Iraq’s Insurgency Runs on Stolen Oil Profits:
The sea of oil under Iraq is supposed to rebuild the nation, then make it prosper. But at least one-third, and possibly much more, of the fuel from Iraq’s largest refinery here is diverted to the black market, according to American military officials. Tankers are hijacked, drivers are bribed, papers are forged and meters are manipulated — and some of the earnings go to insurgents who are still killing more than 100 Iraqis a week.
Sunni insurgents are motivated largely by money — surprise, surprise — not religion. The corruption can become quite brazen:
Before the invasion of Iraq, eight gasoline stations dotted the region around Sharqat, an hour north of the refinery at the northern edge of Saddam Hussein’s home province, Salahuddin. Now there are more than 50.Economic growth? Not exactly. It is one of the more audacious schemes that feed money to the black marketeers. Most tanker trucks intended for Sharqat never make it there. “It’s all a bluff,” said Taha Mahmoud Ahmed, the official who oversees fuel distribution in Salahuddin. “The fuel is not going to the stations. It’s going to the black market.”
Gas stations are often built just to gain the rights to fuel shipments, at subsidized government rates, that can be resold onto the black market at higher prices. New stations cost more than $100,000 to build, but black market profits from six or seven trucks can often cover that cost, and everything after that is profit, said officials who have studied the scheme.
The plan also requires bribing officials in the province and Baghdad, said Col. Mohsen Awad Habib, who is from Sharqat and is now police chief in Siniya, near Baiji. He said owners of bogus gas stations told him they paid $20,000 bribes to an Oil Ministry official in Baghdad to get their paperwork approved. Local and provincial officials then extort their own cut. “In each station you’ll find high Iraqi officials who have shares,” he said.
In Baiji, dozens of active insurgent groups feed off corruption from the refinery, said Lt. Ali Shakir, the commander of the paramilitary Iraqi police unit here. “If I give you all the names, your hand is going to be tired” from writing them down, he said.
Lieutenant Shakir said the more hard-core insurgent groups had a lot of money to pay other fighters, and he grumbled that part of the reason they thrived was that obvious thievery was never prosecuted.
Another scheme, he said, involves a trucking company owned by a man tied to the insurgency who is also a relative of Baiji’s mayor. The trucks take fuel from the refinery but are then unloaded just south of Tikrit. Making arrests would be a waste of time, he said, because provincial officials would let the perpetrators go.
“What can I do?” he said. “After a half hour, they would be released.”
Last year, the Pentagon estimated that as much as 70 percent of the Baiji refinery’s production, or $2 billion in fuels like gasoline, kerosene and diesel, disappeared annually into the black market. Baiji supplies eight provinces.
Some of the most obvious corruption and theft, like tanker trucks hijacked at gunpoint from distribution pumps, has been curbed by Captain Da Silva and his predecessors. The American troops live inside the compound.
Americans don’t like to admit that leniency leads to crime:
Most theft occurs outside the refinery, but fraud still abounds inside, too. At one refinery office, a broken control-room machine has a hole where an object has been jammed through the glass to stop a dial from turning. Most everything is recorded using paper, and tubes of correction fluid sit on the desks of clerks overseeing the flow of fuel. It is regularly used to cover up huge discrepancies in production and distribution tallies that soldiers say can only be explained by theft.“We’d all be hanged” if the refinery had operated this way under Mr. Hussein’s government, one senior refinery official confided to American soldiers.