Black market drains Iraq oil -
Pentagon out to stop ships plying booming trade
Robert Collier, Chronicle Staff Writer Wednesday, October 22, 2003
Dubai, United Arab Emirates -- A recent crackdown on oil smuggling in Iraq's southern ports has uncovered a smuggling chain that stretches all the way down the Persian Gulf to the glittering, ultra-rich cities of the United Arab Emirates.
In the past two weeks, U.S. and British forces operating in Iraq's coastal waters have detained dozens of ships carrying black-market oil that had been sold to them by corrupt Iraqi oil company employees.
It's a business that is costing the new Iraqi government tens of millions of dollars in lost taxes. But while the crackdown appears to have slowed the trafficking, officials and shipping experts in the gulf region say that because so many people depend on the revenue -- from poor seamen to ultra- rich sheikhs who run their emirates with feudal power -- the trade may be too deeply rooted to stop.
"It's so big, so massive and intertwined with everything, they can't stop it," said the general manager of a Dubai shipping company, who asked to remain anonymous.
The drain on oil revenues is weakening the effort to stabilize Iraq. U.S. and British coalition officials say that every day, an average of 2,000 tons of gasoline, diesel and crude oil has been sold by corrupt oil company officials to smugglers, who then load it onto ships and head into the Persian Gulf. That's enough to fill 65 tanker trucks, or about 10 percent of Iraq's current total output. It adds up to a loss of $250,000 a day, money that is sorely needed for rebuilding the wrecked country.
The sliver of Iraqi territory that fronts on the Persian Gulf is small - about 30 miles, between the Kuwaiti and Iranian borders -- but the number of vessels used for smuggling is so great that until recently allied military planners were simply overwhelmed in their efforts to foil the illicit oil trade.
Much of the smuggling is done on dhows -- beaten-up wooden boats, typically about 50 feet long, that look as if they can barely float. Small and rickety as they are, the dhows play a major role in regional shipping, carrying the majority of cargo from Dubai to small ports throughout the gulf. The craft number in the thousands, too many to closely monitor.
U.S. offensive
At the Pentagon on Tuesday, however, Defense Secretary Donald Rumsfeld and Gen. Richard Myers, chairman of the Joint Chiefs of Staff, announced the first results of Operation Sweeney, designed to prevent oil smuggling in southern Iraq.
"To date, we have arrested about 75 individuals, seized 20 full barges, 15 empty barges, eight oil boats, 36 petroleum tankers and nine pickup trucks containing fuel and 10 fuel pumps," Myers said.
Col. Mike Joseph Kelly of the Coalition Provisional Authority's justice unit says the smuggling masterminds are mostly Iraqis who live in the United Arab Emirates, while the ship crews tend to be Ethiopians, Iranians, Somalis and Syrians. Investigators say the destination of most of the contraband oil is Dubai and several of the United Arab Emirates' other member states.
In Dubai, the world's third-largest port by volume, with a skyline punctuated by futuristic office towers, shipping has two faces. The docks at the Port Rashid container terminal are lined with huge, ocean-going cargo ships, while the docks along Dubai Creek swarm with dhows.
"It takes us two days to get to Abu Falous," said Abdul Amin, the captain of a dhow that was preparing to sail for the lawless Iraqi port where many of the recent U.S. detentions have taken place.
Sweating in the sticky 95-degree heat, Amin, an Indian citizen, said the containers on board were carrying household appliances for Iraqis. He acknowledged that "before" he had carried oil, hidden in below-deck holds, on the return trip from Abu Falous, but "not now."
With dozens of dhows and larger ships confiscated recently, he said, captains and boat owners are running scared.
The biggest blow to the smuggling came in July, when the U.S. Navy detained the Navstar 1, a Dubai ship that was carrying 3,500 tons of diesel fuel from the Iraqi port of Umm Qasr bound for the United Arab Emirates.
In a Baghdad court in September, the ship's master and first mate were sentenced to seven years in an Iraqi prison and ordered to pay fines of $2.4 million. The ship was confiscated and sold.
The ship's owner, Adnan Jassem Mahmoud, an Iraqi based in Dubai, has maintained a low profile since the trial, and United Arab Emirates authorities have kept a lid of silence on his case. His company, Navstar Shipping Co., is not listed in Dubai directories, and local business and shipping councils said they never heard of him.
A Chronicle reporter obtained his mobile phone number from a shipping- industry source. When contacted Tuesday morning, Mahmoud nervously replied, "It's all lies, we are innocent. I can't begin to tell you how wrong it is what the Americans are doing."
He promised to meet later with the reporter after consulting with his partners, then hung up abruptly, and all further calls to him went unanswered.
Pirate Coast
In the 19th century, British colonial authorities called this area the Pirate Coast, and local Arab culture is imbued with tales of smuggling pearls and other goods under the noses of colonial powers.
The farther you go from Dubai's sleek high-rises, the anything-goes atmosphere increases. At Umm al-Quwein, a tiny emirate about 40 miles north of Dubai that is much poorer and dowdier than its neighbors, smuggling is more overt. A port worker said dhows and small tankers arrive almost every day carrying diesel fuel and gasoline from Iraq. He said the traffic has decreased in recent weeks, however, because of the U.S. crackdown.
"The oil is just for our use here in Umm al-Quwein. We are a small emirate, as you can see,'' he said, pointing down the street, past a string of cheap restaurants catering to the area's Indian and Pakistani workforce, toward the empty lots of abandoned hotel and office construction projects. "We need the oil. Nobody objects.''
Throughout most of the United Arab Emirates, however, a curtain of silence covers the smuggling issue. The country's media, which are independently owned but take their cues from the government, have ignored the Navstar case, as well as the United Arab Emirates' links to other boats caught smuggling Iraqi oil.
United Arab Emirates officials did not respond to a request for comment, and in an indication of the local sensitivity of the case, U.S. diplomats in the capital, Abu Dhabi, also declined to comment.
Officials at the U.S. Embassy said they had not followed the Navstar case and had not brought it up with local authorities, but they praised the country's authorities for their efforts to crack down on smugglers. In April 2000, the director of Dubai ports and customs was sentenced to 27 years for corruption, and his chief aide received a 31-year sentence for oil smuggling.
Indeed, the United Arab Emirates may escape any blame for the Iraqi smuggling trade because Washington has other interests to pursue with the country's emirs. With only 600,000 citizens, the country is the world's third- largest oil producer and has significant resources. The Bush administration is hoping the United Arab Emirates and other Persian Gulf nations will chip in billions of dollars in aid for Iraq at an international donors' conference that begins Thursday in Madrid.
Some U.S. officials in the region say the attention now being paid to smuggling may be misdirected. Oil smuggling was even more rife before the war, they say, when Iraqi dictator Saddam Hussein pocketed hundreds of millions of dollars a year by evading U.N. control over oil exports.
"The real issue is why the United States hasn't been able to get Iraq under control, not the smuggling," said an official with the U.S. Navy's 5th Fleet in Bahrain, which is leading the interdiction campaign.
"The corruption is so widespread because it always has been that way. Under Saddam, the smuggling revenues went into his pockets. Now, it's the little guys who keep the profits. But the business is the same, and it probably always will be." |
