Institute for War and Peace Reporting | Giving Voice, Driving Change

Basra Fishermen Smuggle Subsidised Fuel

Petrol is draining out of Iraq’s southern borders at an alarming rate, but coast guards say they just don’t have the resources to curb smuggling.
By Haider al-Musawi
Fishermen in the southern province of Basra are smuggling their heavily-subsidised fuel allowances out of the country, mainly to Iran, government officials in Iraq say.

The men who fish off the coast of Basra, which sits between Kuwait and Iran, told IWPR that oil smuggling only exists because it is so hard to make a living here, in one of Iraq's poorest provinces.

Owners of fishing vessels, and other boat owners as well, get an cheap-rate allocation from the oil ministry of between five and 30 tonnes of fuel a month, depending on the size of the vessel.

Although Iraq is a major oil producer, it imports a large proportion of the petroleum products it needs because domestic refining capacity remains woefully inadequate, in part due to sabotage by insurgent groups.

Imported petrol costs the Iraqi state 700 US dollars a tonne, but the fishermen get it for one-hundredth that amount, at just 10,000 Iraqi dinars a tonne, which works out at about half a US cent per litre.

Ayad Ismael Jani, director of the southern regional branch of the security service for oil industry facilities, estimates that the fishermen can then sell the same petrol for 400 to 500 dollars a tonne, not far below world market prices.

"This smuggling phenomenon is very dangerous because it’s destroying the country's economy," said Jani.

Mutasam Akram, who was oil minister in the outgoing cabinet, said the combination of smuggling plus attacks on pipelines cost the state five billion dollars in 2004 and seven billion last year.

The new government inaugurated last week has pledged to make fighting theft and corruption in the oil industry one of its top priorities. Oil is the heart of the Iraqi economy, and the country is believed to have the world's second-largest oil reserves.

The fishermen commonly sell their fuel to Iranian vessels bringing imported freight into the Abu Floos harbour at Abu al-Khasib, 40 kilometres southeast of Basra city.

Ayad Abid Ali, who captains a ship belonging to the Iraqi transport ministry, said there is an "oil mafia" which shifts the oil to Iran and other countries including the United Arab Emirates.

He said many of the fishermen first began smuggling during Saddam Hussein’s rule, via a network of agents working for the president’s son Uday, killed by United States forces in 2003.

"The network is now broader in a way, because anyone who owns a boat or has a fishing license gets petrol," said Ali. "They then sell it to the Iranians and other traders."

Past IWPR investigations have revealed that oil ministry staff, security officials and fuel station owners are also involved in illicit fuel trading and exports.

The security forces in Basra say they are unable to curb the smuggling because they lack the resources, and because government and rule of law are so weak in the province.

Former oil minister Akram said there have been several attempts to cut the fishermen's monthly oil allocation so as to reduce smuggling. But on each occasion, the ministry reversed the decision because of protest demonstrations and threats to its staff.

Brigadier-General Abdul-Hadi Abdullah of the Basra police says he has received threats from the families of smugglers he has arrested. Coast guard officials report being shot at from Iranian fishing boats while pursuing Iraqi fishermen suspected of smuggling oil.

Major Ahmed Hasan, a coast guard officer, said the smugglers are skilled at concealing the fuel in their boats so it is hard to make an arrest.

Colonel Najim Abdulla, the commander of coast guard patrols, said the force does not have the manpower to rein in the smugglers, and even if it had, it would not have enough fuel for its patrol boats.

"I can't chase smugglers who are well aware of our shortages," he said. "They know we don't have enough fuel."

Jihad al-Abbadi, head of the fishermen's union in Basra, said there are about 800 vessels registered with his association. But it is widely believed that many people are buying old, broken boats just so they can claim fishing licenses and subsidised fuel.

In IWPR interviews, fishermen were reluctant to admit that they personally involved in the trade, but admitted that it exists. Several of them stressed how difficult it is to support a family just on a fisherman's income.

"Fishing is a job that takes patience. It takes time to make a profit," said Salam Ali, a 45-year-old fisherman from Basra. "Many have a hard time with this, and because of the poor economic situation they’d rather make a quick profit. That's why they turn to smuggling."

Alaa Muhsin, a 31-year-old fisherman, said he is aware of the problem but has never smuggled himself, "because I love only fishing".

He said smuggling could be halted if a strong government gains control over the whole of Iraq and makes it clear to everyone that "no one is above the law".

Haider al-Musawi is a Baghdad-based IWPR trainee journalist.