Politics of Oil: Terrorism and Corruption

A U.S. soldier looks out from a tower at the massive Bayji oil refinery in northern Iraq.

A U.S. soldier looks out from a tower at the massive Bayji oil refinery in northern Iraq.

The Bayji oil refinery in northern Iraq reflects a mix of forces that define Iraq:  oil and politics, terrorism and corruption.

Bayji produces 70 percent of the country’s refined fuel including gasoline, kerosene and diesel oil.  But millions of dollars of fuel has disappeared over the years, ending up in the hands of terrorists.

Two years ago Al Qaeda and other insurgent groups were a constant threat, intimidating truck drivers as they filled up at Bayji’s fuel distribution points and stealing the fuel at gunpoint.  Inside the compound, corruption was rampant.

“Two or three years ago we had here, maybe the biggest corruption in Iraq,” says refinery director Ali Al-Obaidi.

He arrived in 2007 as part of a joint U.S.-Iraqi corruption crisis team.  The U.S. military set up a  base on the refinery grounds.  Obaidi  began cleaning house.  He fired corrupt workers and started carefully checking documents.  At the distribution points, he added a fuel metering system to monitor the payload for every truck leaving the refinery.

But his team can’t control what happens once the tankers pull out.  The corruption has now moved beyond the refinery gates and into the trucking system.

Col. Adel Faiz, chief of the refinery’s oil protection force says the drivers now “change the document.  They change the stamp.  They play with the destination of the tankers.”

The refinery team would prefer to move fuel through pipelines, but they say they’re meeting resistance from politicians in Baghdad in bed with the trucking companies

Col. Adel and Dr. Obaidi say that fighting corruption has made them some powerful enemies in the oil ministry.  Both men have had warrants issued for their arrest.

Obaidi credits a small but visible U.S. military presence for keeping his political enemies off his back.  “Just their presence here,” he says, “can neutralize this type of pressure, and I feel more stronger.”

All U.S. troops are supposed to leave Iraq by the end of 2011. But the refinery management would like to see the Americans stick around longer.  They guarantee more security and less corruption– the keys to attracting foreign investors and building Bayji’s future.