DEFINITELY A PROBLEM: SURGE ON OIL

Bush’s ‘surge’ on Iraq’s oil
Ben Lando, January 16, 2007 (UPI)
- It is unknown if President Bush's last-ditch effort to turn around the downward spiral that is today's Iraq will have any affect on its struggling oil sector. But the oil sector, like Iraq, suffers from factional and sectarian fighting and an overall dangerous security situation. Oil revenue funds 96 percent of Iraq's budget, a vital factor for the country with the world's third-largest oil reserves.

- Bush's plan is for about 21,000 more troops to target growing violence in and around Baghdad and Anbar Province.
- In the north, where a quarter of Iraq's oil is produced, Sunni militia attacks have shutdown the export infrastructure and hindered refining. None of Bush's "surge" plan will address that, directly or indirectly…
The Shiite south [which produces the bulk of Iraq's 2 million barrels a day and is the sole exporter] has seen relative stability…much of the [Basra] population is someway involved in producing oil and shipping out most of Iraq's 1.5 million barrels of daily exports -- either as legitimate parts of the oil sector or in the growing oil smuggling trade.
- While Bush's plan is to target people or organizations in the Baghdad area, those who have followers in the south ready to rise up could pose a problem for security in the country and send shockwaves through global oil markets…

- "…an offensive that took on Shiite militias… is unlikely…” [Charles Esser, energy analyst at the Brussels-based International Crisis Group] said, since Prime Minister Nouri al-Maliki's government is to have a role in the "surge" and "the Shiite militias in the south are financially connected to the petroleum trade."
- …Moqtada al-Sadr, a Shiite cleric whose power grows daily and who was recently folded into the political process, could be in the crosshairs.
- "If they target Moqtada himself, all hell will break loose," said Juan Cole, professor of Middle East and South Asian history at University of Michigan and an Iraq expert.
- Douglass Macgregor, a retired U.S. Army colonel and now a defense and foreign policy consultant, says Sunni militias will just "melt away"…regroup…target U.S.-led coalition forces at a weaker point…
- Sadr's…reach isn't known. But, Cole says, the 500,000-strong Marsh Arabs, who have deep roots in Basra, have now aligned with Sadr and his Mahdi Army…
- The "surge" may not focus on Sadr's attacks on Sunnis. It could focus on other Shiite militias, perhaps even splinter groups formerly aligned with Sadr who have a strong presence in Basra and are causing havoc in Baghdad…

- If violence escalates in the south, especially in and around Basra, the largest port, and Iraq's largest oil fields, the already hurting industry might be inoperable, [Greg Priddy, an energy analyst for the Eurasia Group, a global political risk advisory and consulting firm] said.
- "The most likely point at which petroleum becomes involved in this would be possibly Mahdi Army attacks on U.S. military fuel convoys bringing fuel up from Kuwait and Basra to U.S. bases up north," Cole said. "If that happened, that would be pretty serious, of course. You can't run tanks and helicopter gunships without fuel…If things got out of hand between the U.S. and the Sadr movement those fuel convoys could be targeted," he said.