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Cablegate: Basrah: The Port of Umm Qasr and an Overview of Iraq's Port

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RR RUEHDA RUEHDE RUEHDH RUEHDIR RUEHIHL RUEHKUK RUEHTRO
DE RUEHBC #0052/01 2601334
ZNR UUUUU ZZH
R 171334Z SEP 09
FM REO BASRAH
TO RUEHC/SECSTATE WASHDC 0915
INFO RUEHBC/REO BASRAH 0953
RUEHGB/AMEMBASSY BAGHDAD 0493
RUCNRAQ/IRAQ COLLECTIVE
RUCNIRA/IRAN COLLECTIVE
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEHKO/AMEMBASSY TOKYO 0001
RUEHCP/AMEMBASSY COPENHAGEN 0013
RUEHLO/AMEMBASSY LONDON 0067
RUEHKU/AMEMBASSY KUWAIT 0013

UNCLAS SECTION 01 OF 06 BASRAH 000052

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EWWT EAID KSEC PREL PBTS ELTN IZ
SUBJECT: BASRAH: THE PORT OF UMM QASR AND AN OVERVIEW OF IRAQ'S PORT
SYSTEM

BASRAH 00000052 001.2 OF 006


1. (SBU) Summary: The port of Umm Qasr, Iraq's only deepwater
port, with significant U.S. assistance, has made major progress
in its rehabilitation since 2003, following years of wars,
damage and sanctions, and must continue to play a central role
if Iraq's post-war economic recovery is to be sustainable. Most
of Iraq's food imports and much of its imported goods enter via
Umm Qasr, and the port has seen growing volumes in recent years,
reflecting Iraq's continuing economic and security improvements.
Underscoring its security-related importance, Umm Qasr is also
home to the Iraqi navy and close to Iraq's two international oil
export terminals. Since 2003, the port has undergone major
improvements in the areas of security, shipwreck removals,
dredging, and commercial development. However, bureaucracy,
technical shortfalls, and human resource deficiencies hamper
more rapid development. The United States plays a crucial role
in the port's continued transformation, overseeing improvements
in security, rehabilitation, and commercialization. In
particular, the U.S. Coast Guard is working with port
authorities to achieve the International Maritime Organization
certification for International Ship and Port Facility Security
(ISPS) certification, which would reduce ship and cargo
insurance and spur greater port business. Other foreign donors,
particularly the Japanese, are also active in providing
assistance. In the future, the GOI envisions a new megaport in
Al Faw on the Persian Gulf, to fill a perceived need for a large
regional port. But even if such a plan ever advances, it is at
least a decade away, and is not without major bureaucratic,
engineering and financial challenges. Thus, for now and at
least the next decade, the Port of Umm Qasr will be Iraq's only
major port, and a key to continued economic growth. End
Summary.

Port of Umm Qasr history
------------------------

2. (U) Umm Qasr (umm KA-sir) is said to be near the site of
Alexander the Great's landing in Mesopotamia in 325 BC. During
World War II the Allies established a temporary port there to
unload supplies to dispatch to the Soviet Union. Construction
of today's port followed a few years after the Iraqi Revolution
of 1958, and was intended to serve as Iraq's major port and
reduce its dependence on the disputed Shatt al-Arab waterway
that marks the border with Iran. In the 1960s and beyond, a
newly industrializing Iraq began to ship goods to the region
from newly-built factories via Umm Qasr. The port became a
symbol of progress and independence of the Revolution. During
three recent wars from 1980 to 2003, however, its facilities and
harbor were severely damaged or impaired with ship wrecks,
unexploded ordnance (UXO) and silted waterways. The city of Umm
Qasr was one of the first Iraqi cities captured in the 2003 Iraq
invasion; after it was de-mined and reopened, it played an
important role in the shipment of humanitarian supplies.

Central economic lifeline
-------------------------

3. (U) Thirty miles south of Basra city at the southern end of
the Khawr Abd Allah waterway at the Kuwaiti border, the Port of
Umm Qasr is Iraq's only deep-water port and primary port of
entry for cargo and food, and key to maritime transportation and
trade. Some 85 percent of Iraq's bulk food supply, including
350,000 monthly tons of wheat, comes through the port. Divided
into North, Middle and South Ports, it has 22 operational
berths, 33 warehouses, and two container cranes. Drafts range
from about 4 to 10.5 meters. In 2008, about eight million tons
of cargo and 100,000 twenty-foot-equivalent units (TEUs) arrived
(few exports leave from Umm Qasr), a 20 percent increase from
2007, and compared to about 5.99 million tons in 2007. These
numbers reflect continuing economic and infrastructure
improvements, as more ships and cargo are arriving, and all
berths are routinely occupied. Weekly, thousands of Iraqi
trucks carry containers off to the interior of Iraq. Umm Qasr
also has decent road and rail links to Basra and Baghdad, and is
reasonably well-provided with water and electricity.

