Iraq Oil Minister Resigns Over Gas Prices

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Iraq's oil minister, Ibrahim Bahr al-Uloum, officially submits his resignation in protest of a three-fold price hike in the cost of gasoline. His announcement is another blow to an oil industry already in shambles with insurgent attacks and low export levels.

MELISSA BLOCK, host:

Iraq's oil minister officially offered his resignation today in protest over government-ordered price hikes that tripled the cost of gasoline across the country. NPR's Jamie Tarabay has this report from Baghdad.

JAMIE TARABAY reporting:

A lot of stories have been circulating lately about Ibrahim Bahr Uloom, the minister of oil. After denouncing the government's massive hike in fuel prices three weeks ago, Bahr Uloom left the country because of what he described as a family emergency. His portfolio was handed over to Deputy Prime Minister Ahmed Chalabi. But Bahr Uloom has refused to be silenced, and today he could barely restrain himself.

Mr. IBRAHIM BAHR ULOOM (Outgoing Oil Minister, Iraq): (Through Translator) Such a decision cannot help the country. The time to keep my mouth shut is gone. I hold my reservations on whether what the prime minister did might not be illegal.

TARABAY: The fuel price hikes were part of an arrangement with the International Monetary Fund to forgive 80 percent of Iraq's $120 billion debt. But Bahr Uloom argues that instead of an immediate increase, prices should have been raised gradually.

Mr. ULOOM: (Through Translator) At a time when we seek to improve our economic situation, we should remember that many of the problems are inherited and cannot be dealt with by economic theories from the international organizations.

TARABAY: Though Bahr Uloom's resignation isn't yet official; it requires parliamentary approval, and the Legislature is in recess until the second week of January, following Muslim holidays. And even then, it may not be able to act until a new government is formed on the basis of last month's elections. But Bahr Uloom is intent on resigning unless the increase is rolled back. He told NPR oil production is at its lowest since the US invasion at 1.1 million barrels a day. Stormy weather in the South and sabotage in the North halted production for nearly two weeks. Today the country's largest oil refinery in Baiji began producing fuel again after threats of insurgents forced it to close. Police had to escort the tankers and secure the highways to ensure safe passage after militants seized some tankers and set them on fire.

Iraq has the world's third-largest proven oil reserves. Bahr Uloom says the government hopes to be able to produce two million barrels a day by the middle of 2006, but he acknowledges that the oil sector has a long way to go before it can provide a stable income for the government, which depends on oil sales for more than 90 percent of its revenue.

Mr. ULOOM: (Through Translator) That is why we wanted to solve our economic dilemmas by a gradual raise in prices over long-term intervals. It is true that Iraq is the only country where our oil is cheap, but it is also true that increasing consumption force the government to import from the outside to face demand.

(Soundbite of wind)

TARABAY: It's hard to find an Iraqi at a gas station not upset by the price spike. Across the country, Iraqis have protested the move. Today in the southern city of Basra, demonstrators burned tires and marched through the streets, protesting what they see as an inevitable increase in the cost for other essentials like vegetables and meat brought on by the massive hike in gas prices.

On Saturday, Iraqi police shot and killed four demonstrators near the northern city of Kirkuk during riots in which protesters set fire to gas stations. And insurgent attacks continue to hurt Iraqi oil production. A pipeline in northern Iraq is still out of service after being hit by an insurgent bomb. And in Baghdad today, Iraqi security forces closed the entrance to the main power plant while they disabled a car bomb.

US government economists here say cuts in Iraqi gas subsidies are necessary to boost government revenue. But the oil infrastructure here still needs billions of dollars of investment, and billions of dollars in US reconstruction money may not be replenished once they run out. Jamie Tarabay, NPR News, Baghdad.

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