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Iraq - All oil, no gas.
January 22, 2006 2:46 PM   Subscribe

Iraq - All oil, no gas. A consortium of 34 Turkish companies have joined together to stop all exports of petrol / refined oil products to Iraq, because Iraq's government owes them over $1 billion that they have so far been unable to pay. Iraq's largest refinery was forced to shut down in December, after its truck drivers walked off the job due to insurgent threats. They reopened ten days later, only to shut down again after an insurgent swarm attack killed and wounded more drivers. The refinery has once more ceased activity, as their reserves of refined fuel are full and there is no way to get them to their customers. Iraq's diesel-driven power plants are undersupplied too, leading to worsening outages.
posted by insomnia_lj (37 comments total)

 
When they still don't even have reliable fuel and electricity how can we even contemplate starting to pull out?

Bush is either the nicest guy in the world, the stupidest or the most forward thinking. We won't be making a profit from our activity in Iraq for a long time at this rate.
posted by public at 3:33 PM on January 22, 2006


With temperatures below zero degrees centigrade, residents of the city are currently getting fewer than eight hours of electricity per day, making them dependant on generators which require fuel that is both in short supply and prohibitively priced.

The free market have a solution for it ! Privatize the war effort, let the war dogs out and with a fine police state it will be over before you can say ROI and think 2nd quarter. Complaining for lack of electricity ? No problem, tell the media to shut the fuck up nobody will ever know.

Then of course when the job is done they'll leave quietly letting us rightfully exploit the natural resources they're sitting on. Free market, competition will not let the poor iraquis become a satellite state, because free market loves democracy and humans right very much, top of the list !
posted by elpapacito at 4:20 PM on January 22, 2006


You left out evil and short-sighted in your options. I happen to lean towards him being evil and short-sighted.
posted by Mijo Bijo at 4:20 PM on January 22, 2006


If it's only $1 billion, why dosn't the US just pay it? Its' just a drop in the bucket for this debacle.
posted by delmoi at 4:21 PM on January 22, 2006


Another billion in red ink appearing overnight.

If the invasion of Iraq ends up costing taxpayers one trillion dollars which seems none too unreasonable, then that's over ten years of Iraq's entire GDP.

If the United States could take back $5 billion a year -- 5% of the Iraqis entire economy, something making the ruinous Treaty of Versailles seem lenient -- this would only pay a small fraction of the cost of servicing the debt incurred (the "interest").

The people running the country, the people who claimed that the United States would make a profit out of the war, did as a group make a lot of money out of the war. You may draw your own conclusions.

$1,000,000,000,000 dollars is one *million* times one million dollars. Here's a little visualization of $1,000,000,000 and if one of you 3-d animation people wanted to do it, I'd love you for it!

Imagine a ten-by-ten-by-ten cube of points -- zoom in on one of the points -- and you see that it's a ten-by-ten-by-ten cube of points in its turn.

Zoom in on one of those points -- it's another ten-by-ten-by cube -- zoom in once more on one of those points -- and it's a ten-by-ten-by-ten cube of single dollar bills (floating in space).

The lowest level cubes are worth $1,000 each -- the next level is worth $1,000,000, then $1,000,000,000 and the whole top level cube is worth $1,000,000,000,000.
posted by lupus_yonderboy at 4:24 PM on January 22, 2006


We're turning the corner at this moment.
The insurgents, "dead enders" if you will, are in their last throes.
Freedom is on the march.
The liberal media won't talk about all the good things going on in Iraq.
"Mission Accomplished!"
"Smoke him out." "Dead or alive!"
It's all the liberals fault.
We'll be greeted as liberators and thrown flowers.
And on, and on, and on...
The truth is out there, just not in the mouth of a Dubya Defender.
Worst thing to happen to Iraq: US invasion and occupation.
Best thing that can now happen: Let Iran have what it has won, Iraq. :-) Maybe they can fix the Bush/Halliburton mess and it would certainly keep them busy for awhile.
posted by nofundy at 4:26 PM on January 22, 2006


The interesting thing to me is how effective this insurgent technique has been. It's a textbook example of how an insurgency can focus on a critical infrastructure vulnerability -- fuel trucks -- and shut a country down as a result.

