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News, 6-12/4/02 (1) OIL POLITICS * Iraq Announces Cut in Oil Exports * Saudi Arabia Moves to Calm Fears of Oil Shortage * Iraqi Cutoff, Venezuelan Labor Problems Send Oil Prices Surging * Russia Holds Oil Exports Steady * SA undecided on oil embargo * Lawmaker proposes banning all US imports of Iraqi oil * Iraq's oil cutoff will hurt poor nations first * Saddam oil threat justifies drilling in Alaska, says Bush * Jordan and the Iraqi oil * IRAQ DIARY, Part 6: Oil and troubled waters [Pepe Escobar on the atmosphere in the Shi'ite oil territory around Basra.] * Oil slumps as Chavez ousted [This very sad piece of news is so clearly advantageous to the US that it is difficult to resist the assumption that they are behind it. Strike by a privileged section of the workforce followed by military takeover in Southern America. Sound familiar?] * Imvune boss was named in UN probe into Iraqi oil deals * Oil Companies Lose Faith in Iraq Contracts [It begins to dawn on the Russian oil companies that the US will never lift the sanctions until a situation occurs in which US companies can compete for Iraqi contracts, and so the deals the Russians have made with Iraq are worthless. Unless of course they summon up the courage to break the sanctions, as they should have done a long time ago.] OIL POLITICS http://cgi.wn.com/? action=display&article=12919906&template=baghdad/i ndexsearch.txt&index=recent * Iraq Announces Cut in Oil Exports The Associated Press, 8th April BAGHDAD, Iraq: Saddam Hussein said Monday he was cutting Iraq oil exports for 30 days or until Israel withdraws from Palestinian territories, an announcement that triggered an immediate increase in world oil prices. Oil Minister Amer Mohammed Rashid said the cutoff took place as Saddam spoke to the nation at about 2 p.m. local time, or 7 a.m. EDT. Gulsum Korkmaz, spokeswoman for the Turkish state-run pipeline company BOTAS, confirmed that Iraq had stopped exporting. Analysts have said such a boycott, which Saddam had earlier threatened, would not affect world oil supplies because other major members of the Organization of the Petroleum Exporting Countries have not agreed to join Iraq's call and other producers likely would make up the difference. The United States and Europe are the major buyers of Iraqi oil. Iraq produces more than 2.7 million barrels of crude oil daily, according to the OPEC Web site. In London, May contracts of North Sea Brent crude shot up on news of Iraq's embargo by $1.44 to $27.43 a barrel on the International Petroleum Exchange. They settled back somewhat to $26.98, up 99 cents from Friday's close. On the New York Mercantile Exchange, contracts of light, sweet crude for May delivery jumped to $27.20 before easing back to $26.88 a barrel, up 67 cents from Friday. Saddam said Iraq's top leaders met earlier Monday and decided ``in the name of the people of Iraq ... to stop exporting oil totally as of this afternoon through the pipelines flowing to the Turkish ports and the south for 30 days'' unless Israel withdraws earlier. He said that if Israel had not withdrawn within that 30 days, Iraq would consider what action to take. Iraq first called on Arabs to cut oil supplies last week as a way of pressuring the United States to force Israel to end its military incursions into Palestinian territory. ``The oppressive Zionist and American enemy has belittled the capabilities of the (Arab) nation,'' Saddam said Monday. He said the Israeli move into Palestinian territory, which included placing Palestinian leader Yasser Arafat under virtual house arrest, was intended ``to break the Arab and Palestinians will and force them to surrender with humiliation to the Zionist-American alliance.'' Saddam has portrayed himself as a champion of the Palestinian cause, a tactic that has helped him break the isolation imposed after Iraq's 1990 invasion of Kuwait and the ensuing Gulf War. President Bush has failed to win Arab support for another attack on Iraq, which he accuses of supporting terrorists and stockpiling weapons of mass destruction. Saddam's unilateral oil cutoff could pressure other Arab leaders to take similar measures. Iranian supreme leader Ayatollah Ali Khamenei said Friday that Islamic countries should stop supplying oil for one month to countries with close relations with Israel. Libya announced Monday that it supported the call, in a report on its state news agency, JANA. The first hints from Iraq last week of a possible boycott caused a brief increase in world crude prices. ``The Iraqi decision will certainly have an immediate impact on the prices given the volatile situation in the Middle East and recent oil disruption in Venezuela,'' said Walid Khadouri, editor in chief of the Middle East Economic Survey. ``But it is not expected to impact the supplies in the world market.'' Iraq, Iran and Libya all belong to OPEC, which pumps about a third of the world's crude. Hans Redeker, a strategist with BNP Paribas, told Dow Jones Newswires that OPEC and other oil producers, such as Russia, likely would increase output to compensate for Iraq's cutoff. Ali Rodriguez, OPEC secretary general, told Dow Jones on Monday he would consult all OPEC oil ministers concerning Iraq's announcement. Last week, he told Dow Jones an oil embargo would run counter to the organization's goal of promoting secure oil supply and stable prices. A boycott would be ineffective without Saudi Arabia and Kuwait, who have rejected Iraq's call to use oil as a weapon. Many Gulf states depend on oil revenues for more than two-thirds of government income and cannot afford to stop sales. The last time oil-producing Arab nations used oil as a political weapon was in 1973, when reduced exports caused a global energy