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

With refineries few, Iraq and Iran run on black market gas

When it came to picking the gas for our escape vehicle, our driver did not choose wisely.

Al-Qaeda might not have been likely to pay attention to a red, late model Opel Omega station wagon with a fractured windshield. But at each checkpoint, our Opel gasped, then stalled and – just as we reached our drop-off point – died altogether.

This disquieting episode on a recent trip to an unsecured zone in northern Iraq was nothing out of the ordinary for Iraqis. Bad gasoline is a common hazard of life here.

How a country rich in oil gets into this predicament, however, is an intriguing story that tells of progress in Iraq – and resulting turmoil in Iran.

Iraq, Iran and the other oil-rich countries of the Middle East love high oil prices when someone else is paying. But for their own people, cheap, subsidized gasoline has been a way for these governments to buy popularity.

Two years ago, Iraq sold gasoline at a fixed price of 12 cents a gallon.
This was dirt cheap, even in a part of the world where the neighbors also held gasoline way below market prices. One consequence was a lack of money to build enough Iraqi refining capacity to meet the rapidly increasing demand. Another consequence was black market entrepreneurs smuggling Iraqi gasoline to other nations in the region, where they could get far more money for it.

Iraq spent nearly 5 percent of its gross domestic product last year importing gasoline at world prices and selling it for much less.

The International Monetary Fund and others advising the Iraqi government urged an increase in gasoline prices to eliminate the subsidy and cut into the black market exports. The government agreed early last year to move in this direction, and regular gasoline in Iraq now sells for $1.22 a gallon.

Iraq's refineries don't produce anywhere near the amount of gasoline consumed in the country, even with higher prices flattening consumer demand. The Iraqi Oil Ministry is years behind schedule on refineries planned for Kirkuk, Karbala and far northern Iraq.

And so Iraq, with all its oil, still has to import gasoline.

Vendors with scores of transparent plastic jerricans filled with gasoline line the roads in many cities and towns. The gasoline comes from as far as Turkmenistan and as close as a backyard "teapot" refinery owned by a hotel manager in Irbil.

With all of Iraq's troubles, there's no one to keep an eye on the quality of this fuel. A seller may cheerfully claim his cans are filled with only the cleanest 90-octane gasoline, but this is buyer beware territory.

Motorists figured out that reliable gasoline refined in Iran tended to be pink, so people started demanding pink gas. Sellers quickly started adding pink dye to their products.

While this makes for all sorts of headaches for Iraqi motorists, something far more serious is happening in Iran.

Iran also has tried to buy happiness among Iranians with cheap gasoline. Regular gas was selling for 30 cents a gallon last year, even though half of Iran's gasoline was imported. The resulting subsidies were costing the government tens of billions of dollars a year and leaving the Iranians more vulnerable to economic sanctions for their rogue nuclear program.

Gasoline prices were allowed to rise to about 40 cents a gallon, but rationing was imposed in June, limiting buyers to 24 gallons a month.
The rationing led to riots in several parts of the country. More than 30 gas stations and other businesses were burned in July.

In an interesting twist, the economic reforms put in place by Iraq to cure its gasoline problems have made matters worse for Iran. Iran now has its own black market entrepreneurs selling Iranian gasoline to motorists in Iraq. When you can get $1.22 a gallon in Iraq, but only 40 cents a gallon in Iran, where would you rather sell?

Iraqis may still have trouble getting good gas, but all those jerricans filled with pink gasoline are evidence of life getting better in Iraq – and worse in Iran.

With refineries few, Iraq and Iran run on black market gas | Dallas Morning News | News for Dallas, Texas | Business Columnists: Jim Landers#

Initial agreement to cancel $30 b of Iraqi debt

Minister of finance said that an initial agreement with International Monetary Fund to cancel 30 billion dollars of Iraq debt was made and that a meeting would take place at the end of current month in Amman to put a final draft of Iraq obligations towards monetary and finance policy. He added that he discussed with International Bank several cases including designing new policy for governmental banks, rehabilitate and develop them, in addition to loans which have been granted previously to Iraq and simplified loans Iraq would have in future. He described his talks with International Cash Fund and International Bank about renewing joint agreement between them and Iraq, as positive ones. Council asked for the use of modern methods in treating sewer and exporting modern specialized machines and separate sewer networks from rain water networks to stop pollution phenomena. In an exclusive statement to as-Sabah newspaper, Eng. Ali Mararj, the Director of Mayssan oilfields said: two committees had been formed; one for reconstruction and the other one is an executive to maintain and reconstruct the oil compound.


http://www.iraqdirectory.com/DisplayNews.aspx?id=4793

Bazerkan oil field in Maysan starts working

The engineering and technical cadres in Maysan oilfields committee have continued rehabilitation and maintenance processes of al-Bazarkan oil compound eastern west al-Amara While Mayssan province has gave brick factories' owners one a week to reduce prices of bricks lump after Amara refinery resume supplying these factories with crude oil.

http://www.iraqdirectory.com/DisplayNews.aspx?id=4794

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Saudi investors await for opening embassy to enter Iraqi market

Saudi investors are awaiting the opening of the Saudi embassy in Baghdad in the upcoming stage to enter the Iraqi market and increase their share, while Saudi business sector is planning to open contacts with Saudi authorities to open a new border crossing with Iraq in Hafr al-Baten region, as well as reopening of Jadida Araar crossing.