4. (U) According to most port consultants, Umm Qasr is a decent,
if modest-sized port (ranking around 200th worldwide in terms of
volume or weight), and has the potential to expand capacity.
While current generation container ships carry about 20,000
TEUs, the maximum capacity ship that can normally access Umm
Qasr is about 6000 TEU. According to port consultants, with

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proper improvements, its annual intake could eventually reach
500,000 TEU. The main imports are wheat, cement, sugar and
rice. And while Iraq imports about 30 million tons/year of
goods, over 50% of this is transported overland via neighboring
ports, hence the need to further develop Umm Qasr. Primarily a
commercial port, Umm Qasr also has a passenger terminal, with
ferry service to/from Dubai twice per week, and carries around
1500-1800 passengers per month, or around 20,000 annually. The
port also has GOI customs and immigration team units for
incoming ferry passengers.

Security status
---------------

5. (SBU) Umm Qasr is also home to the Iraqi Navy which, as well
as protecting port traffic, has the vital role of guarding (with
U.S. assistance) the two nearby offshore oil terminals of Al
Basrah and Khor Al Amaya in the Persian Gulf, through which
around 95 percent of exported oil passes, around 1.4 million
barrels/day, and accounting for around 75 percent of Iraq's GDP.
Perimeter and port security is performed by Iraqi marines and
police, mentored by U.S. military units. However, while the GOI
port security manager informally runs overall security with
participation of a dozen GOI agencies, there is still no legally
established entity in charge.

Rehabilitation, shipwreck removal, dredging
-------------------------------------------

6. (SBU) Hundreds of wrecks, objects and UXO remain throughout
southern Iraqi ports, rivers, channel approaches and sea lanes,
mainly a result of the 1980-1988 Iran-Iraq War. As a result of
efforts since 2003, about three-dozen priority wrecks that had
clogged these areas in and around Umm Qasr and the Shatt Al-Arab
have now been removed. Turkey-based Tuzla Shipyards has been
the main GOI contractor for this effort. Other priority
clearance and dredging has also been done, as well as some yard
and crane rehabilitation -- but much more work remains. These
efforts will enable the port to receive more and larger vessels
in the future. Port authorities are also planning the
construction of four more container berths, each with a 500,000
tons/year capacity, which would increase total annual port
capacity by 2 million tons. Additional warehouses, yards, and
truck parks are also being developed. These and other capacity
improvements related to berth depth and gantry crane repair
could increase annual handling capacity by another two million
tons. Some of these projects will be funded by Commander's
Emergency Response Program (CERP) funds.

Commercial efforts lifting volume, bringing new private
operators
--------------------------------------------- --------------------

7. (SBU) While the GOI has ruled out any outright port
privatization, the Ministry of Transportation (MOT) and General
Company of Ports, Iraq (GCPI) have prepared short and long term
development plans for all of Iraq's ports, and seek partners to
manage and operate a number of major investment projects. They
and international port operators and investors recognize Umm
Qasr's vital economic role. In Umm Qasr's South Port,
U.S.-based American United Logistics (AUL) and France-based
CMA-CGM each recently won three-year contracts to provide
general cargo, container, warehousing and staging services.
Although not a significant private operator incursion (and both
would have preferred longer terms), it is a small but important
first step for a small private sector foothold in the Port. It
is also an opportunity for port management and workers, so long
cut off from the world, to gain a better understanding about
global port operations. The GCPI has pledged to put North Port
out to a short term management arrangement and South Port to a
long term concession. The Port has hosted nine recent investor
visits in the last 12 months.

