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It’s the Oil, Stupid!

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Posted on Jun 26, 2014

Photo by og2t // ou gee tew tee (CC BY-SA 2.0)

By Michael Schwartz, TomDispatch

(Page 3)

There was nothing new about local guerrillas attacking oil facilities. In late 2003, soon after the U.S. occupation cut off the flow of oil revenues to Sunni areas, residents resorted to various strategies to stop production or export until they received what they felt was their fair share of the proceeds. The vulnerable pipeline to Turkey was rendered useless, thanks to more than 600 attacks. The Baiji and Haditha facilities held insurgents at bay by allowing local tribal leaders to siphon off a share—often as much as 20%—of the oil flowing through them. After the U.S. military took control of the facilities in early 2007 and ended this arrangement, the two refineries were regularly subjected to crippling attacks.

The pipeline and refineries returned to continuous operation only after the U.S. left Anbar Province and Maliki once again promised local tribal leaders and insurgents (often the same people) a share of the oil in exchange for “protecting” the facilities from theft or attack. This deal lasted for almost two years, but when the government began cracking down on Sunni protest, the “protection” was withdrawn. Looking at these developments from a petroleum perspective, Iraq Oil Report, an online industry newsletter that offers the most detailed coverage of oil developments in Iraq, marked this as a key moment of “deteriorating security,” commenting that the “forces guarding energy facilities… have historically relied on alliances with locals to help provide protection.”

Fighting for Oil

Iraq Oil Report has conscientiously covered the consequences of this “deteriorating security” situation. “Since last year when attacks on the [Turkish] pipeline began to increase,” the North Oil Company, in charge of production in Sunni areas, registered a 50% drop in production. The pipeline was definitively cut on March 2nd and since then, repair crews have been “prevented from accessing” the site of the break. The feeder pipeline for the Baiji complex was bombed on April 16th, causing a huge spill that rendered water from the Tigris River undrinkable for several days.

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After “numerous” attacks in late 2013, the Sonangol Oil Company, the national oil company of Angola, invoked the “force majeure” clause in its contract with the Iraqi government, abandoning four years of development work on the the Qaiyarah and Najmah fields in Nineveh Province. This April, insurgents kidnapped the head of the Haditha refinery. In June, they took possession of the idle plant after government military forces abandoned it in the wake of the collapse of the Iraqi army in the country’s second largest city, Mosul.

In response to this rising tide of guerrilla attacks, the Maliki regime escalated its repression of Sunni communities, punishing them for “harboring” the insurgents. More and more soldiers were sent to cities deemed to be centers of “terrorism,” with orders to suppress all forms of protest. In December 2013, when government troops began using lethal force to clear protest camps that were blocking roads and commerce in several cities, armed guerrilla attacks on the military rose precipitously. In January, government officials and troops abandoned parts of Ramadi and all of Falluja, two key cities in the Sunni triangle.

This month, faced with what Patrick Cockburn called a “general uprising,” 50,000 troops abandoned their weapons to the guerrillas, and fled Mosul as well as several smaller cities. This development hit as if out of nowhere and was treated accordingly by much of the U.S. media, but Cockburn expressed the view of many informed observers when he termed the collapse of the army in Sunni areas “unsurprising.” As he and others pointed out, the soldiers of that corruption-ridden force “were not prepared to fight and die in their posts… since their jobs were always primarily about making money for their families.”

The military withdrawal from the cities immediately led to at least a partial withdrawal from oil facilities. On June 13th, two days after the fall of Mosul, Iraq Oil Report noted that the power station and other buildings in the Baiji complex were already “under the control of local tribes.” After a counterattack by government reinforcements, the complex became a contested area.

Iraq Oil Report characterized the attack on Baiji by insurgents as “what could be an attempt to hijack a portion of Iraq’s oil revenue stream.” If the occupation of Baiji is consolidated, the “zone of control” would also include the Haditha refinery, the Qaiyarah and Hamrah oil fields, and “key infrastructure corridors such as the Iraq-Turkey Pipeline and al-Fatha, where a collection of pipelines and other facilities deliver oil, gas and fuel to the center and north of the country.”

Further proof of this intention to control “a portion of Iraq’s oil revenue stream” can be found in the first actions taken by tribal guerrillas once they captured the power station at Baiji: “Militants have caused no damage and instructed workers to keep the facility online” in preparation for restarting the facility as soon as possible. Similar policies were instituted in the captured oil fields and at the Haditha refinery. Though the current situation is too uncertain to permit actual operation of the facilities, the overarching goal of the militants is clear. They are attempting to accomplish by force what could not be accomplished through the political process and protest: taking possession of a significant portion of the proceeds from the country’s oil exports.

And the insurgents appear determined to begin the reconstruction process that Maliki refused to fund. Only a few days after these victories, the Associated Press reported that insurgents were promising Mosul citizens and returning refugees “cheap gas and food,” and that they would soon restore power and water, and remove traffic barricades. Assumedly, this will be funded by upwards of $450 million (of oil money), as well as gold bullion, reportedly looted from a branch of the Central Bank of Iraq and assorted other banks in the Mosul area.

The oppressive regime of Saddam Hussein was racked with insurgency, and when vicious repression failed, it delivered a portion of the vast oil revenues to the people in the form of government jobs, social services, and subsidized industries and agriculture. The oppressive United States occupation was racked with insurgency precisely because it tried to harness the country’s vast oil revenues to its imperial designs in the Middle East. The oppressive Maliki regime is now racked with insurgency, because the prime minister refused to share those same vast oil revenues with his Sunni constituents.

It has always been about the oil, stupid!

Michael Schwartz is a Distinguished Teaching Professor, Emeritus, of sociology at Stony Brook State University. Long a TomDispatch regular, he is the author of many books and articles on popular protest and insurgency, corporate dynamics, and political policy, including War Without End: The Iraq War in Context. His email address is Michael.Schwartz@stonybrook.edu.

[Note on Sources: This commentary rests, in part, on the reporting of Ben Lando and the staff of Iraq Oil Report, which is the best English language source for information about politics, economics, and social protest in Iraq. Because its articles cannot be accessed without a subscription, no links to its work are provided in the text. Unlinked evidence about oil and the U.S. occupation is also taken from War Without End: The Iraq War in Context.]

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Copyright 2014 Michael Schwartz


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