The people working in the refinery are getting killed when they drive trucks at rates reminiscent of the British merchant mariners during the Battle of the Atlantic, when they tried to run through the German submarine wolfpacks... but the danger follows them home, too.

They have spies in their midst, their personal identities are known to the insurgents, it's not safe for them to go home, their families are at risk, and it ultimately doesn't matter much if their convoys are surrounded by military vehicles, because when you're driving an unarmored powder keg, all you need is one RPG or a few bullets to ruin your day.

Frankly, I thought the pipelines themselves were vulnerable, but apparently not as vulnerable as this.
posted by insomnia_lj at 6:08 PM on January 22, 2006


I gotta say, it takes class to call in a debt that size when a country is undergoing the kind of turmoil that Iraq is going through right now.
posted by shmegegge at 6:11 PM on January 22, 2006


$1,000,000,000,000 dollars is one *million* times one million dollars. Here's a little visualization of $1,000,000,000 and if one of you 3-d animation people wanted to do it, I'd love you for it!

Not if you live in America, where billion means 109, and trillion means 1012. A billion is a thousand times a million, just like a million is a thousand times a thousand.
posted by delmoi at 6:15 PM on January 22, 2006


"If it's only $1 billion, why dosn't the US just pay it? Its' just a drop in the bucket for this debacle."

Well, if we pay Iraq's $1+ billion dollar gas bill, that would cost us about a third of what is left over from the reconstruction funds. (i.e. Under 20% the $18.4 billion allocated for reconstruction.)

And no, there are no plans for additional US reconstruction funding once that's gone.
posted by insomnia_lj at 6:16 PM on January 22, 2006


Here's a little visualization of $1,000,000,000

Please read $1,000,000,000,000 for $1,000,000,000 in that one place only. It would make even less sense if I'd been using a UK billion...
posted by lupus_yonderboy at 7:04 PM on January 22, 2006


So the deal here is that the war has destroyed the ability for the country to pay its gas bill, and for that the gas company is turning off the tap?

Basically, Iraq's situation on a national level is akin to the personal-level situation of having your home invaded by the Hell's Angels on a bender long weekend. No good can come of it.
posted by five fresh fish at 7:06 PM on January 22, 2006


The interesting thing to me is how effective this insurgent technique has been. It's a textbook example of how an insurgency can focus on a critical infrastructure vulnerability -- fuel trucks -- and shut a country down as a result.

They've learned from experience.
posted by homunculus at 7:21 PM on January 22, 2006


Good analogy there fff, I hope everyone else here can work with it 'cause them's the facts.
posted by mk1gti at 7:25 PM on January 22, 2006


The interesting thing to me is how effective this insurgent technique has been. It's a textbook example of how an insurgency can focus on a critical infrastructure vulnerability -- fuel trucks -- and shut a country down as a result.

Insurgents don't read the textbooks. It's part of the reason they're so effective. B. H. Liddell Hart wrote about strategic 'dislocation' in his book Strategy. If one were to view the opponent as having the shape of a human body, one should focus one's efforts on the joints - areas which are both vital and vulnerable. However, to destroy a joint completely is undesirable. Much better is to immobilise it such that it cannot be employed. Hence dislocation.
posted by Ritchie at 7:39 PM on January 22, 2006


"I gotta say, it takes class to call in a debt that size when a country is undergoing the kind of turmoil that Iraq is going through right now."

You mean that this slew of Turkish businesses -- some, supposedly, quite small -- should not only default on their debts because they can't get their customer to pay on time, but that they should also be compelled to keep shipping free fuel indefinitely, in the hope that a highly delinqent debtor who hasn't paid their bills in months won't default?