But technical, human resource problems limit Umm Qasr's growth
--------------------------------------------- -----------------

8. (SBU) While Umm Qasr has done a credible job at
rehabilitation and expansion since 2003, it is unlikely to ever
gain the substantially extra capacity and deeper drafts to allow
it to become a major regional hub. Umm Qasr was actually
designed to service only third generation container ships, about

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270 meters long, up to 3500 TEUs, and 11 meter drafts. Today,
less than 7% of the world's commercial fleet is third generation
or smaller, and less than 1% of ships being built are that
small. Even with regular dredging, maximum water depth is
around 10-11 meters, and the typical maximum ship is a Panamex,
relatively small by global standards. The port is also
handicapped by its long, single, and narrow inland approach
channel, which still has wrecks, silt, UXOs and minefields
(although priority obstacles have been removed).
Still-unresolved territorial disputes with Kuwait (and Iran in
the case of two smaller ports) hinder further needed dredging
and wreck removals near border areas. Lack of adequate
navigation aids impacts safety, so that only smaller vessels can
regularly access berths. This in turn translates into higher
fuel and shipping charges, longer transit times, and shipping
agents opting for foreign ports, all costs ultimately borne by
Iraq in terms of higher subsidies or cost of goods. Meanwhile,
eighth and ninth generation container ships, carrying 14-18,000
TEUs are already on the drawing boards around the world.

9. (SBU) Human resource problems are also evident. Decades of
wars, sanctions and attendant isolation have contributed to a
general resistance to needed management improvements and new
ideas. The port has a bloated workforce: according to port
consultants, the work done by the 5,000-odd workforce could be
accomplished by around 1,000 workers. A port that advertises
16-hour days actually sees most of its staff leaving at around
3pm. A typical day at the port is a pandemonium of trucks,
containers, cars and people moving in all directions; the port
lacks even the most basic traffic or safety plan. Many basic
services -- warehousing, hotels, restaurants, banks -- are
sub-par or non-existent (and great opportunities for such
businesses are squandered). There still is no established
central legal authority for overall security. Customs and
immigration capacity is also weak. Ideally, the port should
hire a management consultant to oversee a badly needed
integrated commercial-security-rehabilitation vision for the
port. While the GOI agreed to hire U.S.-based port consultant
Cornell Group to assist in restructuring and concessioning the
port for development and operation, this has not yet occurred.

Many GOI agencies vie for control
---------------------------------

10. (SBU) Iraq's ports are managed by the Basra-headquartered
GCPI, a semiautonomous agency under the MOT, and with whom the
PRT and Embassy Baghdad enjoy good relationships. However,
while the GCPI might exert nominal control, in fact, over a
dozen GOI ministries and agencies have a role at the Port of Umm
Qasr, a fact which complicates coordination here and at other
ports. GOI agencies include the ministries of Finance, Defense,
Interior, Trade (operating a grain silo), Industry and Minerals
(operating a cement factory), Construction and Housing,
Agriculture, as well as the Iraqi marines, Customs, Immigration,
Port Police, and intelligence services.

Some U.S. re-deployment efforts to go through Umm Qasr
--------------------------------------------- ---------

11. (SBU) As the United States begins the long drawdown of
troops and material from Iraq (retrograde operations), the Port
of Umm Qasr will also play a role. Currently there is
intermodal movement of containers from the Taji Army base, 20
miles north of Baghdad, to Umm Qasr. The containers are
transported by the U.S.-backed Iraqi Trucking Network to the
Iraqi railways station in Baghdad, and from here moved by rail
to the Port of Umm Qasr, as well as to ports in Iraq, Jordan and
Kuwait.

Extensive USG involvement in the ports
--------------------------------------

12. (SBU) The Port Development Advisory Team (PDAT), an Embassy
Baghdad multi-agency unit led by the Office of the
Transportation Attache, advises and mentors the civilian port
leadership in the areas of security, rehabilitation, and
commercialization. PDAT enjoys excellent relations with the
GOI, including the dozen-odd GOI ministries and agencies at the
port, as well as private sector and third country stakeholders.
PDAT also coordinates the disparate USG agencies providing
support in these areas (detailed below) and monitors and

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provides guidance on the multinational rehabilitation efforts
involving wreck removals, dredging, equipment upgrades, cranes,
fire fighting, rail improvements, electrical power lines, and
guard towers.