crisis. Since then, the world's wealthiest nations have created the International Energy Agency to provide a cushion against any similar disruption. Based in Paris, the IEA can tap into 4 billion barrels of strategic oil reserves maintained by its member countries. That's equal to more than five years of Iraqi production, based on the IEA's estimate of Iraq's output in January. In November 2000, Saudi Arabia led the adoption of a pledge by OPEC and other major exporters that oil would not be used as a political weapon. Iraq's trade with the outside world is restricted by U.N. sanctions imposed after its 1990 invasion of Kuwait. However, Iraq is allowed by the United Nations to sell unlimited amounts of oil to buy food, medicine and other humanitarian supplies, and to pay war reparations. Analyst Khadouri said Iraq had earned enough under the oil-for-food program to ride out a month without sales. http://www.washingtonpost.com/wp- dyn/articles/A18628-2002Apr9.html * Saudi Arabia Moves to Calm Fears of Oil Shortage by Ghaida Ghantous Washington Post (from Reuters), 9th April DUBAI, April 9Saudi Arabia moved on Tuesday to calm fears of a global oil crisis, assuring markets rattled by Iraq's suspension of exports that it will guarantee world crude supplies. Oil minister Ali al-Naimi was quoted in Saudi newspapers saying that Saudi, the world's biggest oil exporter, would ensure reliable deliveries. "I believe there is no threat to the reliability of worldwide oil supplies, and the reliability of Saudi Arabian supplies in particular," the Saudi papers quoted Naimi saying. Oil prices climbed a dollar a barrel on Monday after Iraqi President Saddam Hussein announced Baghdad was suspending exports for a month in protest at Israel's incursion into Palestinian areas of the West Bank. Naimi's comments helped cool prices on Tuesday with Brent blend crude in late-morning London trade off 37 cents at $26.65 a barrel. OPEC has decided that for the time being there is no need to release extra volumes. Saudi Arabia and other producers have plenty of spare capacity to hand in prevent any shortage. Asked what action Riyadh would take in light of the calls from Iraq to join its embargo, the Saudi-owned Asharq al-Awsat newspaper quoted Naimi saying: "The kingdom's position regarding the reliability of supplies has been announced on more than one occasion and I do not believe that anything could threaten reliability of supplies on the global level." "Whatever may be said, we have proven in many previous crises that Saudi Arabia and OPEC are reliable and stable sources of oil supplies," another paper, Saudi Gazette, quoted him saying. Iraqi Oil Minister Amir Muhammad al-Rasheed told Reuters on Monday that Baghdad had asked fellow OPEC member countries to join its campaign, or at least not to raise production. Iran and Libya have given their support to a ban but conditional on a blanket embargo by all Muslim producers, a policy ruled out by Saudi Arabia. OPEC Secretary-General Ali Rodriguez said he had spoken to cartel oil ministers and they saw no immediate need to raise supplies. Ministers will keep a close watch on the market. And the West's energy watchdog, the International Energy Agency, said there was no need for panic. "It's regrettable but not a huge volume," said IEA Executive Director Robert Priddle of the Iraqi outage. "The market has not reacted sharply to this." In the event of an emergency, the IEA can order a release of reserves from stockpiles held among its industrialised 25 member countries. The European Union said on Tuesday its oil experts will meet to consider the market impact but there appears little prospect at this point of any need to release stocks. Nevertheless, the rise in oil prices is raising concern among some economic policy makers that inflated energy costs could stifle the infant global recovery. The Asian Development Bank said in an annual review that high oil prices were the main risk for the region's growth rate. German Finance Minister Hans Eichel said Germany and the United States recognised that oil prices represented a threat to economic growth. "We are both convinced that we must do everything possible to avoid a situation in which the oil price dampens economic growth," Eichel told reporters after a meeting in Berlin with U.S. Treasury Secretary Paul O'Neill. Iraq's stoppage comes as Baghdad seeks to rally support in the Arab world against a military strike by the United States, which sees Baghdad as a threat to international security. By supporting the Palestinian cause, Iraq makes it difficult for Arab countries to join any alliance against Saddam. On the one hand Saudi Arabia will not want to anger Arab public opinion by quickly filling the gap in Iraqi supplies, dulling the impact of Saddam's move, but above all Riyadh needs to underline its status as a reliable source of oil to the West. "Iraq has put up a picket line and any oil producers in the Arab world seen crossing it would be scab labour," said a trader at a major oil company in London. Iraq's oil minister Rasheed said the halt on nearly two million barrels a day of exports was designed to cause discomfort for Israel's ally the United States, buyer in recent months of more than half Iraq's output. Baghdad's crude accounts for about four percent of international oil trade, providing about 10 percent of OPEC's 25 million barrels daily. Other OPEC producers can easily cover the Iraqi outage if prices start to run out of control. Saudi Arabia can deliver its maximum output capacity of 10.5 million barrels a day to the market in 90 days. Riyadh, now pumping at about 7.4 million barrels daily, holds the lion's share of OPEC's five million bpd of spare capacity. http://hoovnews.hoovers.com/fp.asp? layout=displaynews&doc_id=NR200204091180.3_b55a001 