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Oil deals help pay for Iraqi attacks
Correspondents in Baghdad
27nov06

THE Iraq insurgency has become financially self-sustaining, raising tens of millions a year from oil smuggling, kidnapping, counterfeiting, corrupt charities and other crimes, according to a US government report.

The classified report, obtained by The New York Times, estimates that groups responsible for insurgent and terrorist attacks in Iraq are raising $US70 million ($90.7million) to $US200 million a year from illegal activities. The report says $US25 million to $US100 million of that comes from oil smuggling and other criminal activities involving the state-owned oil industry, which are aided by "corrupt and complicit" Iraqi officials.
Up to $US36 million a year comes from ransoms paid over hundreds of kidnappings. Unnamed foreign governments - identified in the past by senior US officials as including France and Italy - paid kidnappers $US30million in ransoms last year alone, the report says.
"If recent revenue and expense estimates are correct, terrorist and insurgent groups in Iraq may have surplus funds with which to support other terrorist organisations outside of Iraq," the newspaper quoted the report as saying.
The report, completed in June, was provided to the newspaper by US officials in Iraq, who said they were leaking it in the hope the findings could improve US understanding of the challenges faced in Iraq.
According to the paper, the report holds out little hope much can be done to stem the flow of funds to insurgents, acknowledging how little US authorities in Iraq know about crucial aspects of the insurgent operations.
The study paints a bleak picture of the Iraqi Government's ability, or willingness, to take the necessary measures to contain the insurgency's financing.
Some terrorism experts outside the US Government who were given an outline of the report by the paper criticised it for lack of precision and reliance on speculation, the newspaper said.
The report was compiled by an inter-agency group that is investigating the financing of militant groups in Iraq. A Bush administration official confirmed the group's existence and said it was studying how money was moved into and around Iraq.
The official said the group, led by the National Security Council, drew its members from the CIA, the FBI, the Defence Intelligence Agency, the State Department, the Treasury Department and the army's Central Command, which oversees the war in Iraq.
If the $US200 million a year estimate is close, it amounts to less than what it costs the Pentagon, with an $US8billion monthly budget for Iraq, to sustain the war effort for a single day, the paper said. But other estimates suggest the sums involved could be far higher.
The oil ministry in Baghdad, for example, estimated earlier this year that 10 per cent to 30 per cent of the $US4 billion to $US5billion worth of fuel imported for public consumption last year was smuggled back out of the country for resale.
At that time, the finance minister estimated that close to half of all smuggling profits were going to the insurgents. If true, that would be $US200million or more from fuel smuggling alone.
The report concluded that the Iraqi insurgency no longer depends on the more than $US1billion that Saddam Hussein, his sons and associates seized as his government collapsed after the US-led invasion.
According to the Times, the report says that US efforts to follow the insurgency financing trail have been hampered by the weak Iraqi Government and its intelligence agencies, lack of communication between the US agencies and between the Americans and the Iraqis, and the nature of the insurgent economy, which is chiefly driven by manual money transfers rather than more easily traceable means.
The leaking of the report came as US troops were engulfed at the weekend in a wave of sectarian bloodletting that threatens to destroy the Iraqi Government and may jeopardise a summit meeting called this week by Prime Minister Nouri al-Maliki.
The violence was ignited by Thursday's car bomb attacks on Shia targets in Baghdad, spawning a spiral of revenge.
After a series of attacks on Sunni mosques on Friday, insurgents in Diyala province were reported to have stormed two Shia houses and murdered 21 men in front of their relatives.
A suicide car bomber attacked a US-Iraqi checkpoint near Fallujah, killing one American soldier and three civilians.
US and Iraqi troops killed 22 insurgents and an Iraqi civilian, and destroyed a factory being used to make bombs, during raids north of Baghdad.
Reuters, AP


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