BASRA, Iraq — This once-placid port city is beginning to look a lot like the mob-ruled Chicago of the 1920s, an arena for settling scores between rival gangs, many with ties to the highest echelons of local and national political power.
Basra's sudden political troubles and violence are rooted in a bloody competition for control of millions of dollars in smuggled oil, residents and officials say. Out on the Shatt al Arab waterway and off the coast of the Persian Gulf, boats wait to receive Iraq's smuggled oil, the most visible sign of what many suspect are vast multinational criminal gangs selling subsidized and stolen petroleum products for a premium in Iran, Kuwait and the United Arab Emirates.
"Oil smuggling is one of the biggest issues in Basra," said Furat Shara, the local leader of the Supreme Council for Islamic Revolution in Iraq, a Shiite political party. "It is over the smuggling of oil that there is a conflict among the political parties."
One local official estimated the value of the smuggling trade at $4 billion a year, or about 10% of the country's gross domestic product.
Basra is almost free of the guerrilla warfare, car bombings and suicide bombings that characterize daily life in Baghdad, Baqubah and cities in the Sunni Arab stretches of the country. But this Shiite-dominated southern city and its surrounding suburbs have descended into chaos and violence, apparently rooted in financial, political and sectarian tensions, that threaten to unravel the region's modest progress.
"The amount of actual terrorism in Basra is very limited," Iraqi Defense Minister Gen. Abdul-Qader Mohammed Jassim Mifarji told reporters at a recent briefing. "The dominating struggle is between armed gangs and political groups."
Officials say much of the smuggling-related violence here is rooted in a power struggle among political groups that include Prime Minister Nouri Maliki's Islamic Dawa Party and the rival Supreme Council for Islamic Revolution in Iraq, as well as Al Fadila al Islamiya, or the Islamic Virtue Party, and rebel cleric Muqtada Sadr's movement.
Though rivals, all these Shiite parties are tied to the same coalition: the United Iraqi Alliance, the bloc with the largest share of seats in parliament.
Officials and observers say the Fadila party, which controls the provincial government and recently threatened to shut down oil exports if it didn't retain control of the nation's Oil Ministry, has been the most eager participant in the smuggling business. One former lawmaker estimated its daily oil take was in the hundreds of thousands of dollars. Fadila controlled the Oil Ministry in the previous government and appointed loyalists to many posts, from high-level jobs down to oversight of terminals in Basra.
Early Friday, gunmen attacked the home of Basra's deputy governor, Louay Batat, injuring one of his guards. The assailants tossed a grenade at a trailer housing his bodyguards before fleeing in a white car. Batat belongs to a small faction allied with the Fadila party.
Iraqis say the smugglers have set up eight makeshift terminals along the coast to store the oil before smuggling it out of the country, a practice employed by Saddam Hussein during the 1990s to circumvent United Nations sanctions.
Unemployed fishermen, struggling to make a living as their traditional livelihoods are destroyed by pollution and overfishing, are more than willing to run boats across the Persian Gulf, often to Iran or the United Arab Emirates. Their plight often provides a convenient public rationale for officials looking the other way.
"This is their justification," said Sheik Abathar Sudani, a local leader of Sadr's movement. "Let the fishermen sell a share from the oil when they are not fishing."
After the collapse of Hussein's regime, Shiite political parties and militias quickly took control, consolidating their rule through elections. They have proceeded with their oil pilfering despite the presence of British forces, who are increasingly viewed as ineffective interlopers.
"The smuggling of oil is being conducted on such a large scale, with the Britons doing nothing to stop it," said Hossein Athad Sukeini, a professor of law at Basra University and a former member of parliament. "The multinational forces must bear the responsibility of providing security and protecting the wealth of the occupied nation they are controlling."
The blatant smuggling has served to symbolize the corruption and incompetence of the Shiite parties that have filled the power vacuum since the U.S.-led invasion in 2003, residents and officials say. Government services such as trash collection and the upkeep of water and electricity lines have deteriorated compared with the time of Hussein's rule, residents say.
"Each political party is busy smuggling oil while we are busy looking for a quantity of gasoline to operate our small generators or cars," said Mahmoud Salman Saadi, 50, a schoolteacher.