Iran sanctions fuel oil smuggling in Iraq

Jul 18, 2010 02:00 AM

The road that leads into Bashmakh is dominated by a snaking line of lorries whose tankers are filled with crude oil products being smuggled into neighbouring Iran in defiance of US sanctions. Surrounded by the lush green fields and rolling hills of northern Iraq, the border crossing at this small village is a focal point in a fierce dispute that is breeding resentment between Kurds, the Baghdad government and Washington.
The drivers, whose inventories are said to include gasoline, gas oil and naphtha, wait day and night to reach the Iranian side of the border. Most of them spend their dead time praying or eating at the side of the road.

Omar Hassan, 30, a Sunni Arab from the northern city of Mosul, said he had been waiting in the queue for three days, prior to heading to ports in southern Iran where at least some of the refined oil products will be loaded for export.
"Each truck carries 25 tons of oil, and we head to Bandar Abbas," said Hassan, standing in the shadow of his truck to hidefrom the boiling midday sun in Bashmakh, 375 km (230 miles) northeast of Baghdad.

Although the autonomous Kurdish regional government in the city of Arbil concedes that smuggling is a problem it insists most exports are legitimate, as the fuel products are excess to local requirements. Regardless of the Kurdish stance, the sending of shipments to Iran, which is said to re-sell at least some of the fuels on the open market, has national and international repercussions.
The permits that allow Iraqi and Turkish drivers to cross the border are issued by Kurdish authorities, in apparent defiance of the central government, with which a major row over the split of oil revenues rumbles on.

The oil ministry in Baghdad has been angered by the apparent selling of goods that it imported from abroad in the first place, as it says they were sent to the Kurdish region for the exclusive use of its citizens.
"If there was a surplus, it would be strange to send it outside the country, because Iraq imports it for Iraqis," Oil Minister Hussein al-Shahristani said, pointing out that the subsequent export revenues are being wrongfully pocketed by Kurdish authorities rather than the Baghdad government.

Among the drivers in Bashmakh, a sense of political ambivalence bordering on ignorance prevails. Their only concern is that business continues so they can work and get paid.
"We transport the black oil, then they put the oil into large tankers, and we don't know where it goes," said Qader Ghafour, a driver from the oil-rich and fiercely disputed, ethnically mixed oil city of Kirkuk, north of Baghdad.

Hewa Raouf, another driver, said: "We are afraid that the smuggling of oil to Iran may stop, because the media now knows about it."
"If smuggling stops, the sources of living for hundreds of families of truck drivers will end," he added, noting that drivers head to Bandar Bushehr and Bandar Imam Khomeini, two other ports in Iran, as well as Bandar Abbas.

As well as reopening the divide between Kurdistan and thecentral government, the illicit export of oil products has alarmed the United States, guardian of the Kurdish region's security since the 1991 Gulf war over Kuwait. Washington has already imposed unilateral sanctions against Iran and it has said it will penalise any foreign entity that sells refined products to Tehran.
A US embassy spokesman in Baghdad said that although smuggling had been an issue since long before the new sanctions, it was investigating the situation in northern Iraq because illicit trade seemed to be flourishing.

"As the major oil companies have indicated they are pulling out of refined product sales to Iran, smaller actors are emerging in an effort to take advantage of the void," he said.
"We are concerned about this and we are reviewing these developments."

For some members of the Kurdish regional parliament, meanwhile, the sanctions are exacerbating already rampant local corruption.
"The revenues from smuggled oil do not enter the official budget of the region," Kowestan Mohammed from the Goran "Change" list, which challenged the stranglehold of the two main Kurdish parties in March elections, told.

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