13. (SBU) The U.S. Coast Guard's Port Advisory Coordination
Element (PACE) is working with GOI port authorities to achieve
the International Maritime Organization's (IMO) International
Ship and Port Facility (ISPS) certification, which could sharply
cut shipping insurance costs (now at "war risk" premium) and
draw new port investment, and benefit Iraqi consumers. PACE
consists of a USCG maritime security advisor to Embassy
Baghdad's Office of the Transportation Attache (OTA) and MNF-I,
three people at the Port of Umm Qasr, and facilitates the
detailed changes to port security needed to achieve ISPS
accreditation. The first step remains to achieve the
still-lacking legal security framework in the port. The PACE
team, which has also assisted other foreign countries in this
area, integrates with the PDAT and Port of Entry Training Teams
(POETT), already at Umm Qasr, who work closely with political,
economic and port management leaders. The ISPS Code is a
performance based standard which establishes a set of measures
to enhance security of ships and port facilities, and is the
sole blueprint recognized by IMO to meet the standards of Safety
of Life at Sea.

14. (SBU) PACE assists Ministry of Transport, GCPI, and local
staff to detect security threats and take preventive measures
against them. PACE establishes roles and responsibilities,
ensures efficient collection and dissemination of security
information, and provides a methodology for security
assessments. A standardized, consistent framework for
evaluating risk is the primary goal, which enables GOI decision
makers to offset changes in threat with changes in vulnerability
for ships and port facilities and determine appropriate security
levels and corresponding security measures. The consequences of
failing to comply or maintain continuous compliance could be
serious, including damaging Iraqi commercial maritime interests.


15. (SBU) A U.S. Customs and Border Protection (CBP) POETT, a
U.S. Army eleven-person contingent, advises and mentors GOI
immigration and customs personnel at the North Port. GOI
security personnel are trained in people and baggage search to
ensure the safety of ferry passengers traveling between Dubai to
Iraq.

16. (SBU) The U.S. Army Corps of Engineers (USACE) Gulf Region
South has also overseen the construction of security towers,
electrical substations, dredging, and a roll-on/roll-off berth
in North Port. USACE is also building new piers and a seawall
on the Iraqi Naval Base in South Port.

17. (SBU) Several U.S.-led military support teams based near the
Port of Umm Qasr mentor a variety of GOI security, police and
military forces related to overall port security. These
Military Transition Teams (MITT) work closely with Iraqi
security, police and military groups to ensure port perimeter
security, help professionalize Iraqi security forces, interdict
the flow of lethal accelerants, increase capacity, and otherwise
improve overall stability.

Other foreign government involvement
------------------------------------

18. (U) The United States, United Nations and other foreign
donors have provided millions of dollars in reconstruction since
2003 (including to the nearby 46,000-person town of the same
name, and many of whose residents are employed directly or
indirectly by the port). The Japan International Cooperation
Agency (JICA), working with Japan-based Nippon and GCPI, has a
$270 million Ports Redevelopment Program soft loan package for
dredging, shipwreck removals, marine and land equipment
procurement, civil and utility works, port operation and
maintenance training for the ports of Umm Qasr and Khor Al
Zubayr. The three-year project aims to rehabilitate operations
and increase efficiency by the reconstruction of port facilities
and shipping lanes, equipment upgrade, and the use of relevant
consulting services. The initial phases of the project beginS
this fall.


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19. (SBU) While the vast bulk of British forces departed Iraq in
July 2009, a small group of mostly naval personnel was to remain
at the Port of Umm Qasr, to mentor the Iraqi Navy in port
safety, security, vessel boarding, and search and seizure
techniques. Due to the still-pending GOI Council of
Representatives ratification of the UK-GOI security agreement
(which anticipates such a continued small Royal Navy presence),
these forces have departed Iraq, putting an end at least for now
their once extensive and historic role in Umm Qasr -- and Basra
Province.

20. (SBU) The Danish Government, working with the United Nations
Development Program (UNDP), has a $2.25 million aid program in
2009-2010 to provide the sea lanes near the ports of Umm Qasr
and Al Zubayr with navigational aids and lightening buoys, to
ensure the safe passage of large commercial vessels. Inadequate
navigational aids impede 24-hour access, entail higher freight
and insurance costs, and cause importers to avoid these ports
and instead transit through neighboring countries. The Danes
also have a capacity-building program to improve management,
procurement, operations and maintenance, as well as the
upgrading of a maintenance vessel which the GCPI has committed
to upkeep.

21. (SBU) In 2004-05, the UNDP led the effort to dredge the
entire 50 mile approach channel from the Persian Gulf to Umm
Qasr, and increased capacity of the Iraqi dredge fleet. Through
the World Maritime University, it has also supported port
management by conducting a three-week continuing education
program for port workers, in areas such as port planning, port
performance measurement and port management structures.

