Shia Parties Battle for Control of Oil-Rich Basra Region

Political parties and their militias are fighting for power over the Basra government, the oil sector it controls, and the oil and fuels smuggling that bring in extra funds.

The southern area, where much of Iraq's oil wealth is located and nearly all its oil exports are sent to market, has been under the purview of British troops, who have allowed various factions to become the power base and their armed outfits to flourish.

Now the British are leaving, and the intra-Shiite fighting that bloodied the streets and complicated provincial politics will explode. Even if U.S. troops, already stretched thin, are sent to mediate, the situation will likely not be calmed -- it will likely be inflamed.

"It's fundamentally related to the battle over oil," said Reidar Visser, editor of the Iraq Web site historiae.org and an Iraq expert at the Norwegian Institute of International Affairs. "It's understandable, of course, given the size of the Basra reserves."

Nearly 80 percent of Iraq's 115 billion barrels of proven reserves -- the third largest in the world -- are buried in or around Basra. With the northern pipeline shut by attacks, most of the 1.6 million barrels of oil per day exported last year went through the port in Basra, bringing enough money to Baghdad -- more than $31 billion -- to fund 93 percent of the federal budget.

That makes control over Basra key. Whoever controls the provincial government -- and/or has strong enough militias -- has charge over the oil industry there and holds sway in the unknown amounts of oil and fuel sidetracked to the smuggling racket.

"The way things work in Iraq is if you have even a simple majority on the governing council, you get to elect the governor, the police chief, you get to put your militiamen into the police," said University of Michigan Middle East expert Juan Cole, "and the provincial government becomes a source of patronage for your party."

In Basra, three Shiite parties, powerful in their varied own right, swap allegiances and gunfire and jockey for position: the Fadhila Party, the Supreme Iraqi Islamic Council (formerly the Supreme Council for the Islamic Revolution in Iraq), and the Sadr Movement, led by cleric Moqtada Sadr.

The Fadhila Party gained control of the province in the 2005 elections, but only with 21 of 41 seats, and with a coalition of other parties and independents. SCIRI took the rest. Sadr has no official seats but loyalists.

All three began their power play, infiltrating the police and the bureaucracy. The Fadhila Party grabbed control of the oil facilities protection service, which put it "in a position to really control how much is or is not smuggled," said Ken Katzman, Middle East expert at the Congressional Research Service. "You can do whatever you want … it's control over the proceeds of the smuggling."

Exact figures are not known, but various estimates put smuggling of both oil and fuel past the billions of dollars mark, annually.

"That's money that the factions are going to control directly," he said.

When SCIRI and Sadr realized Fadhila was bringing in smuggling money, they wanted in. Smuggling isn't a new phenomenon; it was standard under Saddam Hussein's rule, usually with his approval.

Nor is it relegated to just political parties. Other militias and gangs are in it as well.

But the political parties have the most power. Fadhila cut a deal with its rivals.

"Their militias -- the Mahdi Army (Sadr), the Badr Corp (SIIC) and the Fadhila militia -- operate as paramilitaries in the city," Cole said. "They patrol neighborhoods, they fight turf wars for control of neighborhoods, they attack each other's party headquarters, and they are in particular competition for gasoline smuggling."

But politics in Baghdad have a direct relationship to the country's oil capital.