"The reopening of the Saudi embassy in Baghdad and organizing border crossings between the two countries will contribute in increasing trade volume and raise Saudi exports to Iraq," Saudi officials from the Saudi business sector told the independent news agency Voices of Iraq (VOI).

They said they can make big Saudi investments in Iraq but only within a stable security condition.

Chairman of the Saudi Chambers of Commerce Council Abdul Rahman al-Rashed said "the council will take an official step within the next days to address the ministries of finance, interior, and foreign affairs to reconsider the opening of two crossings: the first in Hafr al-Baten region and the second the Jadida Araar crossing to export goods to Iraqi markets."

"The council's plan aims at increasing goods exported to Iraq," he added, noting that the reopening of Jadida Araar crossing will help exporting Saudi products to Iraq directly without passing through Kuwaitor Jordan, currently used as a transit for Saudi products heading for Iraq.

Saudi Foreign Minister Prince Saud al-Faisal, during a press conference on August 1, 2007 with visiting U.S. Secretary of State Condoleezza Rice and Secretary of Defense Robert Gates, had said the kingdom was planning to send a diplomatic envoy to Iraq "soon" to prepare for the re-opening of its embassy in Baghdad and enhance bilateral relations.

Diplomatic relations were re-established between Iraq and Saudi Arabia in 2004 after the fall of the former regime, but an embassy was not opened due to deteriorating security conditions.

Iraq, however, re-opened its embassy in Riyadh in February 2007 for the first time since 1990, when it was closed after the outbreak of the 1st Gulf war.

For his part, the Secretary General of Saudi Chambers of Commerce Dr. Fahd al-Sultan explained the mechanism to be adopted after the reopening of Saudi embassy by maintaining contacts with the Saudi ambassador and then coordinating with Iraqi chambers of commerce.

Al-Sultan said that the council is in permanent contact with Kuwait chamber of commerce and industry and Kuwaiti customs authorities to facilitate the passing of Saudi products through the Arab gulf country.

Regarding the reopening of border crossings with Iraq, he said that "Saudi Interior Minister Prince Nayef Bin Abdul Aziz gave instructions to prepare a mechanism to organize the reopening of the border crossing of Jadida Araar, but he did not set a date."

"The minister did not rule out the possibility of opening a large free-trade area between the two countries, noting that it is possible to turn al-Eidaa region in Jadida Araar into a large trade area in the future according to Saudi policies and laws and security and stability in Iraq," he also said.

The four border crossings, currently closed, between Iraq and the kingdom are Rafhaam al-Uwayiqieliya, Hafr al-Baten, and Jadida Araar, the last one was reopened to export Saudi products to Iraq directly within the U.N. Food-for-Oil Program, before closing it prior to the U.S.-led invasion.

Dr. Fahd al-Sultan voiced belief that his country is qualified to top the list of Iraq's exporting countries with products valued at no less than USD 5.2 billion annually.

Deputy Chairman of the Chamber of Commerce and Industry in Riyadh Abdul Aziz al-Azl warned Saudi investors of accelerating the process of investments in Iraq without having enough security guarantees from the Iraqi government and other international organizations, i.e. the U.N.
Saudi non-oil exports to the war-torn country in 2004 hit USD 8.1 billion, according to unofficial statistics.

http://www.iraqdirectory.com/DisplayNews.aspx?id=4796

Turkey may impose trade sanctions on Iraq: Erdogan

Turkey will consider imposing selective trade sanctions on Iraq in response to incursions by Kurdish PKK fighters from across the border, Prime Minister Tayyip Erdogan said on Tuesday.

"We may impose some sanctions with respect to some goods we export to Iraq," Erdogan told an investors' conference in London. He gave no further details.

"I believe the countries who believe in fighting jointly against terrorism will understand this response, if we choose to display it, because terrorism is a scourge for mankind," he added.

Erdogan said Turkey had been helping Iraq with water, fuel and food and did not deserve the cross-border raids by the PKK (Kurdistan Workers Party), founded in Turkey some 30 years ago by Kurdish separatists.

"To have this organization based in the northern part of that country which we help is something that we must consider," he added.

Turkey has deployed as many as 100,000 troops, backed by tanks, fighters and attack helicopters, along its border with Iraq in anticipation of a possible incursion.

