronyism, corruption, and incompetence. Most say they regret having voted in 2005 for the UIA and say they were tricked by the party's appeal to sectarian passions and considerations at the time.

"It was nothing but empty promises. Anything built on sectarianism and cronyism does not work," says Sheikh Manie. "Turbaned clerics sat here, and we are simple people, and they started telling us the marjaiya [Shiite religious authority] wants this."

Another elder is blunter. "They are gangs, not political parties," he says.
Standing on the edge of Zraiji at sunset, one can see and feel the flames from the smokestacks, burning the precious natural gas that is extracted with oil from the Nahr Omar fields. They are a vivid reminder of Iraq's untapped, and often wasted, potential.

Crude oil spills into Tigris after Iraq bomb

A bomb exploded under an oil pipeline near the northern city of Beiji on Tuesday, causing huge quantities of crude oil to spill into the Tigris River, a police official said. The U.S. military blamed al-Qaeda insurgents.

The Iraqi police official, speaking on condition of anonymity because he was not authorized to speak to the media, said the bomb went off before dawn, delaying the firefighters' arrival at the scene to extinguish the blaze. Because of the danger across the country, Iraqis avoid going outside before daylight.

Beiji, 155 miles north of Baghdad, is the home to Iraq's largest oil refinery.

The U.S. military said in a statement that the part of the pipeline that was hit was some 7 feet underground and covered with a slab of concrete.
"This act of terrorism is barbaric and demented. This demonstrates al-Qaeda does not care about the Iraqi people or the environment," U.S. military spokesman Lt. Col. Michael Donnelly told The Associated Press.

Donnelly said workers from Iraq's Northern Oil Company were trying to prevent the spill from endangering the river, crops and livestock dependent on river water.

Later the in the day, the spill reached the central city of Tikrit, more than 60 miles to the south, residents and local officials said. Water stations closed in both cities, Tikrit and Beiji.

It was not clear if irrigation officials would allow the spill to reach Baghdad or would block it at Samarra dam, which diverts water into Tharthar lake north of the Iraqi capital.

Insurgents have been attacking the oil industry for years to try deprive the government of money needed for the country's reconstruction.

Crude oil spills into Tigris after Iraq bomb - USATODAY.com

Russia, Iraq have no misunderstandings over oil contracts

Russia and Iraq have no misunderstandings over the earlier oil contacts, Iraqi Foreign Minister Hoshyar Mahmud Zebari said upon the arrival in Moscow on Tuesday.

“We have no misunderstandings of the kind. Mechanisms of the interaction in oil projects were discussed during the Russian visit of Iraqi Oil Minister Husayn al-Shahristani,” he said.

Russia’s LUKOIL has signed a contract on the development of the West Qurna-2 field. The action plan says the West Qurna-2 crude will be exported. The people of Iraq will receive deductions and 6,000 jobs. The company will also build a pipeline and a terminal on the Gulf coast.

Investments in West Qurna-2 have reached $1 billion, LUKOIL President Vagit Alekperov said. In his words, the company may accept less than a controlling stake. “When the Iraqi oil law is adopted, we will start negotiations with the government on the West Qurna-2 project,” he said. The project implies the development of the oil export infrastructure.

Zebari said he will go to New York after this visit to Moscow. He will attend a conference chairing by UN Secretary General Ban Ki-moon. An international conference on Iraq will take place in Istanbul in late October – early December.

“As Russia will be taking part in these events, it is necessary to coordinate positions in advance, especially as Moscow has influence in the region,” the minister said. “Russia and Iraq are cooperating well. It is planned to sign a memorandum on the exchange of consulates general. The Russian consulate will open in Basra while the Iraqi consulate will open in St. Petersburg.”

ITAR-TASS

Kirkuk pipeline attack sets Iraq oil back

The international oil market will still have to rely on Basra to supply Iraq's oil exports as an apparent attack shuts down the Kirkuk-Ceyhan pipeline again.

The pipeline is key to increasing Iraq exports, providing the capacity to increased production. The Bush administration, during benchmark stump speeches last week, held up the newly reopened pipeline as a success story.

Iraq produced just less than 2 million barrels per day last month, according to estimates by the global energy information firm Platts. The country usually exports slightly more than three-fourths of what it produces. Most of that is coming from export terminals in Basra, in south Iraq, since attacks on the pipeline feeding oil to a terminal in Ceyhan, Turkey, has rendered it virtually useless.

Media reports are quoting sources on the ground that a pre-dawn bomb ripped open the pipeline between Kirkuk and Baiji, sending oil into the Tigris River, forcing water pumps in Tikrit and Baiji to shut down and threatening the supply into Baghdad.

Last month Iraq officials gave a hushed admission that the line had been repaired and oil was flowing to Turkey, most likely in test quantities, said Rochdi Younsi, Middle East analyst for the business risk firm Eurasia Group.

"They did say that they were completing a series of tests that appear to be promising, tests meaning that they were pumping a certain volume through the pipeline," Younsi said. "But frankly no one expected the Iraqi government to make an announcement because doing that usually leads to an attack."

