BAGHDAD, Iraq, Feb. 4 — Iraqi and American officials say they are seeing a troubling pattern of government corruption enabling the flow of oil money and other funds to the insurgency and threatening to undermine Iraq's struggling economy.
In Iraq, which depends almost exclusively on oil for its revenues, the officials say that any diversion of money to an insurgency that is killing its citizens and tearing apart its infrastructure adds a new and menacing element to the challenge of holding the country together.
In one example, a sitting member of the Iraqi National Assembly has been indicted in the theft of millions of dollars meant for protecting a critical oil pipeline against attacks and is suspected of funneling some of that money to the insurgency, said Radhi Hamza al-Radhi, the chairman of Iraq's Commission on Public Integrity. The indictment has not been made public.
The charges against the Sunni lawmaker, Meshaan al-Juburi, are far from the only indication that the insurgency is profiting from Iraq's oil riches.
On Saturday, the director of a major oil storage plant near Kirkuk was arrested with other employees and several local police officials, and charged with helping to orchestrate a mortar attack on the plant on Thursday, a Northern Oil Company employee said. The attack resulted in devastating pipeline fires and a shutdown of all oil operations in the area, said the employee, who was granted anonymity because he was not authorized to speak publicly about the matter.
Ali Allawi, Iraq's finance minister, estimated that insurgents reap 40 percent to 50 percent of all oil-smuggling profits in the country. Offering an example of how illicit oil products are kept flowing on the black market, he said that the insurgency had infiltrated senior management positions at the major northern refinery in Baiji and routinely terrorized truck drivers there. This allows the insurgents and their confederates to tap the pipeline, empty the trucks and sell the oil or gas themselves...