This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 04 BAGHDAD 002381 
 
SIPDIS 
 
DEPT PASS TO DEPARTMENT OF AGRICULTURE 
 
E.O. 12958: DECL: 05/31/2015 
TAGS: EAGR ECON EFIN ENRG EPET IZ MASS MOPS PGOV PREL
SUBJECT: IRAQ - INFRASTRUCTURE SECURITY UPDATE 
 
REF: A. BAGHDAD 2181 
     ¶B. BAGHDAD 2294 
     ¶C. BAGHDAD2298 
 
Classified By: Classified By: ACTING ECONOMIC COUNSELOR JAMES BOUGHNER 
FOR REASONS 1.4 B AND D. 
 
 ¶1. (C) SUMMARY: During the fifth meeting of the National 
Energy Committee (NEC), DPM Chalabi discussed his recent 
visit to the Al-Fatah crossing, expressing dissatisfaction 
with its current security.  He instructed the Ministry of 
Defense to immediately develop an effective security plan for 
the northern pipelines.  Chalabi also chided the ministers 
for poor intelligence, saying gathering intelligence should 
be an Iraqi led initiative.  The Ministers of Defense  (MOD) 
and Finance (MOF) debated the level of funds disbursed this 
fiscal year, with the MOF arguing that MOD had already 
received almost its entire allotment. The NEC discussed 
alternative export routes for oil and decided to review a 
pipeline option through Iran.   Newly negotiated water flows 
from Turkey, concerns for getting the water through Syria, 
and the competing needs of the agricultural and electricity 
sectors for that water were also discussed. END SUMMARY. 
 
¶2. (C) DPM Ahmed Chalabi convened the fifth meeting of the 
ITG National Energy Committee on May 31.  The Ministers of 
Oil (MOO), Electricity (ME), Water Resources (MWR), Finance 
(MOF), Agriculture (MOA), Industry and Minerals (MIM) were 
present as well as the Secretary General of the Ministry of 
Defense (SGMOD), MOD Director General of Programs and Budget, 
and the Commander of the Iraqi Army.  IRMO Acting Director MG 
Heine, IRMO MOD Advisor, and ECONOFF also attended. The 
Ministers of Interior (MOI) and Defense (MOD) did not attend. 
 Chalabi opened with a discussion of his visit to Kirkuk and 
Al Fatah on May 27 and his observations of pipeline security. 
 
--------------------------------------------- ------------ 
AL FATAH CROSSING AND STATUS OF INFRASTRUCTURE PROTECTION 
--------------------------------------------- ------------ 
 
¶3.  (C) The DPM and MOO visited Kirkuk and Al Fatah to 
observe the Iraqi forces deployed to guard the Kirkuk to 
Bayji pipeline.  The DPM said he was dissatisfied with their 
level of competence, citing continued successful attacks on 
the pipeline.  The DPM used Al Fatah crossing as the prime 
example where security required improvement.  He said Al 
Fatah was the most critical point in the North for oil 
exports and stated that the lack of security and poor 
coordination of security forces at Al Fatah had permitted the 
destruction of the pipeline at that critical location.  "We 
need to solve this protection issue because this stops 
exports which earn funds for Iraq, and it stops the flow of 
oil to the Bayji refinery, which causes more shortages of 
fuels here in Iraq" said the DPM 
 
¶4.  (C) The Minister of Oil concurred, saying the Strategic 
Infrastructure Battalions (SIBS)(NOTE: SIBS is the new term 
for the Oil Security Battalions (OSBs), because they will be 
used to protect more than just the oil infrastructure. END 
NOTE)) were ineffective.  MOO said he was willing to 
cooperate with MOD, but security must be done effectively. 
He said "Why should I fund SIBS if I do not get protection 
for my pipelines, especially this critical segment at Al 
Fatah?"  MOO said he could produce 600,000 barrels of oil per 
day (bpd) in the North, but it does no good if the oil cannot 
be transported through the pipelines. 
 
-------------------------------------------- 
DEVELOPMENT OF PLAN TO PROTECT THE PIPELINES 
-------------------------------------------- 
 
¶5.  (C) The DPM asked the Commander of the Army if he had 
assigned an officer to be responsible for infrastructure 
security. The SGMOD responded that an officer had been 
assigned and stated there was also a plan being formed for 
protection of the pipelines, but the MOD could not fund these 
forces because they would cost $600 million, and it would 
take time to build and train these units, probably six 
months.  SGMOD continued by stating this was an internal 
security mission, which should belong to the Ministry of the 
Interior (MOI), not the MOD.  The MOD needed the funds to buy 
the equipment, training and salaries for these units.  The 
Commander of the Army told the DPM that the SIBS were just 
hired tribesmen in uniform and were not properly equipped or 
trained. He needed help from Coalition forces for the 
training and oversight of these battalions. 
 