407944e cf * Iraqi Cutoff, Venezuelan Labor Problems Send Oil Prices Surging Hoover's (Financial Times), 9th April [.....] The Iraqi move was compounded by a sharp drop in Venezuelan oil exports Monday, due to an escalating dispute at the national oil company, Petroleos de Venezuela. Iraq and Venezuela jointly export about 4.5 million barrels a day, or about 6 percent of global supplies. There were other troubling announcements, too. Friday, Iranian supreme leader Ayatollah Ali Khamenei urged Islamic countries to stop shipping oil for one month to countries having close relations with Israel. Libya announced Monday that it supported the call. Both nations also are members of OPEC, the Organization of the Petroleum Exporting Countries. However, Iran and Libya are unlikely to join with Iraq, argued Jan Stuart, head of research for global energy futures at ABN Amro in New York. Iran's economy is too weak to go for long without precious oil revenues, and Libya is worried about jeopardizing its slowly warming ties with the United States, Israel's main backer, Stuart said. "The OPEC nations are making real good money right now, so I'm not sure they want to cause a lot of problems," Van De Pol agreed. Also, he said, Saudi Arabia, Russia and other major producers could step up their oil flows to offset any losses. "Right now, they don't want to rock the boat on oil," Van De Pol said of the Saudis in particular. California State Automobile Association officials said any drop in Venezuelan crude production should be short-lived because of that's nation's dependence on oil revenues. "It's in their best interest not to have production cuts," CSAA spokesman Atle Erlingsson said. And while gasoline prices have risen in recent weeks, they still remain lower than they were a year ago, he reported. As measured Friday, the average price in San Joaquin County for regular, unleaded self-serve gasoline was $1.64 a gallon, up from $1.39 a month ago, but well-below the $1.82 recorded last year. Statewide, the average per-gallon price Friday was $1.66, up from $1.40 a month ago, and less than the year-ago price of $1.79, Erlingsson reported. Planting, of the American Petroleum Institute, noted that President Bush, in a pinch, could order the release of oil from the nation's Strategic Petroleum Reserve. The reserve holds 560 million barrels of crude oil. It could offset the loss of Iraqi oil imports for two years, given the current rate of about 750,000 barrels per day, Planting calculated. The Associated Press contributed to this report. http://cgi.wn.com/? action=display&article=12938595&template=baghdad/i ndexsearch.txt&index=recent * Russia Holds Oil Exports Steady The Associated Press, 9th April MOSCOW (AP) Russia has no immediate intention to boost oil exports because of Iraq's halt in crude exports, but will decide in mid-May whether to do so, a senior Cabinet official said Tuesday. Russia's aggressive young oil companies want to drop voluntary export restrictions that were agreed upon under OPEC pressure to stabilize world prices, because prices for exported oil significantly exceed Russian domestic prices. World prices jumped higher Monday after Iraq's move, which was aimed at showing support for the Palestinians in their conflict with Israel. But Deputy Prime Minister Viktor Khristenko warned that the price hike could be short-lived. ``The prices are currently high, but factors that determine them can hardly be called stable and long-term,'' Khristenko said, according to the ITAR-Tass and Interfax news agencies. ``It is erroneous and premature to draw instant conclusions.'' Khristenko said Russia would stick to its earlier approved exports regime for the second quarter while closely following the market situation. In mid-May, the Cabinet ``will sum up the intermediate results of monitoring and come up with possible additional decisions on that basis,'' Khristenko said on a trip to Kazakhstan. The Russian Foreign Ministry issued a statement Tuesday saying that ``Moscow is pondering possible consequences of the Iraqi leadership's decision to suspend oil exports for one month,'' and expressing concern over anything that exacerbates the situation in the Middle East. Alarmed by decreasing world prices for oil, the Organization of Petroleum Exporting Countries and the world's other major oil exporters Russia, Norway, Mexico and Angola have agreed to keep just under 2 million barrels a day off world markets until the end of June, although the non- OPEC producers have reserved the right to abandon the deal earlier. Under the deal, Russia is supposed to cut its crude exports through national pipelines by 150,000 barrels a day from the levels of the third quarter of 2001. Most of Russia's oil industry is eager to see the restrictions end. Domestic refineries are currently paying $4.50 a barrel while foreign lifters are paying $23 a barrel. The main losers from Iraq's decision Monday appear to be Russian oil companies which buy a large amount of Iraqi crude under the United Nations' oil-for-food program. Russia, Iraq's top trade partner and its closest ally on the Security Council, has long backed Baghdad's demand to lift the U.N. sanctions. http://news.24.com/News24/Finance/Economy/0,4186,2 -8-25_1166184,00.html * SA undecided on oil embargo News 24, 9th April Cape Town - South Africa will not decide immediately whether to seek an alternative source for a two million barrel oil shipment ordered from Iraq and caught up in Baghdad's oil export halt, a senior official said on Tuesday. Strategic Fuel Fund (SFF) head Renosi Mokate said that half a four million barrel consignment of Iraqi Basrah Light ordered by South Africa had not been paid for or loaded by the time Iraqi leader