Basra violence threatens Iraq's oil

BASRA, Iraq, April 17 Political and sectarian fighting in Iraq's oil capital, Basra, intensifies, threatening most of Iraq's oil production and all its oil exports.

Basra is majority Shiite and, as the central city of the vast majority of Iraq's oil reserves and the largest port where nearly all its oil exports are sent from, equally as important to Iraq as Baghdad. Iraq has 115 billion barrels of proven reserves, and production is struggling at around 2 million barrels per day. Oil sales make up 93 percent of Iraq's budget.

The local government is controlled by the Fadhila Party. Its biggest competitor is the alliance led by Moqtada Sadr. The two sides launched bitter and violent battles against each other over the past weeks.

On Monday a large demonstration was held in Basra demanding Muhammad Masbah al Waili, the Fadhila Party governor of Basra province, resign. Sadr and his Mahdi Army deny involvement in the rally and subsequent campaign for Waili to step down.

Regardless, it "marks a new escalation in intra-Shiite tensions, which will expose government institutions and energy infrastructures in the southern provinces to serious security risks," Rochdi Younsi, analyst for Middle East and Africa for the business risk firm Eurasia Group, wrote in a new report. Sadr says Waili and the Fadhila Party in Basra are corrupt, including involvement in oil smuggling that has cost the Iraqi government billions of dollars in oil revenues and worsened the fuel shortage in the country. Local tribal leaders also back that accusation, Younsi wrote. Fadhila accuses Sadr of planning a violent regional coup, including taking control of the Southern Oil Company.

"Local oil infrastructures could be exposed to a higher security risk as the Shiite community in the south becomes more fragmented," Younsi wrote.

Copyright 2007 by UPI

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