Identifier
Created
Classification
Origin
05BAGHDAD2381
2005-06-03 07:22:00
CONFIDENTIAL
Embassy Baghdad
Cable title:  

IRAQ - INFRASTRUCTURE SECURITY UPDATE

Tags:  EAGR ECON EFIN ENRG EPET IZ MASS MOPS PGOV PREL 
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C O N F I D E N T I A L SECTION 01 OF 04 BAGHDAD 002381 

SIPDIS

DEPT PASS TO DEPARTMENT OF AGRICULTURE

E.O. 12958: DECL: 05/31/2015
TAGS: EAGR ECON EFIN ENRG EPET IZ MASS MOPS PGOV PREL
SUBJECT: IRAQ - INFRASTRUCTURE SECURITY UPDATE

REF: A. BAGHDAD 2181

B. BAGHDAD 2294

C. BAGHDAD2298

Classified By: Classified By: ACTING ECONOMIC COUNSELOR JAMES BOUGHNER
FOR REASONS 1.4 B AND D.

C O N F I D E N T I A L SECTION 01 OF 04 BAGHDAD 002381

SIPDIS

DEPT PASS TO DEPARTMENT OF AGRICULTURE

E.O. 12958: DECL: 05/31/2015
TAGS: EAGR ECON EFIN ENRG EPET IZ MASS MOPS PGOV PREL
SUBJECT: IRAQ - INFRASTRUCTURE SECURITY UPDATE

REF: A. BAGHDAD 2181

B. BAGHDAD 2294

C. BAGHDAD2298

Classified By: Classified By: ACTING ECONOMIC COUNSELOR JAMES BOUGHNER
FOR REASONS 1.4 B AND D.


1. (C) SUMMARY: During the fifth meeting of the National
Energy Committee (NEC),DPM Chalabi discussed his recent
visit to the Al-Fatah crossing, expressing dissatisfaction
with its current security. He instructed the Ministry of
Defense to immediately develop an effective security plan for
the northern pipelines. Chalabi also chided the ministers
for poor intelligence, saying gathering intelligence should
be an Iraqi led initiative. The Ministers of Defense (MOD)
and Finance (MOF) debated the level of funds disbursed this
fiscal year, with the MOF arguing that MOD had already
received almost its entire allotment. The NEC discussed
alternative export routes for oil and decided to review a
pipeline option through Iran. Newly negotiated water flows
from Turkey, concerns for getting the water through Syria,
and the competing needs of the agricultural and electricity
sectors for that water were also discussed. END SUMMARY.


2. (C) DPM Ahmed Chalabi convened the fifth meeting of the
ITG National Energy Committee on May 31. The Ministers of
Oil (MOO),Electricity (ME),Water Resources (MWR),Finance
(MOF),Agriculture (MOA),Industry and Minerals (MIM) were
present as well as the Secretary General of the Ministry of
Defense (SGMOD),MOD Director General of Programs and Budget,
and the Commander of the Iraqi Army. IRMO Acting Director MG
Heine, IRMO MOD Advisor, and ECONOFF also attended. The
Ministers of Interior (MOI) and Defense (MOD) did not attend.
Chalabi opened with a discussion of his visit to Kirkuk and
Al Fatah on May 27 and his observations of pipeline security.


-------------- --------------
AL FATAH CROSSING AND STATUS OF INFRASTRUCTURE PROTECTION
-------------- --------------


3. (C) The DPM and MOO visited Kirkuk and Al Fatah to
observe the Iraqi forces deployed to guard the Kirkuk to
Bayji pipeline. The DPM said he was dissatisfied with their
level of competence, citing continued successful attacks on
the pipeline. The DPM used Al Fatah crossing as the prime
example where security required improvement. He said Al
Fatah was the most critical point in the North for oil
exports and stated that the lack of security and poor
coordination of security forces at Al Fatah had permitted the
destruction of the pipeline at that critical location. "We
need to solve this protection issue because this stops
exports which earn funds for Iraq, and it stops the flow of
oil to the Bayji refinery, which causes more shortages of
fuels here in Iraq" said the DPM


4. (C) The Minister of Oil concurred, saying the Strategic
Infrastructure Battalions (SIBS)(NOTE: SIBS is the new term
for the Oil Security Battalions (OSBs),because they will be
used to protect more than just the oil infrastructure. END
NOTE)) were ineffective. MOO said he was willing to
cooperate with MOD, but security must be done effectively.
He said "Why should I fund SIBS if I do not get protection
for my pipelines, especially this critical segment at Al
Fatah?" MOO said he could produce 600,000 barrels of oil per
day (bpd) in the North, but it does no good if the oil cannot
be transported through the pipelines.