Welcome to Leninland -- the freest place on earth! (Somehow, I bet Halliburton still gets their money on time.)

In some ways, the Iraqi government has been money rich lately. They've had a major influx of foriegn capital through wealthy backers. That said, their backers are obviously getting skittish, and believe it's someone else's turn to pay for a change. That said, everyone seems to be leaving the table early, because nobody wants to be the one left holding the bill.

Iraq was a sucker's bet in the first place... and the Bush administration is behaving like an addicted gambler whose trying to welch on a bet.
posted by insomnia_lj at 7:55 PM on January 22, 2006


The interesting thing to me is how effective this insurgent technique has been. It's a textbook example of how an insurgency can focus on a critical infrastructure vulnerability -- fuel trucks -- and shut a country down as a result.

That's the strategy I would use in Iran (and, in fact, the strategy used successfully in Kosova by the US). Take out the infrastructure and wear down the population until they relent to have weapons inspectors in.
posted by delmoi at 7:55 PM on January 22, 2006


"That's the strategy I would use in Iran . . . Take out the infrastructure and wear down the population until they relent to have weapons inspectors in."

Um... weapons inspectors were already in Iran, and Iran hasn't prevented them from coming back.

If Iran were to let inspectors back in to do what they've already done again, would you allow Iran their legitimate right as a soveriegn nation to refine their own uranium and build nuclear power plants?
posted by insomnia_lj at 8:21 PM on January 22, 2006


"Take out the infrastructure and wear down the population until they relent to have weapons inspectors in."



Yeah. Good luck with that. Kosovo was about 1/15th the size.

Maybe if the Iranians were to give us a four month head start before they start sinking oil tankers and infiltrating Iraq and Afghanistan with their troops...
posted by insomnia_lj at 8:36 PM on January 22, 2006


Kosovo was also about 1/30th the population of Iran, FYI.
posted by insomnia_lj at 8:39 PM on January 22, 2006


the people who claimed that the United States would make a profit out of the war, did as a group make a lot of money out of the war.

That would be the businessmen who planned on gathering the flowers thrown by the Iraqis at the feet of the liberators and selling them as Freedom bouquets!
posted by rough ashlar at 8:48 PM on January 22, 2006


I am absolutely amazed that there is any support whatsoever for an attack on Iran at this point. It seems like you'd want to tie up your loose ends before you begin an even larger project, or at least critically review the results from your previous exploits.

The fact that the French threatened to nuke Iran set off my funny bone, though. Good form!
posted by Clamwacker at 8:57 PM on January 22, 2006


Attack Iran?!

Piffle! And dangerous piffle at that.
posted by insomnia_lj at 9:46 PM on January 22, 2006


lupus_yonderboy: One Trillion US pennies. Of course in real-value terms $1 trillion USD is 100 of these.

Clamwacker: Re: Not tying up loose ends before undertaking larger projects.
posted by moonbiter at 10:01 PM on January 22, 2006


moonbiter: I'm not trying to say that it hasn't happened before, only that it needs to be said again and again. Unfortunately sarcasm is my native tone nowadays.
posted by Clamwacker at 10:23 PM on January 22, 2006


You mean that this slew of Turkish businesses -- some, supposedly, quite small -- should not only default on their debts because they can't get their customer to pay on time, but that they should also be compelled to keep shipping free fuel indefinitely, in the hope that a highly delinqent debtor who hasn't paid their bills in months won't default?

Welcome to Leninland


what horse shit. the solution to a situation like this is never as desperate as "pay in full or else we cut off all service" unless the company is being a bully. If they really didn't want the iraqis to suffer for this bill, they'd have done a lot more a lot earlier. total cessation of all oil delivery? that's what your phone company does if you don't pay your bill on time. that's what the guy who's holding all the cards and knows it does. The article isn't all that informative, but I'd be willing to bet that this consortium is actually a bunch of large companies owed a lot of money exerting pressure on smaller ones to join in an embargo the smaller ones wouldn't normally want. It doesn't take communism to see what you can do for a country torn apart by war, just a little compassion.

