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[casi] Fwd: Stratfor: Iraq Using Oil Pipeline To Sway U.S. Ally]

Abi - apologies for the attachment - herewith as text, best, f.

- [Fwd: Stratfor: Iraq Using Oil Pipeline To Sway U.S. Ally]
Date: Sun, May 26, 2002, 7:54 pm


Iraq Press
May 22, 2002

Dahouk, Iraq Press, May 22 – Iraqi engineers say they have almost
completed the reconstruction of a major pumping station on their joint
oil pipeline with Turkey.

The station, some 80 kilometers south of this Kurdish-controlled city,
was destroyed during the 1991 Gulf War over Kuwait.

The engineers said they were determined to turn on the newly imported
pumps by mid July. The station, once operational, is expected to boost
pumping through the vital pipeline to the original capacity of 1.6
million barrels daily.

Under U.N. rules, Iraq is required to direct the largest amount of its
oil exports via Turkey. But the world body overlooked its
own regulations since the Turkish line's capacity was limited to about 1
million barrels per day.

Currently, the largest portion of the estimated 2.5 million exports go
through terminals on the Gulf.

But the restoration of the station, just south of the northern city of
Mosul, will add an additional 500,000 barrels a day to the
Turkish line. It is not clear whether the United Nations will demand
that Iraq increase its exports via Turkish terminals.

Previously, Iraq bypassed the station, making it more difficult to reach
the full capacity of 1.6 million barrels daily.

The pumps, controls and associated valves needed to revamp the stations
were imported under the terms of the U.N.-approved oil-for-food program
at a cost of about 50 million dollars.

Iraq's network of export pipelines gives it a lot of room to maneuver.
If fully operational, Iraqi export outlets may handle up
to 6 million barrels a day.

While the pipeline via Saudi territories remains idle, Iraq has
reportedly repaired a strategic line through Syria with a potential
capacity of 1.4 million barrels a day.

Industry analysts say the line is currently operational handling at
least 150,000 barrels of illegal Iraqi crude exports to Syria.
Iraq Using Oil Pipeline To Sway U.S. Ally
Stratfor, 24 May 2002

Iraq's use of economic diplomacy to forestall a possible U.S. strike
continues to develop, with Baghdad targeting key U.S. ally Turkey. The Iraqi
government has nearly finished reconstructing a major pumping station on a
joint pipeline, running from Kirkuk in Iraq to Ceyhan in Turkey, which this
summer will become fully operational for the first time since 1990.

The pipeline repairs will generate hundreds of millions of dollars in
oil-transit fees for the Turkish government, which is struggling to revive
its stagnant economy. Baghdad hopes that the cash flow will make the Turks
reconsider supporting U.S. military action against Iraq.

It is not clear exactly what the White House has in mind for Iraq. U.S.
President George W. Bush told an audience in Germany May 23 that an attack
on Iraq was not imminent. The Pentagon seems to have major concerns over
such an operation, and the White House and civilian leaders at the Pentagon
appear to be pressing the U.S. military leadership for more imaginative
attack plans than those that have been presented so far.

However, no matter what scenarios are being offered for ousting Iraqi
President Saddam Hussein, Turkey is key in all of them. U.S. aircraft from
Turkish bases enforce the Iraqi northern no-fly zone, and Turkey's border
with Iraq is a potential invasion route. This makes swaying the opinion of
the government in Ankara a top priority for Baghdad.

The repair and reopening of the Kirkuk-Ceyhan pipeline will almost double
the line's total capacity from 900,000 barrels per day to 1.6 million bpd.
The additional volume through the pipeline will mean a corresponding
increase in the transit fees collected by the Turkish government, something
on the order of a half billion dollars a year in revenue.

This is serious cash for the Turkish government. The economy is in intensive
care: It shrank 9.4 percent last year amid an economic crisis and is only
now steadying under an International Monetary Fund-backed recovery program.

Many Turkish politicians place a large measure of blame for their economic
woes on U.S. policies in the aftermath of the Persian Gulf War. The oil
embargo on Iraq and a collapse in trade between the two countries have cost
the Turkish economy tens of billions of dollars.

The financial hit was partially offset by aid from U.S.-backed international
institutions. Last February, Turkey won a $16 billion loan package from the
IMF, making it the organization's biggest borrower with a total of $31
billion. However, Ankara would rather that the billions of dollars come from
trade instead of loans.

Although the money coming from Iraq may make the Turkish government more
sympathetic to Baghdad's diplomatic efforts, it likely won't be enough get
Ankara to turn its back on Washington. However, Turkey may still use this
relationship to raise its price for participating in a U.S. campaign against

Little by Little, Iraq Shows Signs of Economic Life

By Howard Schneider
Washington Post Foreign Service
Friday, May 17, 2002; Page A01

 BAGHDAD, Iraq -- It was a breezy Monday night, and the mood in Horreya
Square was festive as a crowd that included college students, old men and
shy young girls gathered outside the Faqma ice cream shop to indulge.

