New Iraqi government likely open to renewed oil negotiations with KRG

Former Transportation Minister of Iraq Amer Abdul-Jabbar sheds light on lost oil and aviation revenues in former governments. He explains that only 50 planes a day were flying in the skies of Iraq when he first became minister of transportation, an amount he increased to 500 during his tenure. This has led to massive increases in revenues, although he is unaware of where the funds have gone.

On the topic of oil, he says he has much experience and would offer advice to former Iraqi PM Haider al-Abadi through informal means like text messages, but much of his advice was ignored. He sees new PM Adil Abdul-Mahdi as ‘more moderate’ which could allow for an improvement in energy sector relations between Erbil and Baghdad.

Abdul-Jabbar considers himself to be an ‘independent’ who can work and foster ties between the two governments. He claims there was more corruption in Abadi’s government than in his predecessor Nouri al-Maliki’s. 

Rudaw: Is the Iraqi government benefitting from its airspace which is used by international airlines?

Amer Abdul-Jabbar: Iraq has a strategic airspace which is the busiest, quickest and calmest route that connects north of the world to the South, vice versa, and the West with the East. Iraq is a hub for these flights. The Iraqi airspace was under embargo from 1991 to 2009. 

When I became minister in July 2008, I put together a team and was leading the team. We met with the International Civil Aviation Organization, the International Air Transport Association (IATA), and International Aviation Safety Assessment (IASA). Consequently, we resolved some of the problems we had. This led to the lifting of the European embargo on Iraqi airspace in 2009. The embargo was re-imposed on Iraqi airspace after my duties as minister came to an end in 2015. 

The Iraqi Aviation Authority was established in 1940s and had no technical violations until the end of 2010. Yet, IASA reported and documented more than 230 violations of the Iraqi Aviation Authority from 2011 to 2015. That led to the embargo being imposed again on the Iraqi airspace.

What were the reasons behind these violations?

There were numerous violations. A gap emerges when you change the head of the aviation authority, who should be someone with experience in aviation or at least a person who knows English very well because of continuous correspondence with international organizations and other global aviation authorities. It is not easy to just make a decision to change the head of such an establishment.

Who will benefit from changing the head of such an establishment?

When you have a minister affiliated with a political party, the party then tries to employ its own members at the respective ministry. Political parties appoint managers who aren’t certified. They then ask them to study at a private university to obtain a degree. There was someone who graduated from university in 2012, and was appointed as a general manager in 2013.

Was the change related to income?

Yes. When I became minister in 2008, there were 50 planes using the Iraqi airspace a day and the fee for each plane was $50. I asked why it was only $50.

Was the fee for a plane $50 per day?

Yes. There were 50 planes using the Iraqi airspace every day and the tax for each flight was $50, which was the fee set by the

previous regime. No one had changed that. I looked at the fee neighboring countries were charging. Some were taxing $375. We increased the fare to $375 and then thought about increasing the number of flights using Iraqi airspace. We then started giving special offers to aviation companies across the world. In the offers, we detailed the benefits of using Iraqi airspace. But these companies wanted reassurances. I explained to them the distance between planes flying in Iraqi airspace was 1,000 feet on both right and left sides. 

This is while the distance between flying planes in European airspace is only 200 feet. The number of aviation companies using Iraqi airspace then increased after they became certain of its safety. The number of planes using Iraqi airspace consequently reached 500 in 2010. This means revenues of $68 million if each flight is charged $375.

Where did this money go? Did the country benefit from it?

The income would go to state treasury. According to the plan we had designed, more than 4,000 planes were expected to use Iraqi

airspace by 2016. The problem started after the head of the civil aviation authority was changed and I left the ministry. Only then did the number of planes using Iraqi airspace dropped. The number dropped to 70 in 2016 and to 37 in 2017. Each plane was giving a fare of $375 for using Iraqi airspace until early 2018, while airspace fares in neighboring countries had reached $900 by that time. If they had worked according to our plans and the number of planes using our airspace had reached 4,000 by 2016 and each was being taxed $900, the annual revenue because of Iraqi airspace would have been $1.314 billion by now.

Haider al-Abadi’s cabinet is said to have had a better performance than Nouri al-Maliki’s. But according to your figures, Abadi’s cabinet was worse. Right?

I am speaking about 2016 and 2017. The question concerns the head of civil aviation authority and director of the airline. If 75

percent of our plan was a success by 2016, 3,000 planes would have used the Iraqi space a day. If you multiply 3,000 by 900, it would be $985 million a year, nearly a $1 billion. We lost this large revenue due to the lack of competent people in the sector. Abadi removed the head of civil aviation authority under the guise of a reform campaign. Then he removed the two deputy ministers of transportation along with their advisors. He removed 123 persons at the ministry of transportation alone and they were not even replaced. 