--------------
DEVELOPMENT OF PLAN TO PROTECT THE PIPELINES
--------------


5. (C) The DPM asked the Commander of the Army if he had
assigned an officer to be responsible for infrastructure
security. The SGMOD responded that an officer had been
assigned and stated there was also a plan being formed for
protection of the pipelines, but the MOD could not fund these
forces because they would cost $600 million, and it would
take time to build and train these units, probably six
months. SGMOD continued by stating this was an internal
security mission, which should belong to the Ministry of the
Interior (MOI),not the MOD. The MOD needed the funds to buy
the equipment, training and salaries for these units. The
Commander of the Army told the DPM that the SIBS were just
hired tribesmen in uniform and were not properly equipped or
trained. He needed help from Coalition forces for the
training and oversight of these battalions.


6. (C) DPM and MOO asked the SGMOD and the Army to provide a
plan for the protection of the pipelines, stain their
priority were the pipelines between Kirkuk and Bayji,
including the Al Fatah Crossing. The DPM stated that the
Army must use the forces they currently had in uniform, and
they could not wait six months. The DPM instructed the SGMOD
and the Commander of the Army to meet with Multi-National
Forces ) Iraq (MNF-I) and come up with a joint plan for
protection of key oil infrastructure no later than Monday,
June 6. The MWR and ME requested their critical
infrastructure be included in this planning process with
MNF-I. DPM told the Army Commander that he should plan on
providing Iraqi battalions to MNF-I for this mission.


7. (C) The DPM also requested that MNF-I be asked to come to
the MOD to help with the planning. Several Ministers echoed
the comments that "If we cannot control one pipeline, we
cannot control the country". Additional Ministers added
concerns for pipeline security in the South, as well as near
Fallujah and Baghdad. The DPM asked the Ministries with
concerns for infrastructure protection to work closely with
the MOD and the Army to identify the key facilities requiring
protection. The DPM told the assembled Ministers "the
Americans will give us support", but "There is no magic wand,
we need infantry and intelligence to secure our pipelines."

--------------
NEED FOR BETTER INTELLIGENCE
--------------


8. (C) DPM Chalabi said the insurgents were winning the
intelligence war. He said it was an Iraqi responsibility to
provide intelligence to the American forces. This
intelligence is key to infrastructure protection.

--------------
FUNDING DISPUTE BETWEEN MOD AND MOF
--------------

9. (C) The MOF said that each SIB required $40 million to
form, train, and equip, while the current cost of repairing
the pipelines was $250 million. The MOO added that lost
revenues from exports represented an even greater cost. The
MOD DG of Programs and Budget suggested Iraq use technology
rather than soldiers to protect the pipelines, advocating for
aircraft patrols along the pipelines instead of troop
deployments, as she thought it would be less expensive. The
Minister of Finance added that he thought the government
should put pressure on the tribal leaders who were being paid
$100 million to protect these pipelines. The MOF said the
Iraqi Army had received $4.2 billion to support military
operations. The SGMOD said they had been told the military
was to get $4.5 billion, but nothing had yet been received.
MOF said he had receipts proving the military had received
$4.2 billion this year from the Iraqi budget. MOF and MOD
continued to stick to their disputed positions of funds
disbursed but supposedly not received. DPM requested MOF and
MOD meet separately to assess their differences in funding.


10. (C) DPM Chalabi said the military had received
substantial funding, and now the government needs a payment
back from the military in the form of protection of the
pipelines. The military must use its battalions to give
protection to oil pipelines. He stated, "The money spent on
MOD has not paid off." DPM Chalabi asked the MOF to provide
to all of the Ministers a full accounting of the funds for
all Ministries, so there would be transparency in government.
Several of the Ministers, most aggressively the MIM,
suggested it was more important to fund the military force
protection of the pipelines than to have a balanced budget,
because without protection, no money could be generated from
oil exports. DPM closed this discussion with the comment:
"The problem of infrastructure protection is critical, and we
need to solve it."