Iraq's other ports
------------------

22. (U) Four other smaller ports round out the port picture in
Iraq. Al Maqil, the original port of Iraq, is in downtown Basra
on the Shatt al-Arab waterway, 40 miles up from the Persian
Gulf. Built by the British in 1914, it handles a variety of
cargos, including oils and containers. It has 15 commercial
berths with a 250,000 ton/year capacity, storage sheds, yards
and other service facilities. Since suffering damage during the
Iran-Iraq war its capacity has been limited. Abu Fulus, 12
miles down the Shatt Al-Arab southeast of Basra, serves feeder
vessels and dhows. Built in 1970, it has three berths, with
plans to increase capacity to 750,000 tons/year. Khor al
Zubayr, 36 miles south of Basra city and 12 miles north of Umm
Qasr, was built in 1979 to establish a second outlet for
international trade. The GCPI plans to nearly double the
current 4 million ton/year capacity with the construction 13
multi-purpose commercial berths. Al-Faw port, on the Persian
Gulf 55 miles south of Basra on the Iranian border, was heavily
used in the 1970s but was badly damaged in the 1980-1988
Iran-Iraq War. Heavily blocked by wrecks and silt, and capable
of handling only smaller vessels, it is currently little used.

Hope or hype? New megaport proposed in Al Faw
---------------------------------------------

23. (SBU) As a possible remedy to Umm Qasr's long term physical
limitations, the GOI has identified the port town of Al Faw, on
the Persian Gulf, as a possible location for a modern deepwater
megaport able to handle eighth generation, post-2006
mega-container vessels, with drafts of over 16 meters. Such a
port could eventually have 50-100 berths and cost upwards of $20
billion. While the Ministry of Transport and GCPI have widely
discussed this option for several years and have received some
investor expressions of interest, it is still largely just a
plan.

24. (SBU) Such a port would be the most modern in the region.
Aside from a good location on the Gulf, some GOI officials and
port experts contend that Iraq and the northern Gulf region need
such sufficient capacity to handle the growing volumes of
international trade. No such international hub in the region
exists, although various countries including Kuwait and Iran
have reportedly considered making such a big investment. Such a
port would rival UAE's Jebel Ali in the southern Gulf and could
serve local, regional and global markets. Iraq, with its
sizeable and growing market, central geographical position and
new-found stability and security, would be an ideal location.

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With relatively decent rail and road networks, such a port might
also reduce transit times of goods moving between the Far East,
Turkey and Europe by several days -- and restore Iraq's own
historic role as an east-west transportation link. And given
that so much Iraqi-bound cargo still arrives overland via ports
in Kuwait, Jordan and Turkey, such a facility could gain back
this market share.

25. (SBU) However, given that there is virtually no chance that
the GOI could self-finance such a project, private investment --
foreign and/or Iraqi -- is key. But such private investment
would inevitably imply at least some private sector control,
something the GOI might find hard to accept. Such a massive and
complex project could also prove too much for the glacial and
limited abilities of the GOI bureaucracy. Also, industry
experts contend that the heavy silt swept down the Shatt al-Arab
waterway would require constant and costly dredging. And as
there is presently no rail connection to Al-Faw, such an
installation would be costly. Perhaps the most fundamental
problem of all is the fact that Iraq simply has more pressing
demands right now: for a nation barely able to provide even the
minimum of essential services and security for its citizens, and
unable to feed itself, advocating for a new world class megaport
right now might represent a case of mismatched priorities.

Comment
-------

26. (SBU) While the Port of Umm Qasr still has many limitations
and problems, it is important to remember how far it has come
since 2003. With the continued involvement of the USG and other
nations, security, rehabilitation and commerce-related
improvements should continue. And while a new megaport is good
to plan for, for the next decade or so, Umm Qasr is Iraq's only
realistic port option. The USG and GOI goals for Umm Qasr
continue to be modest and realistic: bringing its capacity to an
optimal level so it can play a role in Iraq's continued economic
recovery. But like Iraq as a whole, due to wars, sanctions and
isolation, in many ways port officials are still largely stuck
in a three-decade-old vision that needs reform if they hope to
keep up with the lightening speed of international maritime
operations. And while we are all impatient to see the port
improve (and especially since the U.S. role is steadily
diminishing), it will be up to Iraq to progress or not, on its
own terms, and on its own time.
NALAND

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