Iraq recently announced an Oct. 5 tender for shipments of oil from Ceyhan, a move that comes after enough oil had been shipped to storage tanks there.

"Yesterday a report came out saying basically that exports of oil through the Kirkuk-Ceyhan pipeline had been abruptly interrupted for the past six days, which basically implies that it was working before that," Younsi said. "And then this morning we heard about the explosions."

Younsi said it is an added dynamic in the power struggle in Iraq. Kurds in the relatively safe and semi-autonomous northern region will be "growing impatient with the deterioration of security in that area," which the federal government controls.

Kirkuk pipeline attack sets Iraq oil back : World

Industry Ministry signs contracts to supply oil

The State Company of the Heavy Engineering equipments, the Ministry of Industry and Minerals has signed contracts with Oil and Construction ministries to supply with their products.

The cadres of the company have accomplished 85% of rebuilding al-Sarafia bridge.

In press statement, an official source at the ministry said: the contract which has been signed with gas filling company at oil ministry necessitates the preparing, supplying, manufacturing, checking and transporting three horizontal liquid gas tanks, 50 tones.

Industry Ministry signs contracts to supply oil | Iraq Updates

Bush ally's Kurdish oil deal proves the surge has failed

To understand what's really happening in Iraq, follow the oil money, which already knows that the surge has failed.

Back in January, announcing his plan to send more troops to Iraq, President Bush declared that "America will hold the Iraqi government to the benchmarks it has announced."

Near the top of his list was the promise that "to give every Iraqi citizen a stake in the country's economy, Iraq will pass legislation to share oil revenues among all Iraqis."

There was a reason he placed such importance on oil: Oil is pretty much the only thing Iraq has going for it. Two-thirds of Iraq's GDP and almost all its government revenue come from the oil sector. Without an agreed system for sharing oil revenues, there is no Iraq, just a collection of armed gangs fighting for control of resources.

Well, the legislation Bush promised never materialized, and on Wednesday attempts to arrive at a compromise oil law collapsed.

What's particularly revealing is the cause of the breakdown. Last month, the provincial government in Kurdistan, defying the central government, passed its own oil law; last week, a Kurdish Web site announced that the provincial government had signed a production-sharing deal with Hunt Oil of Dallas, and that seems to have been the last straw.

Now here's the thing: Ray L. Hunt, the chief executive and president of Hunt Oil, is a close political ally of Bush. More than that, Hunt is a member of the President's Foreign Intelligence Advisory Board, a key oversight body.

Some commentators have expressed surprise at the fact that a businessman with very close ties to the White House is undermining U.S. policy. But that isn't all that surprising, given this administration's history. Remember, Halliburton was still signing business deals with Iran years after Bush declared Iran a member of the "axis of evil."

No, what's interesting about this deal is the fact that Hunt, thanks to his policy position, is presumably as well-informed about the actual state of affairs in Iraq as anyone in the business world can be. By putting his money into a deal with the Kurds, de****e Baghdad's disapproval, he's essentially betting that the Iraqi government - which hasn't met a single one of the major benchmarks Bush laid out in January - won't get its act together. Indeed, he's effectively betting against the survival of Iraq as a nation in any meaningful sense of the term.

The smart money, then, knows that the surge has failed, that the war is lost, and that Iraq is going the way of Yugoslavia. And I suspect that most people in the Bush administration - maybe even Bush himself - know this, too.

After all, if the administration had any real hope of retrieving the situation in Iraq, officials would be making an all-out effort to get the government of Prime Minister Nouri al-Maliki to start delivering on some of those benchmarks, perhaps using the threat that Congress would cut off funds otherwise. Instead, the Bushies are making excuses, minimizing Iraqi failures, moving goal posts, and, in general, giving the Maliki government no incentive to do anything differently.

And for that matter, if the administration had any real intention of turning public opinion around, as opposed to merely shoring up the base enough to keep Republican members of Congress on board, it would have sent Gen. David Petraeus, the top military commander in Iraq, to as many news media outlets as possible, instead of just a few.

All in all, Bush's actions have not been those of a leader seriously trying to win a war. They have, however, been what you'd expect from a man whose plan is to keep up appearances for the next 16 months, never mind the cost in lives and money, then shift the blame for failure onto his successor.
In fact, that's my interpretation of something that startled many people: Bush's decision last month, after spending years denying that the Iraq war had anything in common with Vietnam, to suddenly embrace the parallel.

Here's how I see it: At this point, Bush is looking forward to replaying the political aftermath of Vietnam, in which the right wing eventually achieved a rewriting of history that would have made George Orwell proud, convincing millions of Americans that our soldiers had victory in their grasp but were stabbed in the back by the peaceniks back home.

What all this means is that the next president, even as he or she tries to extricate us from Iraq - and prevent the country's breakup from turning into a regional war - will have to deal with constant sniping from the people who lied us into an unnecessary war, then lost the war they started, but will never, ever, take responsibility for their failures.

Bush ally's Kurdish oil deal proves the surge has failed | Iraq Updates