Saddam Hussein froze exports for 30 days on Monday. "This has only just happened. It is too soon for us to know what we will do in response to the Iraqi decision," said Mokate, whose SFF is a subsidiary of the state's Central Energy Fund. Saddam took the move in protest against Israel's incursions into Palestinian-controlled territories. The SFF awarded a tender in December for four million barrels for the country's strategic reserve. The reserve has been moved, through a series of sales and new purchases, from underground storage in a disused inland gold mine to a more modern storage and shipment terminal at Saldanha Bay, Cape Town. The SFF is responsible for strategic reserves, but not for commercial purchases. The shipment had been ordered for delivery by April 20 to round off a reserve transfer programme launched in 1999. Mokate said that though the blocked Iraqi shipment was for reserve purposes, South Africa could not necessarily afford to wait indefinitely for delivery. It was the last shipment of a programme to build an eight million barrel reserve. "We do have permission to move crude through the strategic reserve when we think it appropriate to do so," she said, adding that the SFF was entitled to trade for profit if an opportunity arose. Mokate said Imvume Resources and its foreign strategic partner, Glencore International AG, had produced all the necessary authorities from the United Nations and Iraq's own oil company to deliver the oil under the terms of an oil-for- food programme. Iraq is under international sanctions, but is allowed to trade a limited amount of oil for food and other essential civilian requirements. South Africa covers 45% of its oil needs locally by converting coal and gas into petroleum products and from small domestic sources. Imports come mostly from Saudi Arabia, but have included Nigerian and Iraqi crudes suitable for the country's refineries. http://www.worldoil.com/news/newsstory.asp? ref=http://188.8.131.52/feeds/worldoil/new/articl e_e.asp?e nergy24=249359 * Lawmaker proposes banning all US imports of Iraqi oil World Oil (AFP/Energy 24), 9th April A top US lawmaker, infuriated by Iraq's temporary oil export stoppage, on Tuesday vowed to introduce legislation banning US oil companies from purchasing any Iraqi oil. "I have the amendment handy," Republican Senator Frank Murkowski told reporters, adding he had already discussed the issue with the White House. He did not say how President George W. Bush's administration had reacted to the proposal. Murkowski was one of a group of Senators and Jewish community leaders who blasted Iraqi President Saddam Hussein's decision to halt oil exports for a month in protest at the United States backing of Israel in the Middle East conflict. "It's time we not allow Saddam Hussein to dictate or shape the way we engage foreign policy in the Middle East," said Senator Larry Craig. Craig, along with Murkowski, is a fierce supporter of a contentious plan to open up the Arctic National Wildlife Refuge to oil drilling as part of a comprehensive energy bill currently on the Senate floor. Supporters of the initiative have presented it as a national security priority. "We need to look at the realities of how we're going to meet our energy needs, with or without the Mideast to help," Murkowski told the Senate. Baghdad has made no secret of the fact its decision aimed at "directly hurting" the US economy by taking around two million barrels per day (bpd) off the market, around half of which ends up in the United States via third parties. There are "those who seek to destroy the United States and our great ally Israel," Murkowski said, describing the war on the Middle East as a "tinder box" that had exploded. http://atimes.com/global-econ/DD10Dj01.html * Iraq's oil cutoff will hurt poor nations first by Abid Aslam Asia Times (from Inter Press Service), 10th April [.....] Those at risk include the former Asian "tigers" clawing their way back from economic crises that began in 1997. "These countries have very little cushion to absorb these shocks," said Anindya Chatterjee, Asia strategist at IDEAglobal. "They've gone through sharp contraction. They're just beginning to show symptoms of economic revival. There is a sense that exports have bottomed out. At a time like this, an oil price hike can really hurt." Higher oil prices would drive up the costs of producing and transporting the exports of such struggling economies as Thailand and South Korea, Chatterjee said. "An increase in the costs would affect profitability and hence investment decisions." "The West is not nearly as dependent upon oil as it was in 1973," said US-based intelligence consultants Stratfor. "The United States consumes only 60 percent as much oil per dollar of GDP [gross domestic product] generated as it did in 1973," the last Arab oil embargo. The reverse is true for much of Asia and for countries such as Brazil: net oil importers whose reserves have dwindled and whose energy efficiency has stalled or deteriorated. Iraq exports oil under a humanitarian exchange with the United Nations, permitted as an exception to 1990 Gulf War sanctions. Cash from the sales is banked in a New York escrow account controlled by the United Nations and released only for food and medicines. UN officials confirmed on Monday that Iraqi oil had stopped flowing to export terminals. The United States and Europe are Iraq's major customers, according to OPEC. Despite Washington's hostility to Saddam, the United States buys half of Iraq's oil exports to satisfy 9 percent of US import demand. Venezuela supplies 15 percent of US oil imports, according to US government data. Exports reportedly almost dried up on Monday because of an escalating dispute at the national oil company, Petroleos