A Digest of the Week’s Exclusives

21 June: Although Iraq’s first postwar exports are set to restart Sunday, June 22 – auctioning some 10 million barrels held in storage to coincide with resumed pumping – the outlook according to debkafile‘s energy experts is uncertain. Oil installations are far more dilapidated than thought, constant prey to organized sabotage and criminal looting. Oil wells and pumping stations have been repeatedly damaged at both the northern and southern oil fields – and not only by diehard pro-Saddam guerrillas. Local tribal interests seeking a stake in the oil industry are behind some of the gangs of saboteurs, and looters make off with replacement parts as soon as they are installed.

Plagued most often by the lawlessness are the giant southern field of Rumeila and the Baiji refinery in the north. KBR, a subsidiary of the Texan Haliburton, which is under contract to help US army engineers repair and restore Iraqi oil production, has doubled its costs in one month to $184 million. Shipments at the Turkish terminal were originally scheduled for Friday June 20. But they were delayed after two bomb explosions started fires on the 600-mile Iraq-Turkish pipeline last week near Baiji. Under discussion now with Washington is the dispatch of Pakistani and Indian contingents to help prop up security in Iraq. According to debkafile‘s military sources, Indian units would be deployed along Iraq’s borders with Syria, Iran and Turkey, while Pakistani soldiers would secure inland areas of the northern region. Their presence if approved would boost oil field security substantially.

Target output was also scaled down. Iraq was originally expected to produce 1.2 million barrels per day by this month and return to its pre-war output of 2.4 million bpd by the end of the year with up to 1.8 million bpd going to exports. At the end of this week, the realistic target figure had to be dropped to 1.0 million to 1.2 million bpd by mid-July.

According to debkafile‘s experts, Iraq will need another 6-12 months to reach its pre-war production level of 2.7-3.1 million bpd and another 18 months to break through that ceiling. World prices are therefore likely to stay high in the near future, reducing America’s impact on the market and empowering the Saudis as leader of OPEC.

23 June: The Israeli-Palestinian peace front remains stalled in defiance of the US secretary of state Colin Powell’s generous assertion of progress towards an Israeli-Palestinian accord for the transfer of security responsibility on the Gaza Strip. Israel’s military commander of the West Bank and Gaza Strip Lt. Major Amos Gilead said after another inconclusive meeting with Palestinian internal security minister Mohamed Dahlan: “As long as Arafat pulls their strings, we’ll get exactly nowhere.”

The latest Palestinian stipulation is that Israel withdraw from all the Palestinian areas its troops entered after Arafat declared his confrontation on September 28, 2000. Until that happens, the Palestinians will not consider implementing the Middle East road map.

Arafat has ordered Prime minister Mahmoud Abbas and Dahlan to stand fast on this pre-condition because turning the clock back will empower him to proclaim himself victor of the Palestinian-Israeli war and the Israelis vanquished.

But that is not all. Before permitting the Abu Mazen-Dahlan duo to make any security commitments, Arafat is demanding what he regards as the Palestinians’ due for their suffering in the coin of hundreds of millions of dollars from the United States, euros from the European Union and shekels from the Israelis.

“Seventy percent of the Palestinian security forces are controlled by Arafat and the rest by Dahlan,” says Israeli negotiator Gilad: “Before talking to us, Palestinian leaders invariably present themselves to Arafat for instructions.” Yet Israeli prime minister Ariel Sharon said on Monday that Abu Mazen is a man “we can negotiate with.” As he spoke, a booby-trapped car was fortunately intercepted on Jerusalem-Modiin Highway 443 carrying a huge quantity of explosives. The vehicle was traced to the Ramallah district where Arafat reigns supreme.

Jerusalem and its environs and highways have again become a killing ground for Palestinian terrorists and suicides dispatched from Ramallah. But is anyone willing to take Arafat on?

Not as long as the impact is muted of the US-Israeli-Palestinian stalemate on the broader diplomatic arena in which Washington is engaged.

Washington took the opportunity of the World Economic Forum held this week in Jordan to administer another push to its free trade plan for the Middle East – the other half of its program of democratic reform. Only Jordan and Israel have free trade pacts with the United States. The reception by other Arab governments to the American economic plan is far from enthusiastic, as DEBKA-Net-Weekly explained in its last issue on June 20.

It is hard to see Mahmoud Abbas and Dahlan safely picking their way through the minefields they are negotiating between the leading Arab rulers and Arafat, on the one side, and the Americans and Israelis, on the other. Hamas leaders can afford to frustrate them by keeping up their protracted game of tease over a ceasefire.

However, debkafile reveals that the American secretary of state drew on his colleague’s symbolism to put the Middle East manipulators and schemers firmly in their place by a quiet piece of advice to Jordan’s King Abdullah II. Send your ambassador back to Tel Aviv, he said. Don’t wait for the Egyptians. They belong to the Old Middle East; you’re in the New Middle East.

23 June: The loud chatter swirling around the stalled Middle East road map muffled the real news emerging from this year’s World Economic Forum assembled on June 22 at the Dead Sea. debkafile‘s exclusive sources report some of these items.

For Washington, the focus of the gathering of 1,400 foreign ministers and businessmen – brought to the fore mainly in behind the scenes conversations – was that the United States has big plans for Iraq and is forging ahead in its drive for a new Middle East.

Two high-powered Americans attended the event to underscore these points: Paul Bremer, civil administrator of Iraq, and Liz Cheney, assistant secretary of state for the Near East, 36-year old daughter of the vice president.

Bremer informed anyone who wanted to listen that Washington has not been sidetracked by the guerrilla attacks in Iraq and two key plans have taken form:

— On July 15 , the US administration begins building the New Iraqi Army, staring with the 1st Brigade of 5,000 armed men who will serve under Iraqi officers. Conscription of 40,000 men is targeted by the end of this year, roughly one tenth of the size of Saddam Hussein’s armed forces at the outset of the war in March 2003.

2. On the political side, Bremer has selected 25 to 30 prominent Iraqis to serve on a national council to select ministers for a future Iraqi government and create commissions to frame a new Iraqi constitution.

Ms Cheney turned up at the World Economic Forum not only with a plan of action but a $100 million budget to support it: The money is there to promote democracy and advance women’s rights in the Middle East.

The message conveyed by the presence of the two American officials was beamed most of all at Arab ears. Their representatives poured out a heap of anti-Israeli, anti-Semitic invective at the current World Economic Forum, but they are warned that the days of Arab dictatorships are numbered and democracy is around the corner. In future, US dollars will be spent on building democratic regimes rather than propping up corrupt tyrannies.

An important disclosure also came from the forum’s host, King Abdullah II, who reported in quiet conversations that Jordan has begun sending detachments of police officers to organize internal security in Iraq’s main cities and take command of local Iraqi police forces.

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