If you want to take all blame away from these guys so you can put it all on halliburton and bush, go ahead, but it's still bullshit. It's not a zero sum game, and these guys are every bit as guilty in their actions thus far as Bushco are. And that guilt doesn't detract from Bush's. It still reinforces Bush's guilt, while adding to that of this consortium as well. So don't worry.

I never saw you as a mccarthyite, but hey if calling me a communist works for you...
posted by shmegegge at 11:02 PM on January 22, 2006


Clamwacker: Gotcha. I myself just feel the need to point out again that we still have a job to finish in Afghanistan. Which also reinforces your point -- not one, but two(!) unfinished conflicts and some folks are squawking about starting a third.
posted by moonbiter at 12:15 AM on January 23, 2006


"If they really didn't want the iraqis to suffer for this bill, they'd have done a lot more a lot earlier."

WTF?! If I owned a small shipping or trucking company, and if I was contracted to buy petrol and deliver it to a customer... if my employees took on some actual physical risk just getting the customer the order, and if they didn't pay my company and I suddenly had creditors asking me when I would pay for the gasoline I purchased, or possibly charging me fees or doing all business COD with me as a result... if I needed payment to make sure my business didn't have to lay people off... and you came to me and said that I should've done a lot more a lot earlier to make sure that I wouldn't have to cut off future purchases until the existing ones had been paid for, I'd probably kick you out of my office. With my foot.

It's one thing for the government of Turkey to guarantee payment on all gasoline sent to Iraq, but why should these businesses have to do it, after-the-fact, in an involuntary manner?

Turkey has already waived billions of debt. Their GDP is about 1/25th the size of the US, but they waived about eight times as much debt relative to GDP than the US did... and it wasn't even their war. They have lost billions in exports and tourism as a result of the war, dealt with terrorist attacks, etc. Even before the war, they were losing about $5 billion a year due to the sanctions, times ten years. That revenue has not come back, unfortunately.

Iraq was late on $600 million to Turkish businesses last year for the same reason, and it took threats from the Turkish government to get them to pay on time. They're lucky that they haven't been made a COD customer, frankly. They were publically warned three times by Turkish politicians that they were late, but the Turkish politicians even extended the deadline for them, and the Iraqi government *STILL* failed to pay on time.

No shmegegge . You're being irresponsible with other people's money. Why don't *YOU* send your money to Iraq to buy their gasoline for them?
posted by insomnia_lj at 12:27 AM on January 23, 2006


"I never saw you as a mccarthyite, but hey if calling me a communist works for you..."

I didn't call you a communist. I did, however, clearly point out that your idea that Turkish businesses should have to wait indefinitely to get paid back -- and, arguably, that they should lose jobs and possibly risk their companies because of it -- is straight outta cloud cookooland. If you're a major nation doing business with an independent company, you don't ask for charity after the fact.

Iraq could at least have the dignity to "print" the money and pay their debtors on time. Sure, it would devalue the dinar to some degree, but the US does it all the time with much larger sums of money.
posted by insomnia_lj at 12:34 AM on January 23, 2006


you should come down off your high horse, insomnia. you're getting awfully self-righteous, here, when there's no reason to. Especially since you're starting to sound like you blame iraq having financial troubles when they're being robbed blind.

I'm not saying they should be forced to pay for anything, nor that they should indefinitely provide services without payment.

what i'm saying is that your portrayal of these gasoline companies as innocent victims is absurd. they're ruthless opportunists, and it bit them in the ass. I have no sympathy for them, so I said it was a classless thing to do to cut off the fuel all at once because it is. There are plenty of things they could have done, such as gradual reduction of oil delivery or working out a more affordable amount of oil to be purchased until Iraq gets on its feet.