de Venezuela, between some managers and new executives appointed by President Hugo Chavez. OPEC's 11 members account for 41 percent of the world's crude-oil production and 55 percent of the oil traded internationally, according to the cartel's website, www.opec.org. http://www.thetimes.co.uk/article/0,,3- 262466,00.html * Saddam oil threat justifies drilling in Alaska, says Bush by Damian Whitworth The Times, 10th April PRESIDENT BUSH is using Iraq's threat to curtail the world's oil supply to try to save his cherished hope of opening up Arctic Alaska to exploration, as Republicans on Capitol Hill appear to be losing the battle over the issue. With the Democratic-controlled Senate determined to kill plans to drill in the Arctic National Wildlife Refuge, Republicans are considering abandoning a key vote on the matter. Mr Bush, who has put exploitation of the reserve's coastal plain at the heart of his energy plan, said that Saddam Hussein's decision to halt oil exports in protest at Israel's action in the West Bank proved the need to make the US more self-reliant in oil production. Mr Bush told business leaders that Saddam would try to cut off America's energy supply, adding: "What more reason do we need than to have good energy policy in the United States to diversify away from somebody like him?" The refuge is a 1.5 million-acre stretch of wilderness along Alaska's coastal plain and Mr Bush's plan to investigate its oil potential has been opposed by environmentalists and Democrats since the presidential election. The Interior Department estimates that a new Alaskan field would supply 1.9 million barrels of oil a day. The US uses 19 million barrels a day, about 800,000 barrels a day from Iraq, its sixth biggest supplier. Mr Bush said: "Once production is up and running, on a very small footprint in the middle of this vast country, we can produce as much oil as Iraq produces on the world market." He will be hoping that he can convince enough Republicans and moderate Democrats to support drilling in an amendment to the energy Bill that is being debated this week. So far only 40 out of 100 senators have said that they are in favour of opening the refuge, 50 are against drilling and ten are undecided. Rather than allow Mr Bush to suffer a major defeat in a vote this week Republicans are suggesting that the entire matter should be postponed. It would then be revived when the House, which has already passed its own Bill supporting drilling, meets the Senate in committee to iron out differences in their two Bills. Such a committee is almost certain to come up with a compromise and Republicans believe that that may be their best hope, given the public antipathy to exploration. One possibility might be a proposal to open up just the northwestern third of the reserve, but even that would face fierce Democratic opposition. Mr Bush's difficulty is that in a Congressional election year there is wariness on Capitol Hill about being too closely associated with the Bush Administration on energy issues. Ever since the presidential election Mr Bush and his Vice- President, Dick Cheney, have been cast as former oilmen with close links to their friends in the industry. The collapse of Enron, Mr Bush's biggest political patron, has only enhanced that image problem and Mr Cheney has been under fire over his discussions with energy bosses while drafting the White House energy plan. Opponents of drilling question how much oil exists in the region and are portraying Mr Bush as overly eager to please his sponsors. John Kerry, a Democratic senator and likely presidential candidate, said: "In the last year they've tried every excuse under the Sun to destroy the pristine wilderness California's energy crisis, a sagging economy, the war on terrorism and those excuses have failed because US senators know the difference between real energy policy and big oil's lust for our last acres of pristine wilderness." http://www.arabicnews.com/ansub/Daily/Day/020410/2 002041002.html * Jordan and the Iraqi oil Arabic News, 10th April Jordan has stressed that supplies of the Iraqi oil to it will not be affected by the decision taken by Iraq to stop its oil exports to the world for one month. A decision taken on Monday by Iraq in protest of the flagrant Israeli aggression against the Palestinian people. The Jordanian minister of energy and mineral resources Muhammad al-Batayneh said that Jordan is contacting with Iraq to this effect, stressing that Jordan will not be affected by this decision because its oil supplies are made by trucks. Other Jordanian governmental sources said that Jordan is linked to Iraq by bilateral agreements and it was never the case that Iraqi oil supplies to Jordan were obstructed despite all conditions the region had passed. http://atimes.com/front/DD11Aa02.html * IRAQ DIARY, Part 6: Oil and troubled waters by Pepe Escobar Asia Times, 11th April FAO, on the Iran-Iraq border - From this particular point of view - right in the middle of the rich oilfields of both Iraq and Iran - Saddam Hussein's decision to freeze all Iraqi oil exports for one month from Monday as punishment for United States support of Israel's military onslaught in Palestine feels like a nuclear bomb is about to be exploded. For the moment, the measure affects only 3 percent of the world market. But if followed by other Organization of Petroleum Exporting Countries (OPEC) member nations - such as Iran, Libya or Venezuela - it could provide the White House and the Pentagon with the perfect excuse to attack Iraq sooner rather than later. The United States ranks ninth as an importer of Iraqi oil. The all-important paragraph of Saddam Hussein's speech - endlessly replayed on Iraqi TV - reads as follows in the official Iraqi News Agency translation: "The Revolution Command Council, the Iraqi leadership of the Baath Arab Socialist Party, and the cabinet in their meeting on April 8, 2002, declare, in the name of the faithful, honest, mujahid, noble, Iraqi people: completely stopping oil exports starting from this afternoon April 8, through the pipelines going to the Turkish port on the Mediterranean, and our ports in Basra for a period of 30 days, after which we will further decide, or until the Zionist entity's armed forces have unconditionally withdrawn from the Palestinian territories they have occupied and have shown respect for the will of the Palestinian people and the Arab nation to sovereignty, security, dignity and life." For the Revolutionary Command Council - the supreme executive power in Iraq - both Baghdad and Ramallah in Palestine represent the same struggle. This is the core of the Iraqi diplomacy for the crucial next few months - while for the Bush administration the two thorny issues are absolutely delinked. The only foreign news on Iraqi TV is Palestine, most of the images borrowed from al-Jazeera and Abu Dhabi TV. The pan-Arabism of the regime is more than evident in an array of explosive video clips dedicated to the Palestinian cause. Recently, in Kufa and Najaf - the holiest cities in Islam after Mecca, Medina and al-Quds (Jerusalem) - Asia Times Online learned about the existence of training camps where Iraqi volunteers are being prepared to fight a jihad against the "Zionist entity" alongside their Muslim brothers in Palestine. Muhamad Abdel Saheb is in charge of the protocol department of the Kufa mosque - where Ali, the Prophet Muhammad's brother-in-law, was mortally blessed in 631. Kufa is the birthplace of the Shi'ite faith. Saheb says that "we Iraqis are waiting for a sign from the president to declare a jihad. If the president makes a sign, everybody will answer his call". Saheb stresses that "jihad and political struggle, it is the same thing". In Najaf, where the "Prince of the Believers" Ali is buried in a magnificent mausoleum, the imam, Dr Haider Muhamad Hasan Alkelydar, confirmed the existence of the jihad training camps, some of them shown on Iraqi TV. Government officials such as Ahmed, who works in the Najaf administration, are able to say, "I want to be a martyr in Palestine. I can't do it only because I have to take care of my mother and my wife." Fao is also Shi'ite country. On the road from Basra to Fao, about 10 kilometers away, lies Iran, with Iraq and North Korea a part of Washington's axis of evil. Behind a bridge over the river Al Karon it is possible to see Abadan - arguably the largest refinery in the world - its steel tubes gleaming against the sky. Most of the terrain is still heavily mined, a memory of the Iran-Iraq war of several decades ago. By the roadside, black billboards exhort the glory of Iraqi martyrs. Fao lies beside the Shatt-el-Arab, where Iran and Iraq are separated by a river stream no wider than 800 meters. About 5,000 fishermen live on the Iraqi side. Iranian police boats patrol the river, enforcing a virtual divide to ensure that the locals don't practice their fishing in the neighboring country's waters. The absolute majority of the boats and trawlers carry the Iraqi flag. On the Iranian margin there's a "monument to the martyrs". During the Iran-Iraq war, the Iranians repeatedly tried to build a bridge over the river, always bombed by the Iraqis. The Iranians thought the occupation of Fao during the war, in 1986, was definitive. But the Iraqis took the city back in 1988 through the operation "Blessed Ramadan" coordinated by Saddam Hussein. After Fao, Iran lost any hopes of winning the war. Fao was rebuilt through a popular campaign, but again partially destroyed by American bombing during the Gulf War in 1991. To learn about Saddam Hussein's desire to coordinate an oil shock such as in 1973, uniting all the Arab world is all the more powerful when juxtaposed with the fact that Iran has already approved an Iraqi proposal to use oil as a weapon. Even before Monday's decision, oil was the incendiary issue in Iraq. Asia Times Online had definitive assurances from Paris and then Baghdad that it was possible to examine the current state of the Iraqi oil industry in Basra. But then we learned on the spot, on Saturday, that since April 1 there's been absolutely no way to visit the oilfields. We were still in Baghdad at the time, but we were not informed. A spokesman from the governor's office in Basra says that the order came from the Ministry of Communication. He adds that a British Broadcasting Corp team waited in Basra for a week trying to do the same thing, and then left empty- handed. The reason for the ban, "We are in a state of war." Later, we learn from the Information Ministry in Baghdad that the order actually came from the Oil Ministry: the decision was made by the Revolutionary Command Council. We remind Basra officials that the Ministry of Information in Baghdad stressed that the governorship of Basra would facilitate any authorizations for a visit to the oil fields in southern Iraq, and also to the port of Abu Bakr. A cabinet secretary finally agrees to set up an interview so that we can have some sort of explanation straight from the governor of Basra. The next day, one Karin Murad, the governor's director of information, again changes the rules. For starters, all the questions in the interview have to be submitted in advance. And the governor does not take questions related to oil. Ten minutes later, even more changes. Murad says that Basra was waiting for permission from the Ministry of Interior for the governor to be interviewed - and the permission was denied. The previous day, the cabinet secretary had the permission from the governor himself for