Iraq's new government risks being held to ransom by a dissident Shi'ite faction using its local clout in Basra to hobble vital oil exports, Iraqi officials and senior political sources said on Friday.They warned that the locally powerful Fadhila party was threatening to have members in the oil industry stage a go-slow to halt exports through the key southern oil port if it did not win the concessions it wanted from Baghdad. "Fadhila is in control," a senior Shi'ite political source close to the party said.
Turf wars among Iraq's ruling Shi'ite Islamist parties have long made its second city a confusing battleground for rival militias, leaving the British forces nominally in charge of Basra hoping that the new government can finally impose order.
Instead, the small Fadhila, which controls the governor's office and parts of the local oil industry but which refused to join Prime Minister Nuri al-Maliki's cabinet, risks turning the tables on Baghdad by turning off its cash lifeline. "He who owns Basra owns the oil reserves. It is the gateway to the Gulf," the Shi'ite political source said. "It's the richest city in the world. It has a strategic position so why would any one give it up?"
The power struggle over Basra's oil goes to the fractious heart of the United Iraqi Alliance, the bloc of Shi'ite Islamist parties that controls a near-majority in parliament and will shape Iraq's future for years, with or without U.S. occupation. "The security problem in Basra, the corruption, the death squads, is all a power struggle between militias and mafia run by parts of the UIA," a senior Iraqi oil official said, warning that factions in Basra could shut down all Iraq's exports.
Maliki's Dawa party, the SCIRI group and followers of cleric Moqtada al-Sadr dominate the Alliance in Baghdad. Fadhila refused to join the government when Maliki took the Oil Ministry from it and handed it to an independent, Hussain al-Shahristani. Shahristani in turn has vowed to centralize control of oil in Baghdad and crack down hard on corruption and oil smuggling, which officials say are endemic in the southern oilfields.
The senior oil official said: "Fadhila are threatening that they want kickbacks. Unless they get kickbacks they could shut down exports. This is a very serious problem and crisis."
Politics in the city have been dominated by bitter disputes over authority and accusations of corruption and organized crime between the governor, Fadhila's Mohammed al-Waeli and its police chief as well as other Shi'ite factions and clerical figures. But the political source said these issues masked a broader agenda that ultimately came down to control of oil. "The real struggle is hidden beneath the politics," he said. "There are local and international battles for Basra. Locally it is between Fadhila and other groups while regionally it is between Iran and other forces, like the British."
"This will affect the oil sector. The Alliance has chosen a person with no experience to be oil minister instead of someone from Fadhila. This has angered the party.
"Fadhila employees will do a minimum of work to satisfy domestic needs of 400,000 to 500,000 barrels a day. As for exports and boosting output, let the ministry deal with that."
Shipping agents said on Friday there was no disruption to oil loadings at Basra.
Basra province is not only vital for Iraq's oil exports but for its domestic fuel requirements, due to its refinery, and for food supply, containing its only port and rich farmland.