SULAIMANIYAH, Iraq — The smuggling of tens of thousands of gallons a day of crude oil and refined fuels from northern Iraq to Iran, in violation of new U.S. sanctions, is stoking tensions between Iraq's central government and its Kurdish provincial counterparts.
The reports about the oil smuggling surfaced just over a week after the U.S. imposed new sanctions barring the export of refined fuels to Iran. They also arise at a time when Kurdish help may be needed to form the next government as politicians in Baghdad have been deadlocked since the March 7 election.
Iraqi officials quickly vowed to do something about the practice. The smuggling is an embarrassment for Baghdad and the Kurds — both U.S. allies — not only because of the sanctions but also because of Iraqis' perception that politicians are profiting on the trade while the public suffers from fuel shortages.
Iraqi Oil Minister Hussain al-Shahristani said Tuesday that the Cabinet had decided to summon representatives of the Kurdish regional government to discuss the smuggling issue and "to put an end to it, as it harms Iraq's national and economic interests."
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"This matter is unacceptable and strange," al-Shahristani told reporters after the Cabinet meeting. It is "illogical to export refined products to neighboring countries while Iraq imports refined products such as gasoline."
The Kurds, however, appeared resistant. One Kurdish government official told the Associated Press that he doubted any meeting would take place, noting "the government's mandate is over." He spoke on condition of anonymity because he was not authorized to discuss the issue.
Kurdish officials acknowledged that some refined fuel from their region was being exported legally, but denied that any crude was being smuggled into Iran.
Kurdish Natural Resources Minister Ashti Hawrami insisted the source of the smuggling problem was not the Kurds. According to the Kurdish news agency, Hawrami said oil from two major refineries in central Iraq is being shipped to Iran and "the Iraqi government's raising of this issue now has a political objective of covering up the unofficial sale of crude oil from southern Iraq."
In a statement this week, the Kurdish regional government blamed Baghdad's policy of selling heavily discounted fuel to private distributors for the Iraqi public, which it said creates "incentives" for the buyers to smuggle it abroad. It acknowledged some of that smuggling may go through Kurdistan and said it is "committed to working with the federal government to eliminate permanently all such profiteering of fuel oil."