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December 24, 2004

Corruption Keepin Oil and Gas From Iraqis

Here's the deal: ever since the interim government took over oil, gas, and electricity production and distribution, there have been more shortages and a bigger black market for the products. From WaPo:

Even if there were no sabotage, officials say, Iraq's fuel supply is clearly being diverted by the people who control it. The official system builds in numerous incentives for distributors to siphon gasoline before it reaches service stations. For one thing, the government sets an artificially low price for fuel -- so low that the government spends $5 billion to $7 billion a year subsidizing it.

"It's bigger than the cost of the food ration," said Adnan Janabai, a government minister of state, referring to the massive subsidy for staple foods that, along with the fuel subsidy, eats up half of Iraq's budget, according to officials. "What's doing the damage is the smuggling."

For anyone entrusted with distributing gasoline, the temptation is obvious. At the pump, the price of a gallon of gas is officially set at 80 dinars, the equivalent of one American nickel.

Ten days ago, customers unwilling to wait in line were handing over $2.70 for the same gallon. On Saturday, the black market rate had dropped to perhaps half that, but the 2,500 percent markup remained a powerful enticement to sell the stuff on the side.

"Yes, the people blame us, but what can we do?" said Atiyaf Abdul Sattar, an Oil Ministry employee, who was driving a Toyota van so new it had no license plates. Because she works for the ministry, she had to wait in line only an hour at a Baghdad filling station. "The main problem is the security situation."

Hrm. Sounds to me like the main problem is that officials don't have to deal with the problems they cause. The bitch quoted in the WaPo story reminds me of school administrators in L.A. who say there's no money to pay for air conditioning in classrooms. Students and teachers sweat their way through the day, desperately trying to stay focused on teaching / learning whilst administrators sit in their air-conditioning chilled offices.

Posted by cj at December 24, 2004 10:44 AM

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