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Thursday, June 17, 2004

Thirteen Days to Democracy! 

From Reuters:
Bombers killed 41 people in two strikes on Iraq's fledgling security forces Thursday, stepping up a bloody drive to sabotage plans for U.S.-led occupation to give way to Iraqi rule on June 30.

A suicide bomber blew up his white four-wheel-drive car at an army recruiting base in Baghdad, killing 35 people and wounding 138, in Iraq's deadliest single bombing since a suicide attack on the same target killed 47 in February.

Later Thursday a car bomb killed six paramilitary civil defense guards and wounded four near the town of Balad, north of the Iraqi capital, the U.S. military said.

Insurgents -- thought to include Baathists loyal to Saddam Hussein, Iraqi nationalists and foreign Islamist militants -- have attacked government officials, security forces and the oil industry in the runup to the June 30 handover.

Oil exports, Iraq's economic lifeblood, remained paralyzed Thursday after sabotage attacks on pipelines in the north and south. But an oil official said some exports could resume on Friday after repairs to a pipeline to a Gulf terminal . . . .

Iraq's new defense minister promised a crackdown. "We will cut off their hands and behead them," Hazim al-Shaalan said. Iraqi forces would lead the raids, with only logistical help from U.S. troops, he added.
From Patrick Cockburn in the Independent (via Cursor):
A bomb blast early yesterday morning destroyed a pipeline in the desolate Fao peninsula south of Basra, where saboteurs had struck the previous day. Crude oil gushing from the broken pipe formed deep black ponds in the sand. All crude oil exports from terminals in Basra and Khor al-Amaya have been stopped.

The attacks show that anti-government guerrillas now have the skill and the organisation to cripple permanently Iraq's oil exports. This will seriously damage the prospects of the new Iraqi interim government, which is badly in need of high oil revenues in order to restore the economy and create an army.

An escalation in bombings and assassinations was expected by the US before the so-called handover of power to an Iraqi interim government on 30 June. But the attacks on the oil industry and the electric power supply have been more sophisticated and effective than had been expected.

The international price of oil did not rise significantly after sabotage stopped Iraqi oil exports but this may change if, as appears likely, the saboteurs can sustain their attacks. Iraq had been hoping to raise its output to 2.5 million barrels a day in the near future.

Iyad Allawi, the new Iraqi Prime Minister, is hoping to restore security by getting senior officers from the old Iraqi army, disbanded by the US last May, to reconstitute their units. This is very different from the American plan to allow carefully vetted officers and men from Saddam Hussein's army to join a freshly raised military force on an individual basis. Iraqi officials estimate the cost of this new army will be between $3bn (£1.6bn) and $4bn.
From Juan Cole:
It would take about $30 billion a year in income for the Iraqi state to run the country properly and repair everything that needs to be repaired, as well as servicing its debts and paying reparations. In the past year, Iraq has only been able to generate about $10 billion from petroleum, and I doubt the government is able to collect much in taxes. It is not enough to keep things going. If sabotage goes on being this effective, Iraq looks likely to get only half that in oil income in the coming year, especially if prices come down (trust me, eventually they will. I'll tell you some time about boom and bust cycles in primary commodity markets).

This development is another reason for which "sovereignty" won't mean much on June 30.

Over 20 years with many billions of dollars of investment, Iraq may have an upward capacity of 10 million barrels a day, similar to that in Saudi Arabia. But that rosy scenario would require a return of the country to a condition of normality. If you like nightmare scenarios, consider another possibility: that the instability in Iraq spreads to Kuwait and Saudi Arabia. American readers: Can you say, "$5 a gallon gasoline"? (The Europeans already pay that but a lot of it is tax, and aside from the UK they have little petroleum of their own.)

Even for Iraq just to get out 2.5 million barrels a day would have required that the main US contractor in Iraq, Halliburton, had done its job. It hasn't, in part because of the poor security situation . . . .

And now, the Iraq Revenue Watch of the Open Society Institute is reporting that the Coalition Provisional Authority (i.e. the Bush Administration in Iraq) is rushing to give away $2 billion in Iraqi oil revenues in reconstruction bids before the so-called turn-over of sovereignty on June 30. This move is obscene. When the US knows very well that an Iraqi government is going to be recognized in only a couple of weeks that will have rightful claim on how that money is used, it is just ethically wrong for the Americans to commit the money now.

See Erik Eckholm's piece in the New York Times again after you've read the Iraq Revenue Watch report. The move is a disgusting piece of American colonialism in the worst tradition of money-grubbing through sheer imperial power. It is unfortunately probably not illegal, just revolting. And, it is another thing for which the Iraqis are going to find it difficult to forgive us.

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