Iraq pledged on Tuesday to rein in the PKK after Ankara threatened to send forces into Iraqi territory to confront them.

http://www.iraqdirectory.com/DisplayNews.aspx?id=4798

Iraq joins Multilateral Investment Guarantee Agency

Finance Minister Baker Jaber Azzubaidi signed on the agreement by the power of which Iraq joins the Multilateral Investment Guarantee Agency (MIGA) an institution of the World Bank Group. Hence, Iraq became the country number 174 to join this agency.

However, MIGA guarantees the foreign investors who want to invest in one of the member countries and protects them from any political decisions these countries might take against the investors. Hence, this membership would help to encourage the foreign investors to invest in Iraq’s different fields.

http://www.iraqdirectory.com/DisplayNews.aspx?id=4799

Turkey confirms Iraq raids and boosts troops on border

Turkish warplanes and troops attacked Kurdish rebels inside Iraq this week, security sources said on Wednesday, but Ankara wants to hold back from any major incursion for now to give diplomacy a chance.

Turkey moved more troops to the mountainous border, keeping up pressure on Baghdad to honour promises to crack down on an estimated 3,000 rebels of the outlawed Kurdistan Workers Party (PKK) who use the region as a base.

Security sources, speaking on condition of anonymity, confirmed a series of sorties between Sunday and Tuesday evening in which Turkish warplanes flew 20 km (13 miles) into Iraq and some 300 ground troops advanced about 10 km.

"Further 'hot pursuit' raids into northern Iraq can be expected, though none have taken place so far today (Wednesday)," a military official said.
Thirty four PKK rebels were killed in the sorties, he said, adding all Turkish troops involved in the operations were now back in Turkey.

But Abdul Rahman Jaderji, a PKK spokesman in northern Iraq, told Reuters there had been no direct fighting between the two sides since clashes on Sunday in which 12 soldiers were killed.

He said Turkish troops had been shelling areas of northern Iraq, but little new shelling had been reported on Wednesday.

Baghdad has pledged to act against the rebels. A Turkish official on Wednesday quoted Iraqi President Jalal Talabani as saying Iraq might hand over PKK militants to Turkey. Talabani had previously ruled out any such move de****e Turkish appeals.

The lira currency firmed to 1.2100 against the dollar on the back of Talabani's reported comments.

The Turkish official described as a "final chance" for diplomacy a planned visit by an Iraqi delegation to Ankara on Thursday. At Turkey's request, the team will be headed by Iraqi Defence Minister General Abdel Qader Jassim. It will also include Iraq's National Security Minister Shirwan al Waeli.

REINFORCING

Washington and Baghdad fear a major Turkish incursion into northern Iraq could destabilise the whole region. But Turkish Prime Minister Tayyip Erdogan's government is under heavy public pressure to take tough action, especially since Sunday's deaths.

Ankara is sceptical about Baghdad's ability to crack down on the PKK in northern Iraq, where the central government has little clout. And the publication of photographs said to show eight Turkish soldiers captured by the PKK has added to pressure on Ankara to act.

"We are reinforcing our troops near the border at Silopi and Uludere with men drawn from other parts of the country," a military source told Reuters in southeast Turkey on Wednesday.

Turkey, which has NATO's second biggest army, has deployed as many as 100,000 troops, backed by tanks, F-16 fighter jets and helicopter gunships, along the mountainous border in preparation for a possible large-scale strike.

Ankara blames the PKK for the deaths of more than 30,000 people since the group launched its armed campaign for an ethnic homeland in southeast Turkey in 1984.

Turkey's National Security Council comprising political leaders and army top brass met on Wednesday in Ankara to mull possible economic measures against the Kurdish administration of northern Iraq over its continued failure to tackle the rebels.

"The prime minister has indicated this meeting could produce economic sanctions, for example, cutting off electricity to northern Iraq or the closure or slowing down of traffic at the Habur border gate," said Suat Kiniklioglu, an AK Party lawmaker.

Northern Iraq depends heavily on Turkey for power, water and many food supplies. Iraqi Kurdish leader Masoud Barzani has infuriated Turkey by refusing to act against the PKK. He has said his peshmerga fighters would resist any Turkish incursion.

Turkish Foreign Trade Minister Kursad Tuzmen said Ankara was capable of maintaining trade relations with the rest of Iraq excluding the north if the crisis over the PKK escalates.

Turkey confirms Iraq raids and boosts troops on border - Yahoo! News UK

U.S. general outlines Baghdad security handover plan

U.S. forces hope to hand over half of Baghdad to Iraqi security control by the end of 2008, after violence in Iraq dropped to its lowest level since January 2006, the No. 2 U.S. general in Iraq said on Wednesday.