But they didn't do that. Why? Because this way they know that they'll be paid exactly what they want right away, no matter who that winds up hurting in Iraq, because that's how dependent on gasoline people are. And then they'll go right back to making money selling iraq gasoline its people can't afford some more. That's not looking out for your employees, that's greedily making money off the suffering of others.

But seriously, what's your beef? You're acting like these companies are innocent victims and iraqis are the big baddies or something. You know it's not that simple, so why pretend?
posted by shmegegge at 12:47 AM on January 23, 2006


"you're starting to sound like you blame iraq having financial troubles when they're being robbed blind"

If there's a rip off, it's the war we brought upon the Iraqi people. The conflict itself is the cause of the ripoff.

But why should Turkish companies have to pay for it? When they aren't paid for fuel that they paid upfront for and shipped to the Iraqi government, why aren't they the victims here? Why shouldn't the Iraqi government be responsible to its people for not paying for something they owe?

Iraq, sadly, is an insolvent, unprofitable nation right now. Under such circumstances, it's probably just as well that they go into some amount of debt in order to buy the things they need for their people today. At some point, they'll have to pay the piper, but when they do, they'll ideally be in a better position to pay it, the Iraqis will ideally be in a better position to deal with the shock to their economy, and they'll be paying off the debt in cheaper dinar anyways. I just hope they *DID* arrange to pay in dinar, and not in dollars... though given the fall of the dollar, it could be worse.

From what I can tell, they weren't being robbed by the Turks on this deal, primarily because the majority of the petrol was arriving in the south by ship. Less risk, therefore less cost to pass on to the consumer.

Iraqis actually get an incredible deal on fuel. Due to price increases recently imposed by the government, they're paying about 40 cents a gallon... and bitching about it, because many literally can't afford to pay that much. Truth be told, the Iraqi government has always heavily subsidized its energy. That means, of course, that they're probably paying $1.70 a gallon for their gasoline when they import it from the Turks, who get their oil from Russia and Iran primarily, and then eating $1.30 a gallon *PLUS* armed, military-protected delivery cost, to get it to their citizens... assuming it ever gets there in the first place.

...that said, the subsidies in Kuwait and Saudi Arabia on energy are even greater. If Saddam didn't subsidize oil, then he'd have legitimized the Iraqi black market, oil and gas theft, questionable products bought out of the trunk of a car, etc.

If you ask me, the Iraqi government probably paid late on purpose so as to make it appear to their people that the price increases for fuel and removal of subsidies are absolutely necessary. Which they aren't, technically, assuming that the country can actually refine its own oil... but it *IS* a good idea for the time being while under the current circumstances.

The question is, how much can you lift the subsidies on fuel before you make the cost of fuel, of produce, of everything that relies on fuel, prohibitive to the average Iraqi. Not much, unfortunately.
posted by insomnia_lj at 1:19 AM on January 23, 2006


These insurgents are a bunch of dead-enders and sore losers. The insurgents will never amount to anything. They'll never be able to stand in the way of liberty and freedom for the Iraqi people.

Look at my purple thumb! Ain't "democracy" grand?

This war will pay for itself.

It's gonna be a cakewalk.

Where's Ahmed Chalabi, fearless feckless leader of the Iraqi people?
posted by nofundy at 5:35 AM on January 23, 2006


shmegegge, why should Turkey's businesses pay for the consequences of the USA's invasion? The entire reason the Turks are being screwed-over with non-payment is that the USA has buggered the pooch. Howzabout you cough up some dough to the Turks, since it is your government that is ultimately responsible for it?
posted by five fresh fish at 9:41 AM on January 23, 2006


frankly, I think it's a bad idea to consider the turks innocent victims of our policy, as I said.

but here's an idea:

since the link to the story isn't all that informative, let's ask ourselves these questions:

