Reconstruction In Iraq at Risk From Corruption
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
BAGHDAD, Iraq – A new class of mafiosi sucking billions of dollars out of Iraq’s oil sector is crippling efforts to rebuild the country, according to an official report published in Baghdad.
The findings of the Oil Ministry’s independent inspector-general painted a sordid picture of massive abuses pervading every corner of the industry, from the well-head to the petrol pump. It said that since Saddam Hussein’s overthrow in 2003, the spread of smuggling had turned Iraq from a major exporter of petrol products into an importer.
“These problems have led to the loss of billions of dollars, both in direct actual losses and in lost opportunities,” the report concludes.
“This is robbing Iraq of historic opportunities for revival and reconstruction and of basic necessities for a ruined nation and heavily-burdened people.” It calls for “radical and urgent action” to stop the abuses and punish those involved, including new legislation and penalties to make oil smuggling a crime of “grand economic sabotage.”
The economics editor of the pan-Arab al-Hayat newspaper, Walid Khadduri, estimates that smuggling and other rackets in Iraq are costing the country more than $18 billion a year in direct losses and missed opportunities.
“There is no accountability, no punishment, and it goes all the way to the top – the smuggling gangs are in cahoots with local authorities and politicians because they need protection,” he said. “There was corruption under Saddam but nowhere near this.”
The ministry report says smuggling has created a “new class of grand mafiosi” and a corrosive environment of corruption that is affecting everybody in the oil business and destroying public faith in politicians. The report documents abuses ranging from direct theft from oil consignments and pipelines, to frauds involving false documentation for imported petrol.
Even roadside supplies of black-market petrol sold locally were worth an estimated $900 million a year to the illegal profiteers, the report says.
It estimates that 10 to 20% of the refined products Iraq is now obliged to import from neighboring Turkey, Syria, and Jordan are being smuggled back to countries of origin after receiving government subsidies to reduce prices for local consumption. This could be netting crooks up to $900 million a year.