 In the Iraq of the mid-1990s, such a scene would have been impossible.
People were penniless and the government strictly rationed milk and sugar to
ensure that the country's embargoed food supplies covered necessities.

 But those days are past. Step by step, economic and social life is
rebounding and the country is breaking out of limits imposed on it by the
United States and other Western powers after the Persian Gulf War a decade

 Iraq is now sufficiently flush to independently launch an oil embargo, as
it did last month, suspending exports of crude as a protest against Israeli
occupation of Palestinian cities in the West Bank. That won Iraq admiration
in many Arab countries, as have its payments of $25,000 that U.S. officials
said have been made to the families of each Palestinian suicide bomber.

 Many Iraqis and foreign diplomats here said the country's resurgence will
make the U.S. goal of unseating President Saddam Hussein all the more
difficult to achieve. And, in the meantime, the growing prosperity is
allowing Hussein's political apparatus to proclaim that Iraq was the
ultimate victor in the Persian Gulf conflict.

 "Many people predicted that Iraq would collapse in 1991, but we have
reconstructed our country," Oil Minister Amir Mohammad Rasheed said recently
at a news conference in Baghdad. "We know it is difficult for those without
thousands of years of history to understand, but oil is not the only
resource of the Iraqi people."

 Oil, however, is what's driving the rebound. Iraq is allowed to sell as
much petroleum as it wants under U.N. sanctions to buy food, medicine and
other necessities. But money is also entering the country illegally through
oil smuggling and a complicated surcharge scheme that a Wall Street Journal
analysis recently estimated provides around $2.5 billion annually outside
the control of sanctions.

 While U.S. officials contend that much of the money is being spent to refit
the Iraqi military, develop long-range missiles and possibly assemble
nuclear, biological or chemical weapons, clearly some of it is improving the
lives of Iraqi citizens.

 Per capita income now stands at around $2,500 annually -- double that of
Egypt, according to the CIA World Factbook. Iraq's gross domestic product
grew about 15 percent in the year 2000.

 "Little by little, things are getting better. You can find everything,"
said Sinan Abdul Hamid, 20, an engineering student whose chief complaint
about life is that the lasers used in his classes are out of date.

 Entrepreneurs are bringing shiploads of computers, televisions, stereos,
appliances and other goods from Dubai to stock the the shelves of Baghdad's
shops. Wealthy Iraqis can arrange long-distance special deliveries of their
favorite foods from grocery stores in Amman, Jordan, 12 hours by car and a
few bribes away from the Iraqi capital.

 Farmers are buying new trucks; new double-decker buses are moving about the
capital. A few privately owned luxury cars are breaking the previous
monotony of wobbly taxis and private cars with shattered windshields.

 Even such areas as an impoverished corner of Saddam City south of Baghdad
are feeling gains. There, vegetable seller Rabbia Jassim at first pointed to
his 6-year-old son's dilapidated sneakers and said that for the poorest in
Iraq, many basics remain out of reach. But later he conceded there was some
improvement: His family can now afford an occasional chicken.

 As part of the upturn, Iraq has again become a major force in the regional
economy. Much of its $13 billion in annual imports come from Turkey, Egypt,
Saudi Arabia, Syria and Jordan, Iraqi officials said, helping bolster
economies in the region. They added that Turkey's sales to Iraq doubled in
the past year, to nearly $1 billion, while Egypt, starved for hard currency,
now gets $2 billion a year from goods its sells to Iraq.

 Iraqis are traveling abroad more easily, too, on the expanding network of
flights available since Saddam International Airport reopened a year ago.
Royal Jordanian Airlines offers four flights a week between Amman and
Baghdad, and service is also available to the Syrian capital, Damascus, and
to Moscow.

 Iraqi diplomats circle the globe pressing their nation's case, while
business leaders from the Arab world, Russia and Europe fill Iraq's version
of a five-star hotel, the Al Rasheed.

 The future of Iraq and Hussein has been a chief preoccupation of the
region, as well as of world powers, for more than a decade now. While there
is agreement that Iraq's isolation as a nation should end, there is
disagreement over whether that should happen while Hussein is still in

 To Washington, he remains a global menace, intent on developing weapons of
mass destruction and likely to use them against Israel, Arab neighbors or
even the United States. At a recent U.N. Security Council briefing, U.S.
officials presented evidence of new long-range missile sites, and foreign
diplomats in Baghdad cite suspicions that Iraqi officials have stepped up
efforts to acquire material for a nuclear device.