--------------
OPTIONS FOR NORTHERN EXPORTING OIL
--------------


11. (C) DPM Chalabi and the MOO suggested options for the
export of Northern oil from Iraq. They concluded that
exporting through Turkey would be preferred, but if it could
not be accomplished due to security problems, then Iraqi oil
could potentially be exported via Saudi Arabia, Basrah, or
Iran. The discussion on the possibility of using Saudi
pipelines was dismissed due to security problems in the
southwest of Iraq. The possibility of expanding exports in
Basrah was dismissed because of inadequate pipeline access
from the North, lack of storage facilities in Basrah, and
port infrastructure problems. The final option of exporting
oil from Kirkuk through Iran was discussed in terms of the
security and pipeline construction requirements. The DPM
said during the Iran-Iraq War, Iraq had built a very long
pipeline in only nine months, and thus a route through Iran
was possible as an alternative export route. MOO concurred
with the DPM, and he requested additional consideration by
the Ministers of a northern oil export pipeline route through
Iran.

-------------- --------------
INCREASED ELECTRICITY FROM ADDED WATER FLOWS FROM TURKEY
-------------- --------------


12. (C) The Minister of Water Resources (MWR) reported he
had talked to the Turkish Ambassador, and that Turkey would
release an additional water flow of 200 cubic meters of water
per second for Iraq. This would increase the electrical
power generation at Iraqi hydropower facilities. MWR had not
yet discussed this deal with Syria. Syria had also requested
increased water releases from Turkey, but the amount
requested is unknown to MWR. The downstream compact for Syria
and Iraq is normally a 58/42 (Iraq/Syria) split of water
flow. The Turkish Ambassador told the MWR that Iraq needed
to inform Syria of this new water flow agreement, and that
this discussion needed to be between Iraq and Syria. The ME
emphasized to MWR how important this water was to Iraq, and
requested the MWR talk to his counterpart in Syria
immediately. This additional water would provide an
additional 750 MW of power in Iraq. The total goal for
hydropower production is 1500 MW, as set by the DPM.


13. (C) The Minister of Agriculture (MOA) said water was
needed for agriculture and the diversion for electricity
would ruin this year's crops if it were all diverted. MOA
stated agriculture required 350 cubic meters of water per
second for agricultural irrigation. The ME said he had a
proposed reduced rate of electricity production for the
summer because of the concerns over food production losses
due to diversion from agriculture. The ME recommendation to
the Ministers for revised hydropower production is: 1075 MW
in June, 1250 MW in July, 1112 MW in August, 794 MW in
September, and 609 MW in October.

--------------
FUEL FOR ELECTRICITY PRODUCTION
--------------


14. (C) The Minister of Electricity (ME) said he was still
short $50 million for purchasing fuel for the summer
electricity program. The MOO told the Ministers he had signed
contracts for importing the fuel (gas-oil) for the summer
electrical generation program and had paid an initial payment
of $15 million, but the contracts had been initiated to
support fuel imports.

-------------- --------------
AGENDA FOR NEXT MEETING OF NATIONAL ENERGY COMMITTEE
-------------- --------------


15. (C) The DPM said the next meeting of the NEC would
discuss the smuggling of oil from the ports along the Shatt
al Arab. The DPM said, in his opinion, "oil was being
stolen" and the NEC needed to assess Iraqi ports and oil
export procedures to prevent smuggling.

--------------
COMMENT
--------------


16. (C) COMMENT: DPM Chalabi appears to continue to show
firm leadership of the NEC. The consensus of the Ministers
to support the protection of the oil infrastructure
demonstrates the criticality oil revenues to the government
of Iraq. The NEC meeting highlighted the continuing tension
between MOF and MOD over funding issues. The Ministers
differed on how to support the Iraqi military and were
concerned their investments in the security forces were not
being paid back with adequate security improvements across
Iraq. This meeting showed a higher level of concern than
previous NEC meetings on the shortcomings in oil
infrastructure security and the resulting lack of oil export
income for Iraq.


17. (C) Water resources could be of increasing contention
between several actors. The increased flow of water
negotiated with Turkey by Iraq would lead to more electricity
in Iraq, if it gets through Syria. The Ministers appeared to
have a real concern that this could be an item of dispute
between Syria and Iraq in the near future. The allocation of
water for electricity versus agriculture is another internal
question for Iraq, which has not been fully discussed. This
could lead to the real issue of food versus electricity in
Iraq. END COMMENT.
SATTERFIELD
Satterfield