April 3, 2006
Iraq’s oil exports hit another post-invasion low in December and January, according to the Oil & Gas Journal. How do they know? Good question: according to Reuters, production and exports have gone unmetered
since the Coalition Provisional Authority took over the country
following the 2003 invasion; until new meters are installed,
everybody’s just guessing.
Among the best chronicles of the
haziness surrounding Iraq’s oil production and exports — and the
general pall of corruption that hangs over the country — comes from
journalist Ed Harriman, writing in the July, 2005 issue of the London
Review of Books. Harriman wrote
that in addition to the roughly $9 billion in Iraqi oil funds that
vanished without a trace during CPA head Paul Bremer’s reign, the
International Advisory and Monitoring Board established to oversee and
audit CPA expenditures of Iraqi cash "discovered that Iraqi oil exports
were unmetered."
Neither the Iraqi State Oil Marketing Organisation nor
the American authorities could give a satisfactory explanation for
this. 'The only reason you wouldn’t monitor them is if you don’t want
anyone else to know how much is going through,’ one petroleum executive
told me. Officially, Iraq exported oil worth $10 billion in the first
year of the American occupation. Christian Aid has estimated that oil
worth up to an additional $4 billion may also have been exported and is
unaccounted for. If this is correct, it would have created an off the
books slush fund that both the Americans and their Iraqi allies could
use with impunity to cover expenditures they would rather keep secret –
among them the occupation costs, which were rising far beyond what the
Bush administration could comfortably admit to Congress and the
international community.
The Iraqis now say that they’re pumping somewhere around 2 million
barrels per day, but with exports effectively shuttered by sabotage in
the north, official exports are funneled entirely through the southern
port of Basra. Which remains, nearly two years after the CPA packed up
and got out of Dodge, unmetered. And they’ll stay that way for a while. The
Reuters story linked above is about the announcement of a deal between
Iraq and Royal Dutch Shell to establish a system congruent with
international standards for measuring oil and gas production and
exports.
The Iraqi Oil Ministry has reached a preliminary agreement with the Royal Dutch Shell group to consult with it
on creation of a system measuring the flow of oil, gas and related
products, whether inside Iraq or for export to foreign markets, said
Deputy U.N. Ambassador Feisal Amin al-Istrabadi. The ministry also has concluded an agreement to rebuild a
metering system in its southern oil port of Basra, where oil is loaded
onto tankers for export, the U.N. envoy said in a March 22 letter
circulated at the United Nations on Friday.
"This long-term development project will be implemented in stages that may be fulfilled in one or two years," he said.
The
letter was addressed to the International Advisory and Monitoring
Board, created by the U.N. Security Council in 2003 to watch over the
stewardship of Iraq’s natural resources.
Emphasis mine. So we’ll know in a year or two, possibly, how much oil
Iraq is pumping and how much is sold on the official market. What we’ll
never know is how much was stolen and smuggled between the time the CPA
took over Iraq and the time the meters are installed. By way of
explanation for the unregulated oil trade, Harriman provides an insight
into the conditions under which the IAMB and Iraq’s own internal
auditors operated during the first two years of the war.
The IAMB … spent months trying to find auditors acceptable
to the US. The Bahrain office of KPMG was finally appointed in April
2004. It was stonewalled. 'KPMG has encountered resistance from CPA
staff regarding the submission of information required to complete our
procedures,’ they wrote in an interim report. 'Staff have indicated . .
. that co-operation with KPMG’s undertakings is given a low priority.’
KPMG had one meeting at the Iraqi Ministry of Finance; meetings at all
the other ministries were repeatedly postponed. The auditors even had
trouble getting passes for the Green Zone. … Bremer re-established the Iraqi Board of Supreme Audit a month
before he left Baghdad. It is now said to have more than a thousand
auditors and support personnel spread throughout Iraqi government
ministries. A new Iraqi Commission on Public Integrity, the equivalent
of the FBI, is said to have 200 staff and 15 US advisers. Yet according
to the latest American figures [at the time of publication], of more
than 3400 complaints, only about one in 50 has been passed to the
Commission on Public Integrity for possible prosecution.
There
is an explanation for this lack of activity. On Thursday, 1 July 2004,
two days after Bremer left Baghdad, Ehsan Karim, the new head of the
Board of Supreme Audit, was killed by a bomb as he left the Finance
Ministry. Two weeks later, Sabir Karim (no relation) was murdered in a
drive-by shooting as he set off for work at the Ministry of Industry,
where he was in charge of investigating corruption. A few weeks ago,
another senior official investigating corruption was murdered. The IAMB
keeps the names of its Iraqi delegates secret to keep them alive.
No wonder Ahmed Chalabi was so keen on inhabiting the corner office at the Oil Ministry.
Much
has rightly been made of the connections between current Bush
administration officials and the Reagan/Bush era Iran-Contra affair,
which involved much cooking of books and funneling of cash and arms to
officially off-limits and by any standard unsavory characters in
Central America and elsewhere around the world, including Iran. When
things began to go seriously south in Iraq, unnamed officials began
muttering of "the Salvadoran option" — the creation of unofficial
government death squads to deal with the expanding insurgency — and
soon thereafter, reports of kidnappings and executions perpetrated by
men wearing "stolen" Iraqi police and army uniforms became common.
A letter to the London Review of Books in response to Harriman’s story suggests
that the connections and practices at play in Iraq go back considerably
further than Iran-Contra. James Hamilton-Paterson wrote in to say that
"in 1971 I wrote a book about Cornelius Hawkridge, a Hungarian-American
who conducted a vendetta against the military and civilian corruption
that dogged the American presence in Vietnam."
I still have many volumes of corroborative evidence
presented to US Senate hearings at the time: Improper Practices,
Commodity Import Program, US Foreign Aid, Vietnam; Military Club Fraud
and Currency Manipulations etc. They detail the same kinds of practice
as Harriman does. The General Accountability Office’s report of May
1967 revealed that the civilian contractor RMK/BRJ could not account
for $120m worth of materiel shipped from the US to Vietnam. RMK/BRJ’s
name crops up frequently in investigations from the period in
connection with the disappearance of huge sums of taxpayers’ money –
one reason for this was the company’s gross overcharging for gasoline
(Harriman found evidence of the same thing). The acronym stood for
Raymond, Morris-Knudsen, Brown, Root and Jones. Much of the current
investigation surrounds Halliburton’s subsidiary KBR, which stands for
Kellogg, Brown and Root. I have yet to see anyone point out KBR’s
genealogical connections. A few years ago in Manila I had dinner with John Negroponte when
he was still US ambassador there. Later, he would become ambassador to
post-Saddam Baghdad and then George W. Bush’s intelligence supremo. He
was a Vietnam veteran, and I plied him with questions about the massive
corruption during the war. 'Yes,’ said Negroponte, who had also been
involved in the covert funding of the Contras in Nicaragua, 'we learned
an awful lot from that war.’
Foolishly, I took this to imply repentance.
Wouldn’t it be loverly to have a press in this country possessed of some sort of institutional memory?
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