¶6.  (C) DPM and MOO asked the SGMOD and the Army to provide a 
plan for the protection of the pipelines, stain their 
priority were the pipelines between Kirkuk and Bayji, 
including the Al Fatah Crossing.  The DPM stated that the 
Army must use the forces they currently had in uniform, and 
they could not wait six months.  The DPM instructed the SGMOD 
and the Commander of the Army to meet with Multi-National 
Forces ) Iraq (MNF-I) and come up with a joint plan for 
protection of key oil infrastructure no later than Monday, 
June 6.  The MWR and ME requested their critical 
infrastructure be included in this planning process with 
MNF-I.  DPM told the Army Commander that he should plan on 
providing Iraqi battalions to MNF-I for this mission. 
 
¶7. (C) The DPM also requested that MNF-I be asked to come to 
the MOD to help with the planning.  Several Ministers echoed 
the comments that "If we cannot control one pipeline, we 
cannot control the country".  Additional Ministers added 
concerns for pipeline security in the South, as well as near 
Fallujah and Baghdad. The DPM asked the Ministries with 
concerns for infrastructure protection to work closely with 
the MOD and the Army to identify the key facilities requiring 
protection.  The DPM told the assembled Ministers "the 
Americans will give us support", but "There is no magic wand, 
we need infantry and intelligence to secure our pipelines." 
 
---------------------------- 
NEED FOR BETTER INTELLIGENCE 
---------------------------- 
 
¶8.  (C) DPM Chalabi said the insurgents were winning the 
intelligence war.  He said it was an Iraqi responsibility to 
provide intelligence to the American forces.  This 
intelligence is key to infrastructure protection. 
 
----------------------------------- 
FUNDING DISPUTE BETWEEN MOD AND MOF 
----------------------------------- 
¶9.  (C) The MOF said that each SIB required $40 million to 
form, train, and equip, while the current cost of repairing 
the pipelines was $250 million.  The MOO added that lost 
revenues from exports represented an even greater cost.  The 
MOD DG of Programs and Budget suggested Iraq use technology 
rather than soldiers to protect the pipelines, advocating for 
aircraft patrols along the pipelines instead of troop 
deployments, as she thought it would be less expensive.  The 
Minister of Finance added that he thought the government 
should put pressure on the tribal leaders who were being paid 
$100 million to protect these pipelines.  The MOF said the 
Iraqi Army had received $4.2 billion to support military 
operations. The SGMOD said they had been told the military 
was to get $4.5 billion, but nothing had yet been received. 
MOF said he had receipts proving the military had received 
$4.2 billion this year from the Iraqi budget.  MOF and MOD 
continued to stick to their disputed positions of funds 
disbursed but supposedly not received.  DPM requested MOF and 
MOD meet separately to assess their differences in funding. 
 
¶10.  (C) DPM Chalabi said the military had received 
substantial funding, and now the government needs a payment 
back from the military in the form of protection of the 
pipelines.  The military must use its battalions to give 
protection to oil pipelines.  He stated, "The money spent on 
MOD has not paid off." DPM Chalabi asked the MOF to provide 
to all of the Ministers a full accounting of the funds for 
all Ministries, so there would be transparency in government. 
 Several of the Ministers, most aggressively the MIM, 
suggested it was more important to fund the military force 
protection of the pipelines than to have a balanced budget, 
because without protection, no money could be generated from 
oil exports.  DPM closed this discussion with the comment: 
"The problem of infrastructure protection is critical, and we 
need to solve it." 
 
