David Smith / The London Observer – 2008-02-25 01:02:33
http://www.guardian.co.uk/world/2008/feb/24/iraq.oil
Oil Giants Are Poised to Move into Basra
David Smith / The Observer
BASRA (February 24 2008) — Western oil giants are poised to enter southern Iraq to tap the country’s vast reserves, despite the ongoing threat of violence, according to Gordon Brown’s business emissary to the country.
Michael Wareing, who heads the new Basra Development Commission, acknowledged that there would be concerns among Iraqis about multinationals exploiting natural resources.
Basra, where 4,000 British troops are based, has been described as ‘the lung’ of Iraq by Prime Minister Nouri al-Maliki. The region accounts for 90 per cent of government revenue and 70 per cent of Iraq’s proven oil reserves. It has access to the Gulf and is potentially one of the richest areas in the Middle East, but continues to be plagued by rival militias.
Wareing, international chief executive of KPMG, was asked by Brown to help kick-start business in the Basra region in the hope that prosperity will bring stability. On his first visit last week, he met officials and business leaders but a sandstorm forced him to cancel a flight to Baghdad to meet Maliki and General David Petraeus, the US’s commanding officer in Iraq.
In the first interview since his appointment, Wareing, 53, told The Observer that security had improved significantly in recent months and was no longer an issue for investors. ‘If you look at many other economies in the world, particularly the oil-rich economies, many of these places are quite challenging countries in which to do business,’ he said. ‘Frankly, if you can successfully operate in the Niger Delta, that is a very different benchmark from imagining that Basra needs to be like London or Paris.’
Iraq’s parliament has yet to pass a hydrocarbon law setting out the terms oil companies will operate on and how profits will be split. ‘My sense is that many of the oil companies are very eager to come in now, and actually what they’re waiting for is the hydrocarbon law to be passed and various projects to be signed off. That is what is causing them to pause, rather than the security position,’ he said.
Wareing declined to name names but it is thought that Shell, Exxon Mobil and dozens of others are watching closely. The role of American corporations in Iraq has been hugely sensitive since the US-led invasion in 2003, which some critics said was motivated by the Gulf state’s oil wealth.
Wareing acknowledged: ‘If you look at any oil-rich country in the world today you will find there are real concerns in terms of how those energy assets are developed between the role of the multinationals and what is for the benefit of the local people. You’ll find that very much in Russia, for example. You can imagine in the future that is something the Iraqis will be focused on, but I haven’t really seen much evidence of that at all to date.’
Basra fell largely under the control of Shia militias after the ousting of Saddam Hussein and has witnessed a violent turf war, as well as high rates of murder and kidnapping. Corruption is rife, residents are afraid to use banks in case they are robbed and smuggling of oil and other goods helps fund militias and criminal gangs. Unemployment has been put at between 30 per cent and 60 per cent, and the agricultural sector is in serious decline as cheap imports grow.
The commission, funded by the Department for International Development, is a crucial part of Britain’s strategy in Iraq, following the handover of power in Basra to Iraqi forces last December. Ports, airports, agriculture and banking are also seen as possible investment areas. The commission has organised an investor conference in Kuwait next month, targeted at Iraqi expats among others, and will stage an event in London in April for European and possibly US companies.
Wareing, a father of six from Worcestershire, has often travelled to ‘challenging’ locations in his role with KPMG, and was asked to take the unpaid position by Brown, whom he describes as ‘a persuasive man’.
He said: ‘The security and prosperity of Iraq isn’t just about Iraq, it’s about the Middle East and probably wider than that as well. To be asked to play a small part in that isn’t something you get asked every day of the week.’
Hopes of UK Troop Cuts in Basra Dashed
David Smith / The Observer
BASRA (February 24 2008) — A final all-out battle for Basra is seen as ‘inevitable’ as persistent violence looks set to keep British troops mired in southern Iraq longer than was expected.
An uneasy truce has been maintained between Iraqi security forces and Shia militia groups since Britain handed over control last December and moved to a base outside the city. Gordon Brown announced that the number of troops in Iraq would be cut from 4,700 to 2,500 by spring but that timetable appears increasingly optimistic.
Last week four British soldiers were injured, one seriously, by a roadside bomb during a night patrol and three contractors, two Indian and one Sri Lankan, died on the British base after it was hit by 19 rockets in 24 hours. Two private security company staff were injured after a visit to the Basra Children’s Hospital. Negotiations for the release of a kidnapped British photojournalist continued without a breakthrough.
In an unusually frank analysis, Colonel Richard Iron, military mentor to the Iraqi commander General Mohan al-Furayji, said ‘There’s an uneasy peace between the Iraqi Security Forces [ISF] on the one hand and the militias on the other. There is a sense in the ISF that confrontation is inevitable. They are training and preparing for the battle ahead. General Mohan says that the US won the battle for Baghdad, the US is going win the battle for Mosul, but Iraqis will have to win the battle for Basra.’
Basra has been the scene of a violent power struggle between rival Shia factions, prominently Jaish al-Mahdi (JAM) led by the radical cleric Moqtada al-Sadr, who last week announced an extension to its six-month ceasefire. It has seen armed groups move into hospitals and university campuses to impose their religious and political ideology, bullying or even beheading women for going out to work or dressing inappropriately.
Asked who runs the city now, Iron, who has been in Basra since December, said: ‘There’s no one in charge. The unwritten rules of the game are there are areas where the army can and can’t go and areas where JAM can and can’t take weapons.’
He added that General Mohan was keen to maintain the British presence. ‘Mohan’s view is that having this force here – the tanks, helicopters, aircraft and so on – gives him power downtown. If there were no coalition forces here, his political power would be hugely damaged. If he is going to fight or face down JAM, he needs this back-up.’
Despite public expectations of a rapid wind-down and withdrawal, British battle groups continue to conduct joint operations with the ISF at the border, where the smuggling of Iranian weapons to Shia militias remains a major concern. In a combined anti-smuggling effort at the port of Umm Qasr earlier this month, British soldiers fired a £67,000 missile to sink a barge armed with machine guns and rocket-propelled grenades. But their primary role is now training and mentoring Iraqi troops and police.
Far from the 35sq km British garrison at Basra airbase now being dismantled, a £12m military hospital and five rocket-proof dining facilities are under construction. A £4m barrier dubbed the ‘Great Wall of Basra’, made of 13ft high concrete blocks each weighing 6 tonnes, will soon stretch 7.5km around the base. The siege mentality is underlined by accommodation where beds are shoehorned between sandbags and 7.5-inch thick concrete blocks. Body armour and helmets are worn or within reach at all times.
Speaking to The Observer in his first interview since taking charge two weeks ago, the new British commander, General Barney White-Spunner, refused to set a deadline for reducing the 4,000 troop contingent. ‘For the time being, the ISF value the assistance and training that we give,’ he said. ‘When they say thank you very much, that’ll be the time to go.
‘We are emerging from some dark days. There are criminal elements, there are splinter groups, there are people that don’t want to get on with the process. But given the rather tortuous path this poor country’s been on in the last 15 years, I think the progress it’s made is really encouraging.
‘It’s like we’ve been pushing a rock up a hill, we’re just on the top of the hill and once the economy takes off, when people have got jobs, health and education, that’s when things will really start going.’
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