ASSOCIATED PRESS
BEIJI, Iraq - U.S. troops in this oil refining center are cracking down on a vast fuel theft and smuggling operation that robs from Iraq's economy and helps finance the insurgency.
The troops are chasing the smugglers and closely monitoring refinery workers. For American soldiers, it means ending a hands-off approach at the facility and doing jobs that would normally fall to police.
Capt. Adam Lackey of Trafalgar, Ind., said it was a problem that could no longer be ignored because the illicit money helps buy bombs and bullets that kill and maim soldiers.
"Our hand has been forced," said Lackey, of the 1st Battalion, 187th Regiment, 101st Airborne Division. "We're going to make it harder for them, make it less profitable, and we're even going to make it more dangerous."
Before the crackdown began in recent weeks, fuel smuggling from Beiji was so extensive and flagrant that dozens of truck drivers would congregate just outside the refinery's gates. In plain sight, they would swap counterfeit export documents or transfer fuel to unauthorized trucks.
Iraqi officials have long complained about oil smuggling, especially from the Beiji refinery and other sites around the northern oil fields.
In a report last month, the inspector general of the Oil Ministry, Ali Alaak, estimated about $4 billion worth of petroleum products were smuggled out of Iraq last year, including gasoline and crude oil siphoned from pipelines. He described oil smuggling as the greatest threat to Iraq's oil-dependent economy.
The Finance Ministry estimates that up to half of the profits from oil smuggling end up in the hands of insurgents.
So much fuel was disappearing that residents of this Sunni Arab city 155 miles north of Baghdad would routinely wait eight hours or more to buy fuel at gas stations within view of the refinery.
Smuggling is lucrative in Iraq because fuel prices are heavily subsidized by the government. A gallon of regular gasoline costs less than 70 cents. Smugglers make a substantial profit by shipping fuel to Syria or Turkey, where prices are much higher.
Inside Iraq, because of long lines at official filling stations, street bootleggers can charge double the authorized price to customers who cannot wait.
Insurgents also profit by charging a "protection fee" of $250 to $300 per truck, according to U.S. soldiers quoting drivers. Between 200 to 700 tankers leave the refinery daily, soldiers said. Drivers who do not pay run the risk of being ambushed.
It is unclear whether insurgents run the smuggling rings directly, which would increase their profits even further.
American officers would not estimate the amount of money that ends up in insurgent hands after smuggling from Beiji. But they said the national government desperately needs all the money it can get to combat the predominantly Sunni insurgency and rebuild Iraq's infrastructure.
"You think about how much money they could be making for the government if they sold it properly," Lackey said. "That's all they got in this country -- fuel. That's all they got to sell."
The initial weeks of the operation have started to pay off. Lines for fuel are shorter, soldiers said, and about one-fifth of gas stations in Beiji appear to be operating normally.