---------------------------------- 
OPTIONS FOR NORTHERN EXPORTING OIL 
---------------------------------- 
 
¶11.  (C) DPM Chalabi and the MOO suggested options for the 
export of Northern oil from Iraq.  They concluded that 
exporting through Turkey would be preferred, but if it could 
not be accomplished due to security problems, then Iraqi oil 
could potentially be exported via Saudi Arabia, Basrah, or 
Iran.  The discussion on the possibility of using Saudi 
pipelines was dismissed due to security problems in the 
southwest of Iraq.  The possibility of expanding exports in 
Basrah was dismissed because of inadequate pipeline access 
from the North, lack of storage facilities in Basrah, and 
port infrastructure problems.  The final option of exporting 
oil from Kirkuk through Iran was discussed in terms of the 
security and pipeline construction requirements.  The DPM 
said during the Iran-Iraq War, Iraq had built a very long 
pipeline in only nine months, and thus a route through Iran 
was possible as an alternative export route.  MOO concurred 
with the DPM, and he requested additional consideration by 
the Ministers of a northern oil export pipeline route through 
Iran. 
 
--------------------------------------------- -------------- 
INCREASED ELECTRICITY FROM ADDED WATER FLOWS FROM TURKEY 
--------------------------------------------- -------------- 
 
¶12.  (C) The Minister of Water Resources (MWR) reported he 
had talked to the Turkish Ambassador, and that Turkey would 
release an additional water flow of 200 cubic meters of water 
per second for Iraq.  This would increase the electrical 
power generation at Iraqi hydropower facilities.  MWR had not 
yet discussed this deal with Syria.  Syria had also requested 
increased water releases from Turkey, but the amount 
requested is unknown to MWR. The downstream compact for Syria 
and Iraq is normally a 58/42 (Iraq/Syria) split of water 
flow.  The Turkish Ambassador told the MWR that Iraq needed 
to inform Syria of this new water flow agreement, and that 
this discussion needed to be between Iraq and Syria.  The ME 
emphasized to MWR how important this water was to Iraq, and 
requested the MWR talk to his counterpart in Syria 
immediately. This additional water would provide an 
additional 750 MW of power in Iraq. The total goal for 
hydropower production is 1500 MW, as set by the DPM. 
 
¶13.  (C) The Minister of Agriculture (MOA) said water was 
needed for agriculture and the diversion for electricity 
would ruin this year's crops if it were all diverted.  MOA 
stated agriculture required 350 cubic meters of water per 
second for agricultural irrigation.  The ME said he had a 
proposed reduced rate of electricity production for the 
summer because of the concerns over food production losses 
due to diversion from agriculture.  The ME recommendation to 
the Ministers for revised hydropower production is: 1075 MW 
in June, 1250 MW in July, 1112 MW in August, 794 MW in 
September, and 609 MW in October. 
 
------------------------------- 
FUEL FOR ELECTRICITY PRODUCTION 
------------------------------- 
 
¶14.  (C) The Minister of Electricity (ME) said he was still 
short $50 million for purchasing fuel for the summer 
electricity program. The MOO told the Ministers he had signed 
contracts for importing the fuel (gas-oil) for the summer 
electrical generation program and had paid an initial payment 
of $15 million, but the contracts had been initiated to 
support fuel imports. 
 
--------------------------------------------- ------- 
AGENDA FOR NEXT MEETING OF NATIONAL ENERGY COMMITTEE 
--------------------------------------------- ------- 
 
¶15.  (C) The DPM said the next meeting of the NEC would 
discuss the smuggling of oil from the ports along the Shatt 
al Arab.  The DPM said, in his opinion, "oil was being 
stolen" and the NEC needed to assess Iraqi ports and oil 
export procedures to prevent smuggling. 
 
------- 
COMMENT 
------- 
 
¶16.  (C) COMMENT:  DPM Chalabi appears to continue to show 
firm leadership of the NEC.  The consensus of the Ministers 
to support the protection of the oil infrastructure 
demonstrates the criticality oil revenues to the government 
of Iraq. The NEC meeting highlighted the continuing tension 
between MOF and MOD over funding issues.  The Ministers 
differed on how to support the Iraqi military and were 
concerned their investments in the security forces were not 
being paid back with adequate security improvements across 
Iraq. This meeting showed a higher level of concern than 
previous NEC meetings on the shortcomings in oil 
infrastructure security and the resulting lack of oil export 
income for Iraq. 
 
¶17.  (C) Water resources could be of increasing contention 
between several actors.  The increased flow of water 
negotiated with Turkey by Iraq would lead to more electricity 
in Iraq, if it gets through Syria.  The Ministers appeared to 
have a real concern that this could be an item of dispute 
between Syria and Iraq in the near future.  The allocation of 
water for electricity versus agriculture is another internal 
question for Iraq, which has not been fully discussed.  This 
could lead to the real issue of food versus electricity in 
Iraq. END COMMENT. 
SATTERFIELD 
Satterfield