They instead appointed inexperienced people, which finally led to a reduction in income. The current minister of transportation has neither deputies nor advisors. If we compare the Abadi cabinet with that of Maliki, we can see there was investment budget during Maliki’s. But during Abadi’s cabinet, the whole budget was turned into functioning budget due to plummeting oil prices and corruption became endemic. There was more corruption during Abadi’s cabinet than there was during Maliki’s. The corruption levels during Abadi’s cabinet were more dangerous than those during Malki’s.

Can you speak about the corruption in the oil sector in Iraq, especially as regards SOMO?

I once asked the prime minister’s advisors whether they knew anything about SOMO. They don’t know anything about the company

or its policies. They don’t know how the company sets its prices, how it calculates the amount of oil exported, how they conduct quality control for oil sales, when they reduce oil prices, and how it exports the oil. I worked in the oil sector for a long time. I began as an assistant engineer and ended up as general manager. I worked for an OPEC company. I have seen more than 100 harbors where oil is sold and exported. That is why I speak from experience. Advisors don’t have this kind of information. 

$1 billion has been wasted every year in the airline industry. The flight monitoring body was dissolved and turned into a company. Every party then started to open their own companies to invest in the airline industry. I made it known that there was cash in the sky, and now I don’t want to draw their attention to another kind of investment by touching on the mechanisms used to export oil.

Baghdad has been constantly asking the Kurdistan Regional Government to hand over it oil reserves to SOMO. How could they ask for such a think when they don’t know anything about the company is doing business?

The government in Baghdad doesn’t know anything about oil sales of the Kurdistan Region. But SOMO does. However, neither the prime minister nor his advisors know anything about the works of SOMO. But the company itself is experienced in the business and has many competent people working for it.

Why has SOMO kept the prime minister and his advisors in the dark about its business?

Leaders, including the prime minister, president of the republic and speaker of the parliament, appoint advisors not to benefit from

their advice, but to get them to benefit financially from the country’s riches. Dr. Haider al-Abadi became acting oil minister after Dr. Adil Abdul-Mahdi resigned. I then sent him a message informing him of an error in the way SOMO was operating and explained to him how they could increase the oil price. Abadi had later sent the message to SOMO which led to the price of an oil barrel increase by 30 cents in a short period of time, which would mean an annual income of $383. He replied, thanked me and acknowledged they benefitted from my instructions. Why should we send information by a text message? It is advisors that are supposed to provide this information so that the country benefits from it.

You have abundant experience in the oil sector. How do you think oil relations between Erbil and Baghdad can be improved? What should they do in order to reach an oil deal?

I was once on the same panel as Dr.Barham Salih in the office of Dr.Ibrahim Bahr al-Ulloum, discussing relations between Erbil and Baghdad and the prospects for improving these relations. The people from Baghdad were defending the position of Baghdad, and Salih was defending the Kurdistan Region. Al-Ulloum was chairing the panel, who invited Amer Abdul-Jabbar to speak. And I told Salih I had a solution for the complex relations between Erbil and Baghdad and asked him to testify to an event that happened during Maliki’s cabinet where we were together in the council of ministers. He asked me to go ahead and say it. I said: “When the problem of falling oil prices emerged, the finance minister said they cannot pay salaries of employees until the end of the year if oil prices don’t change and oil exports do not increase.”

Then Maliki asked if there was anyone who could resolve the problem. Salih said Abdul-Jabbar could solve it in front of more than 100

politicians. I then wrote a report detailing the failures of the ministry of oil and outlines mechanism to resolve the problems. When I submitted the report, Salih asked why I hadn’t signed it. I told him they were party men, and I was an independent minister affiliated with no parties and hence my signature was of no value. I asked him to sign it so that his position strengthens. Salih signed the report under his name and then submitted to the prime minister who later formed a committee of experts on the matter. After they investigated the matter, they realized all my information was correct. Then they decided to increase oil production from 1.85 million barrels to over 2 million. 

In the meeting, I suggested that a team headed by Dr. Ibrahim Bahr al-Ulloum be formed to resolve problems between Erbil and

Baghdad, and we too be part of the team. Ulloum has a doctorate in the field of oil and was minister of oil. He is also like by both the Kurd and Arabs. There are many problems between Erbil and Baghdad, but the most important one is oil. We said we would work to resolve the oil problem between the two. The majority of problems would dissolve and end if the oil problem is resolved. Salih said Dr. Amer Abdul-Jabbar is an expert, he had confidence in him, and that they had worked together in the council of ministers. He invited Ulloum and me to visit Kurdistan. 

Then I visited Dr. Hussein al-Shahristani and shared the idea with him. I asked him to give us the green light and support us in this initiative, and he said it was up to me and that I could visit the Kurdistan Region as an ordinary citizen. I am a minister. How can I visit them as an ordinary citizen, I replied? I asked him to approve my suggestion so that we resolve the problems. He said in a cold manner that he would hopefully get back to me. He didn’t encourage me to go ahead with my initiative. The file was later closed. But Dr. Adil Abdul-Mahdi is more moderate. The same team headed by Ulloum can be formed again and we could resolve the oil problem through cooperation between the two.