the interview. Murad then says that we can "shake the governor's hands". We decline. The episode reveals one of two things: either the Shi'ite southern administration does not care to observe any demands from the central government - and it is already busy preparing a secession; or, more probably, the "state of war" paranoia is a diversionist tactic to cover the fact that any minor decision in Iraq has to be fully scrutinized by the central government. Consequently, for the moment the oil industry is off-limits to "foreign spies". As far as Saddam Hussein's explosive gesture is concerned, for the Iraqi and Arab world mindset, the US has given a free hand for Israel to destroy the Palestinian Authority. An united Arab world might be able to exert some kind of pressure for the US to rein in Ariel Sharon. But it is getting increasingly harder to figure out how Iraq might be able to convince the Arab world and other OPEC countries to stand up against America - and simultaneously prevent a wrathful, inevitable American attack on itself. http://news.24.com/News24/Finance/Markets/0,4186,2 -8-21_1167756,00.html * Oil slumps as Chavez ousted News 24, 12th April London (Reuters): Oil prices fell heavily on Friday after Venezuelan President Hugo Chavez resigned under pressure from the military, reigniting oil market fears that the Opec producer might revert to a policy of cheating on cartel output limits. Staff at the Venezuelan state oil company ended a strike that hit exports this week and said they would resume normal supplies from the world's fourth largest exporter. Brent blend crude for June ended down US$1.44 in London at $23.19 a barrel. In New York, US light crude slumped $1.68 to $23.31 a barrel, a five- week low. Chavez was arrested by the military in the wake of a massive demonstration on Thursday when 15 people were killed by snipers that officers said were allies of Chavez. Businessman Pedro Carmona will lead a transition government before an election. When Chavez came to power in 1999 he ensured the Latin American producer observed its Opec output limit after years of quota cheating. But the head of sales at state company Petroleos de Venezuela (PDVSA) said after Chavez's ousting that production should be set according to market conditions and not Opec quotas. "Let's not talk about quotas. Let's talk about the possibilities Venezuela has in the petroleum business," Edgar Paredes told reporters at a press conference. "If we've got the resources and the market provides us with possibilities, we should take advantage of them." Former Venezuelan Oil Minister Humberto Calderon Berti, an ally of Carmona's, said the next government might well abandon Chavez's strict application of Opec quotas and recapture market share lost over his three-year tenure. "I think policy will be changed. It will be orientated more towards capturing markets while maintaining ties in Opec. Its going to be a policy of production expansion within Opec in an orderly way," he said. Chavez ordered a change in oil policy following the collapse of crude prices in 1998, caused in part by the previous Venezuelan government ignoring its Opec quota. Caracas fell out with leading cartel power Saudi Arabia and oil slumped below $10 a barrel. A heavy slide in Venezuelan oil production capacity during the Chavez years might mean a new government will be unable to threaten any early repeat of pre-Chavez policy. Chavez came under pressure to quit after executives and workers at PDVSA began protests six weeks ago. The dispute widened this week with business and labour leaders backing an indefinite general strike. On Friday dissident PDVSA employees were heading back to work and pledged to return exports to normal. "We are going to get PDVSA going as it normally does and that should be 100 percent starting Monday," said Luis Roja, President of PDVSA Gas. Venezuela is the world's fourth largest oil exporter and a leading supplier to the United States. As much as 500 000 barrels a day of its 2.6 million bpd of crude output was cut by the strike and refinery operations severely curtailed. Last year Venezuela accounted for 13% of U.S. petroleum imports. [.....] www.busrep.co.za/html/busrep/br_frame_decider.php? click_id=345&art_id=qw1018596961926I515&set _id=60 * Imvune boss was named in UN probe into Iraqi oil deals by Edward West Business Report (South Africa), 12th April Cape Town - Sandi Majale, the chairman of Imvume Resources, the oil trading empowerment company that has won a R1 billion state tender to supply 4 million barrels for the strategic oil reserves in Saldanha Bay, used to be a director and co- owner of a local oil trading company called Montega Trading. Last year Montega Trading was implicated in a UN investigation into the alleged busting of sanctions on the sale of Iraqi oil. Renosi Mokate, the head of the Strategic Fuel Fund (SFF), which awarded the tender, said the fund was aware that Majale had been implicated along with a Swiss company, Glencore International. But the two companies had never been called on to repay the $3 million profit they were supposed to have made on the oil deal, and Glencore had subsequently been allowed to continue to buy Iraqi oil, Mokate said. So far, 2 million barrels of the R1 billion, 4 million barrel tender for the supply of Basrah light have been loaded on to the vessel Sebang under UN approval and are due to be loaded into the Saldanha storage tanks towards the end of the month. Mokate said the fate of the other 2 million barrels would be known within a matter of days, considering Iraq's one-month suspension of oil production. The oil was purchased in terms of the Iraqi "oil- for-food programme". Under this programme, the price of oil is fixed and the proceeds from its sale must be