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Basra oil fuels fight to control Iraq's economic might

The province sits on as much as 20 percent of the Middle East's oil reserves.

By Sam DagherCorrespondent of The Christian Science Monitor / September 19, 2007

Basra, Iraq

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.

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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