 President Bush has called Iraq part of an "axis of evil" that includes its
neighbor Iran and North Korea. U.S. officials have not made a case linking
Iraq with al Qaeda or any terrorist attack against U.S. interests. But they
insist that Iraq is developing weapons of mass destruction and say action
against the country, perhaps armed action, is needed.

 "The combination of a dangerous regime with such destructive weapons is not
acceptable," said Patrick Clawson, research director at the Washington
Institute for Near East Policy.

 Among Iraq's Arab neighbors, the view is less apocalyptic. Hussein is
viewed as a brutal leader, but many say he became more cautious after seeing
his army expelled from Kuwait in 1991. An international coalition might well
retaliate against any aggressive act tied to Baghdad, spelling an end to the
Baath Party that controls the country.

 One diplomat here, whose government has counseled the United States to
avoid military action in the absence of clear provocation, said the risks of
toppling Hussein might be as great as the risks of leaving him in power.

 In society here, the diplomat said, "there is a big hate for the U.S. Every
malaise is attributed to them and not the regime. The complexity of the
problem is that once Pandora's box is open, are we in a more difficult
position than now?"

 A U.S. attack could lead to a fracturing of the country among the
quasi-autonomous Kurdish region in the north, the Iranian-influenced Shiite
populations in the south, and the Sunni Muslims who dominate the central
region, the diplomat said.

 Some Iraqis who privately dislike the regime are also uneasy about the
prospect of an attack. They would rather wait for the 65-year-old Hussein's
natural demise than risk a war or revolution. "Borders are closed, brains
are closed," said one businessman, who asked not to be identified. "But it
has been 20 years. What is three or four more? This is what is in the heart
of Iraqis."

 Advisers in the president's office, meanwhile, say the government's public
bravado -- defiant, anti-American and ready for a fight -- isn't the whole
story. "What are we going to say if [Bush] says we are the axis of evil? We
fought Iran for eight years. How can you just throw us in one bottle?" one
Iraqi official said. "We have learned lessons, and we will make use of those
lessons. We will try to avoid our people suffering again."

 Despite the talk of war, the United States hasn't much changed the military
pressure that it has exerted against Iraq since the end of the Gulf War.
Every day a panoply of U.S. planes, including high-flying U-2 reconnaissance
jets and RC-135 eavesdropping aircraft, course the skies of northern Saudi
Arabia and southern Turkey, monitoring the Iraqi military. Warplanes stage
periodic strikes against antiaircraft positions.

 But some diplomats in Baghdad and analysts in Washington say that Bush's
war threats may already be paying off with the rise of what amounts, by
Iraqi standards, to a group of pragmatists on the Baath Party's ruling
Revolutionary Command Council.

 The diplomats said they believe Foreign Minister Naji Sabri has developed
an influential voice in alliance with Hussein's younger son and possible
successor, Qusay. Sabri is said to have pushed for recent efforts to mend
fences with Kuwait and Saudi Arabia. At a recent Arab League summit in
Beirut, Iraq went further than ever, promising to respect Kuwait's

 Iraq has also reopened talks with the United Nations on the possible return
of U.N. weapons inspection teams, who were withdrawn from the country in
1998 hours before the United States and Britain launched airstrikes on
Baghdad. The talks now involve Iraqi scientists and generals. Before Sept.
11, Iraq maintained that inspectors would never return.

 Hussein remains the ultimate arbiter, however, holding on to power despite
a record of domestic mismanagement, political executions and atrocities
against his people.

 Increasingly elaborate statues of Hussein continue to sprout throughout the
capital, as do state-financed mosques. The Mother of All Battles Mosque
opened recently. Still in progress is Saddam Mammoth Mosque, intended to be
the largest in the world. Along one boulevard stands what people call The
Big "La," ("No" in Arabic), a granite symbol of the country's defiance.

 Hussein is lionized in party tracts as the rightful heir of history's great
Muslim leaders, such as the 12th-century warrior Saladin, who fought the
Christian Crusaders. The revisionism has turned the invasion of Kuwait into
a "Zionist trap" that ended with U.S. troops encircled and begging for a

 It is unclear how many people accept that account, doled out incessantly by
Iraqi newspapers and television. But the hardships of the last decade have
been real, and many ordinary Iraqis appear to view the recent easing as a
triumph over the United States.

 In their offices in the capital, Iraqi officials tried to build on those
feelings. They said that what is really behind Bush's talk of war is
Hussein's refusal to follow the recent path of Egypt, Saudi Arabia, Jordan
and other Arab states and submit to what they perceive as U.S. dominance.

 Bush "wants Iraqi oil. Saddam Hussein won't let him. He wants to put a
stooge government in. Saddam Hussein won't let him," said Abdelrazak
Hashimi, a semi-official government spokesman. "Nobody has the right to go
into another country and change the system of government. . . . Nobody can
just scratch Iraq off their calendar."

© 2002 The Washington Post Company

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