12/05/2011 07:43 am ET Updated Feb 04, 2012

Iraq: Basra Wants More Autonomy

By Rania El Gamal

BASRA, Iraq, Dec 5 (Reuters) - Officials in Iraq's
southern oil hub Basra are trying to cancel a $17 billion Shell
gas deal because they want a bigger say, highlighting the
pressure on central government to ease its control over the

Basra, where dozens of international oil companies signed up
to develop some of Iraq's largest oilfields, is increasingly
restless with the slow pace of development in the province and
wants more control over its natural resources and revenues.

Demands for more provincial power have simmered for years in
Iraq, split by ethnic, sectarian and tribal tensions. But the
Basra push and an autonomy drive from Salahuddin province
threaten to stir tensions as the last U.S. troops withdraw.

The final contract with Royal Dutch Shell and
Mitsubishi to capture flared gas in three southern
Iraqi oilfields was signed on Nov. 24 despite objections from
the Basra local council that it was not included in talks or the
deal's signing.

Officials from the Basra Provincial Council filed a lawsuit
against the Iraqi Oil Ministry on Nov. 25 demanding the
cancellation of the gas agreement.

"In principle, we don't have any problem with developing the
gas but when the contract is signed, there has to be an article
that shows the provincial council has agreed ... Unfortunately,
we did not know anything about this contract," said Sabah
al-Bazouni, head of the Basra Provincial Council.

"Basra is the most suitable province to become an autonomous

Regional autonomy would give the province more power over
finances, administration and laws, and an upper hand in
supervising public property, which could loosen Baghdad's grip
on the oil and gas sector.

The legal case is unlikely to deter Shell and delay the
project, but it raises concerns about future disputes over oil
and gas rights in Iraq, which is struggling to rebuild after
years of violence just as Washington prepares for a full troop
withdrawal by the end of December.

"Just as the constitution gave rights to the region, it also
gave similar rights to the producing provinces ... Today, the
Kurdish region signs a deal with ExxonMobil and the central
government objects, it is double standards," said Bazouni.

Minority Kurds in the north of Iraq have enjoyed
semi-autonomy for years since Western powers imposed a no-fly
zone after the 1991 Gulf War. The Kurdish north is now seen as a
model for other regions seeking more autonomy.

Iraqi Kurdistan was able to attract foreign investment and
provide its residents with better security and living standards
than in the rest of Iraq, where bombings and power cuts are a
part of citizens' everyday lives.

But the Kurdistan Regional Government (KRG) and Baghdad are
locked in a row over land and oil. The central government has
objected to a recent deal between the KRG and U.S. oil giant
ExxonMobil to explore for oil in the northern region.

Despite that, officials in Basra look to the KRG's
experience and blame the lack of progress on political wrangling
in Baghdad and rivalry among the Shi'ite Muslim, Sunni Muslim
and Kurdish parties, each jostling for more power.

"Part of what drove us to demand regional autonomy is that
political problems are usual in Baghdad not in Basra, where the
governing parties are a known quantity," said Ghanem Abdul-Amir
al-Maliki, a member of Basra Provincial Council.

"It is clear that the Kurdistan region is stable to a large
degree because the governing parties there are a known factor
... In Baghdad, everyone is trying to please his own party on
the account of others. We want to get rid of the political
infighting in Baghdad by setting up a region."


Provinces need a public referendum and parliamentary
approval to attain regional autonomy. Prime Minister Nuri
al-Maliki, who took part in writing the constitution in 2005,
supports powerful central government.

His government has tried to quieten the autonomy movement,
partly out of concern that it could lead to instability as the
U.S. troop withdrawal picks up pace. The remaining 10,000 troops
are scheduled to leave before Dec. 31.

In October, the mainly Sunni Salahuddin province
symbolically decided to declare the area autonomous. The move
was criticised by Maliki.

In the mainly Shi'ite oil hub of Basra, autonomy talk has
bubbled for years. Basra sent a formal request for autonomy more
than a year ago, but has had no response from Baghdad.

The southern city used to be called "The Venice of the
Middle East", but now, Basra's crisscrossed canals are filthy
pools of stagnant water filled with heaps of rubbish.

Roads are damaged and only a few hours of electricity are
provided every day.

Most of Iraq's oil exports come from the fields around
Basra, but residents are fed up with shortages of power, water,
jobs and housing. They complain they have seen little benefit
from the oil wealth.

"Federalism is the solution. It has been eight years and
Basra is still the same. The central government was not able to
solve the problem of the electricity, water and other services
in Basra," said Raied Khoudair, 34, a government employee.

"Until when Basra will remain the cow that Iraq milks for
everything, and gets nothing from Iraq? We see the development
in the Kurdistan region and the prosperity they live in, we are
no less than them."

(Additional reporting by Aref Mohammed; writing by Rania El
Gamal; editing by Elizabeth Piper)