The full extent of the Iraq fuel smuggling we've been hearing about is revealed:
"Even at the low end, that would mean smuggling costs account for almost 10 percent of Iraq's gross domestic product, $29.3 billion in 2005."
Holy crap!
The article goes on to describe a smuggling network and black market that seems to have more control over the country's oil exports and fuel imports than the official government does. Some choice bits:
- Corruption is apparently systemic. "The network is so pervasive and entrenched, the officials say, that fuel importers brazenly arrive at depots with half-empty tankers and arrange to have their deliveries certified as complete."
- Oil pipelines are bombed to force "hundreds of trucks" to move the oil. Since many truck drivers are part of the smuggling network, much of that oil is resold. An official claims that the pipeline bombs are often timed to stop crude from flowing after the Baghdad refinery is full but before excess crude can be exported. (!)
- Because of government subsidies, a massive black market for fuel exists. Businesses that receive subsidized fuel find it more profitable to sell much of that fuel on the black market than use it in service of their business. The article claims that 50 fishing boats are manufactured per month in Basra just to increase government subsidized fuel quotas. The fuel is simply resold on the black market at 'normal' prices.
- The profit on black market fuel is huge: "...of about $1 billion spent on black market fuels by Iraqi households in 2005, an estimated $800 million went straight into profits for those who run the illicit network."
Who knows exactly how much of this money goes to fund the insurgency, but I think it's safe to assume that whatever faction is controlling security in a given area is collecting a large part of the smuggling money.
Article here