"We are anxious for them to take over full responsibility as they are anxious to take full responsibility," Lieutenant-General Raymond Odierno, in charge of U.S. forces' day-to-day operations in Iraq, told a Baghdad news conference.

"You will see steady progress over the next 12 months of us turning large portions of Baghdad (over) to Iraqi security forces as we continue to have success. I think it will be somewhere between 40 and 50 percent by the end of the year."

His comments are significant because stabilising the capital, torn apart by sectarian violence, was the main goal of a 30,000-U.S. troop build-up that began in February, part of a plan to give feuding political leaders time to reconcile.

The comments are likely to be seized on by opponents of the war in the United States, who want Iraq's security forces to assume more responsibility so that U.S. troops can begin pulling out. Handing over security responsibility for the nation's capital would be a major step in that direction.

Supporters of President George W. Bush's "surge" strategy will see Odierno's comments as evidence the plan is working. Bush has asked Americans to be patient and give the strategy time to bear fruit.

Even after handing over control, many U.S. troops, who now number about 170,000, would almost certainly remain in an "overwatch" role to support Iraqi forces.

ROADSIDE BOMBINGS DECLINE

U.S. generals say the Iraqi army, rebuilt from scratch since Saddam Hussein's ouster in 2003, is growing in strength, but critics say it is poorly armed and equipped, while sectarianism and corruption is still rife in the police force.

Seven of Iraq's 18 provinces have already been transferred to Iraqi security control, although these are in Iraq's more stable Kurdish north and Shi'ite south.

"Attack levels continue their steady downward trend that began in June and are now at the lowest level since January 2006," Odierno said, adding that roadside bombings in particular were down more than 60 percent in the last four months.

In February 2006, the bombing of a revered Shi'ite shrine in the town of Samarra unleashed a wave of violence between majority Shi'ite and minority Sunni Arabs that killed tens of thousands, displaced millions and pushed Iraq toward civil war.

While the U.S. troop buildup has helped to reduce violence, there are fears over growing tensions between rival Shi'ite factions in Iraq's south who are vying for political supremacy.

Bombings and shootings are still a daily threat in parts of Iraq as U.S. and Iraqi forces target Sunni Islamist al Qaeda militants and splinter groups from Shi'ite cleric Moqtada al-Sadr's Mehdi Army militia.

Odierno named six Mehdi Army commanders who he said had failed to obey Sadr's order for a six-month ceasefire so that he could reorganise the force, which is increasingly seen as beyond his control.

U.S. forces have staged a number of raids in Sadr City, the Baghdad slum that is the Mehdi Army's main stronghold, in recent weeks to capture members of rogue factions blamed for continued kidnappings, extortion and murders.

U.S. general outlines Baghdad security handover plan - Yahoo! News UK

Iraq revokes immunity for foreign security firms

The Iraqi government said on Wednesday that it has decided to revoke the immunity from prosecution that the foreign security firms enjoyed in the violence-plagued country.

"The cabinet held a meeting on Tuesday and decided to cancel the article that granted immunity for the foreign security companies that was issued by the dissolved CPA (Coalition Provision Authority) in 2004," the office of Prime Minister Nuri al-Maliki said in a statement.

The cabinet decided to submit a new draft law regarding the issue to the next Tuesday cabinet meeting, the statement said.

Under then U.S. administrator in Iraq Paul Bremer, the CPA issued a law stipulating that the "multinational forces, foreign liaison missions, their personnel, property, funds and all international consultants shall be immune from Iraqi legal process. "

Earlier this month, the Iraqi government threatened to punish service members of foreign security firms, including a U.S.-based security firm Blackwater for their allegedly deliberate killing of 17 Iraqis in the Nusour Square in western Baghdad.

http://www.chinadaily.com.cn/world/2007-10/24/content_6204584.htm

Turkey confirms hosting int'l conference on Iraq in Istanbul

Turkey is to host on November 3 an international conference on Iraq that will gather foreign ministers of several countries in its biggest city Istanbul, the semi-official Anatolia news agency reported on Wednesday.

Prior to the conference, a meeting will take place at Istanbul's Conrad Hotel on November 1-2 with the participation of high-level officials from several countries, Anatolia reported.

Officials from Iran, Kuwait, Bahrain, Saudi Arabia, Egypt, Jordan, Syria and Turkey, as well as UN Security Council's five permanent members -- United States, France, Britain, China and Russia, plus G-8 countries Japan, Germany, Italy and Canada were invited to the conference.

The meeting will also be attended by officials from the United Nations, Organization of Islamic Conference, Arab League and the European Union.

Following high-level officials' meeting, foreign ministers will meet at Ciragan Palace Kempinski Hotel.

In early May, Egypt hosted an international conference on Iraq in Red Sea resort of Sharm al-Sheikh.

Turkey confirms hosting int'l conference on Iraq in Istanbul