1. how much were these companies charging before the war?
2. how much now?
3. how much of the increase is justified by increases in the price of oil worldwide?
4. how much of the increase is over and above that?

see, I'm not pretending like this isn't the result of our invasion. I'm fully aware of our role in this, but as I said above, if you'd read it, our guilt in this does not diminish theirs. They're companies who are trying to maximize their dollars through practices that, while common among huge successful companies, are nonetheless despicable given the current situation in iraq, imo.

do you guys cry every time somone says something bad about disney, microsoft and time-warner et al? Sure, every argument you've made makes perfect sense in a pure economics way. But so does every argument MS has ever made about its own business practices, if you discount the idea of business ethics.

the way I see it is these guys looked to make a killing in iraq BECAUSE of what we did. Now all of a sudden they're the wounded investor because it backfired on them? the hell with that. If you try to make a buck off iraq by taking advantage of what WE'RE doing to them, then where am I supposed to find sympathy? Yes, it's ultimately us who're creating this terrible situation in iraq, but I never denied that. If you check my posting history, you'll see that I've never supported this war in any way whatsoever. But you want me to drum up tears for companies that tried to benefit from this war at the expense of iraqi suffering? for god's sake, why? that story about the iraqi refinery? that's what gets my sympathy. the guys sitting safe in their offices who figure it's cool to bully millions of people of a prohibitively expensive material they can't live without? not really. they're acting like a bully to get what they want, and chances are (though I have no figures for this) that what they want is a hell of a lot more than they COULD have charged. chances are that they could have sold a hell of a lot less, since foreseeing financial problems from the iraqi government doesn't exactly require a crystal ball. Yeah, they're just businessmen trying to earn a living. But trying to make billions off the iraq war, which is what they're doing, is a risky venture whose ultimate reward depends on the suffering of the iraqi people.

seems to me you guys are acting like Paris_Paramus walked in here shouting support for the US or something, and that's not what I'm saying. I mean, are you guys even reading?
posted by shmegegge at 10:25 AM on January 23, 2006


You're absolutely right, shmegegge.

Obviously, all businesses are evil, especially if they agree to do business with the Iraqi government. If they do that, they're obviously guilty of something too, and obviously trying to take advantage of and gouge the innocent Iraqi people.

They shouldn't do business with the Iraqi government, and if they do, they should expect to get ripped off. Hell, if these companies are ethical, they should freely give their money away, even if they have to lay off their employees or shut their doors in order to do it. That's what they get for trying to make billions of dollars in profits off of the Iraqi people, even if the total sales were only a billion dollars between over 30 companies, and the traditional markup for shipping fuel isn't really all that much. Pennies on the dollar, really.

In short, businesses that deliver the Iraqis desperately needed fuel supplies = corporate misery merchants.

I'd disagree with you about all this further, but really, what's the point?! You've made your POV abundantly well known.
posted by insomnia_lj at 12:58 PM on January 23, 2006


fine fine. you can have your soapbox back, insomnia "prince of internet guerilla journalism."

you're absolutely right. anyone involved in this country who ISN'T american is obviously totally on the up and up, and your total lack of information on the companies involved is absolutely fine because there's no reason to know any more about their business practices. They're not american, right? so they must be totally on the up and up. I mean, to actually acknowledge that someone who isn't american could possibly have shady or ulterior motives (in business no less! who'd-a thunk!) would require finishing your chest thumping for all of 30 seconds, and it's clear you can't do that. That would be like asking you to civilly discuss something with someone who disagrees with you on THE MOST MINOR point of your post. you know, to discuss something without reducing it to petty name calling and snide remarks.
posted by shmegegge at 4:26 PM on January 23, 2006


Q: How do you know the USA has invaded your country?
A: Two years later, there's a shortage of your single, previously abundant, natural resource.

Freely adapted from a similar Chechoslovakian joka about the Soviet Union. Those ungrateful Checkoslovakians.
posted by spazzm at 5:47 PM on January 23, 2006


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