handed over to the UN. In terms of the latest R1 billion tender, the oil was bought from Iraq by a Russian company called Slavnet. It was then sold to Glencore International, sold again to Imvume, and finally sold to the SFF. Lawrence Venkile, a spokesperson for Imvume Resources, said Majale had since disposed of his equity in Montega Trading. Referring to Montega's involvement in the alleged sanctions busting, Venkile said that as far as he was aware, Montega Trading had bought the oil last year from the Iraqi state oil marketing company Somo. Montega had then contracted Sopak, a subsidiary of Glencore International, to do the shipping and marketing of the crude oil. Montega at the time had not been unaware of the problems associated with Sopak's diversion of the oil to Croatia, but Montega had since resolved its issues with Glencore, while Glencore had been allowed by the UN to continue trading in Iraqi oil, he said. Glencore used to be owned by controversial financier Marc Rich and was sold to a Russian consortium. http://www.themoscowtimes.com/stories/2002/04/12/0 41.html * Oil Companies Lose Faith in Iraq Contracts by Dmitry Zhdannikov Moscow Times, 12th April Oil firms cannot tap Iraq's reserves because of sanctions, but would have to compete with Western majors if sanctions are lifted. Russian oil firms, once the biggest friends of Iraqi leader Saddam Hussein, say they have lost hope that deals they signed to develop Iraq's vast oil and gas deposits will ever be fulfilled under the current regime. Sources in Russian companies said that as long as Saddam remains in place, they no longer believe the United Nations will lift sanctions against Baghdad and pave the way for tapping into Iraqi oil reserves, the second-largest in the world. And if Saddam were removed, the Russians would lose their advantage, as foreign rivals are already prepared to move in. "We do not have any illusions any more. It's clear that the United States will never allow us to work in Iraq under Saddam. And we ourselves are not rushing any more either. We are waiting," a senior source in a Russian oil major said. "How can you lift sanctions against someone they call an axis of evil?" said a senior source at another large Russian firm that has agreements to invest in Iraq. "We can go on only with small contracts. Large deals are hopeless. First due to sanctions. Eternal sanctions until Saddam quits. And when he quits, Russian firms will face very tough competition from Western rivals," another senior source said. U.S. President George W. Bush has called Iraq part of an "axis of evil," along with Iran and North Korea, and says he wants Saddam removed from power. Friends in the Soviet era, Russia and Iraq kept close political and economic ties after the Soviet Union collapsed in 1991 and United Nations trade sanctions were slapped on Baghdad after its 1990 invasion of Kuwait. Russian firms, bolstered by Moscow's ties with Baghdad, are among the largest lifters of Iraqi crude under the UN oil-for-food program. They are annually buying oil worth $5 billion. They are also keen to tap into Iraqi oil reserves and have signed a number of deals with Bagdad. But work has been frozen due to sanctions. Russia's biggest oil firm, LUKoil, agreed in 1997 to invest together with Zarubezhneft and Mashinoimport $4 billion into the huge West Qurna oil field, which has total reserves of 8 billion barrels, but refused to defy sanctions by starting work. This was also the case with state-owned medium- sized oil firm Slavneft, which agreed to develop the Subba oil deposit in Iraq with reserves of up to 800 million barrels. Each year, Russian companies have said they hoped to start investing in Iraq very soon, expecting the end of sanctions. But lately they have stopped making optimistic statements. However, some companies said smaller, existing contracts with Iraq allowed under sanctions, such as oil service or oil-trading deals, were profitable enough to make participants happy despite growing tension between Baghdad and the West. Gazprom signed contracts worth $18 million to repair gas stations in Iraq and supply trucks and machines. Oil firms Tatneft, Slavneft and Zarubezhneft have deals worth tens of millions of dollars to drill oil wells in Iraq to help the country maintain oil output. Iraqi Deputy Prime Minister Tareq Aziz said earlier this month that a continuation of these deals with Russian firms could be at risk if U.S. proposals to tighten up sanctions were passed at the United Nations in late May with Moscow's support. On Monday, Saddam announced an immediate suspension of Iraq's oil exports for a month in protest against U.S. support for the Israelis incursion into Palestinian areas of the West Bank. "We have survived previous halts and kept earning real money. So will survive this one as well," a source said. Such deals could one day be threatened by Western competition. "I'm not sure that under either scenario, either the end of sanctions or the fall of the regime, we can survive the competition with rich Western majors," said a source in a company with both a drilling and a trading contract. But some Russian firms said they were not afraid of rivals after enjoying high oil prices in recent years and added they expected to keep even large contracts. "The West Qurna contract is recognized internationally, and we recently got some positive signs [from Western countries] who said it would never be subject to any revision," said a source in the West Qurna consortium. ------------------------------------------------- This mail sent through UK Online webmail _______________________________________________ Sent via the discussion list of the Campaign Against Sanctions on Iraq. 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