In Basra, a Governor or a Mafia Don?

Mohammed Waeli was furious. The powerful governor of Basra had heard that Iraqi Army soldiers were looking to use city bulldozers to clean up the streets of his unruly metropolis. If anyone was going to get credit for improving life in Basra, he was. In a late-night phone call last month, he tore into the top Army commander in Basra, Gen. Mohammed Huweidi. "We want to use [the bulldozers] to serve the city," the general protested. "We're not asking any money for this service." Waeli wasn't mollified. Huweidi's men were interfering and should back off, he warned. "Let me explain," Huweidi said, as the governor continued to berate him. Finally Huweidi relented. "Yes, you're the governor," he said. "I will ask them to pull back."

As tough as the fight against jihadists and outlaw militias has been in Iraq, the government's next foe may be equally challenging: itself. Waeli, the general said after hanging up, felt threatened by the Army: "We work seriously here, and this is not always welcome." Their clash is likely to be repeated elsewhere. As the Iraqi Army grows more capable and the central government expands its influence across the country, they're sure to antagonize local players like Waeli who have carved out profitable fiefdoms for themselves. The Basra governor—described as a "mafia don" by one Baghdad official, who asked for anonymity in order to speak more freely—is not the only example. In late June a bomb killed four Americans and six Iraqi officials at a district council meeting in Baghdad's Sadr City. The attack was blamed on the head of the local council, who feared the Americans were maneuvering to have him replaced.

Prime Minister Nuri al-Maliki sent some 30,000 troops to Basra in March in a bid to tame the Shiite militias that were running rampant in the city. But some Baghdad officials believe he was also hoping to oust Waeli himself. The governor took power in 2005, on the same day that religious zealots severely beat dozens of university students having a picnic in a Basra park. The assault marked a sea change in the port city, which had been known as relatively liberal (at least by regional standards). Soon dozens of academics, doctors and other secular professionals were also targeted. One militia, Tharallah, which translates as God's Vengeance, is suspected of killing dozens of women in the city. Public music performances, even by traditional musicians playing drums on the corniche, stopped. In one downtown roundabout, the nipples of a female statue were scratched off.

Waeli, a chubby man with a trim mustache and penchant for sharp tailored suits, seems to be less a zealot than an opportunist. According to a handful of Iraqi and U.S. officials familiar with southern Iraq, the governor ran a successful import-export business under Saddam. The enterprise attracted the attention of the secret police, and Waeli is suspected of cutting deals with the regime to keep his business going. After the U.S. invasion in 2003, he underwent a makeover. "He was secular and used to drink," says Wael Abdul Latif, a former governor of Basra and Waeli's second cousin. "But overnight he became religious and started carrying dark prayer beads as a sign of his devotion." He joined the Fadhila Party, an offshoot of the political movement loyal to cleric Moqtada al-Sadr, and deftly outmaneuvered his political rivals in the 2005 elections.

The governor is known as the "oil prince" because of his suspected ties to smuggling networks in oil-rich southern Iraq. The road that leads south from Basra to the port of Abu Fulus, for instance, winds through dozens of date farms. Iraqi officials say smugglers have buried underground tanks here for storing petroleum. Every few kilometers, small creeks and canals cut through the farms; from these, boats chug out to the open sea and link up with tankers that carry the oil a short distance across the Persian Gulf to the deepwater port of Al Fujayrah in the United Arab Emirates. The racket is estimated to bring in millions of dollars a year.

Before March, many of the guards posted at the Basra oilfields and ports—known as the Facilities Protection Service, or FPS—were loyal to Fadhila and, according to both Iraqi and American officials, collected kickbacks on the party's behalf. Waeli's brother Ismail is suspected of taking care of the details. Hadi al-Ameri, the head of the Iraqi Parliament's security committee and one of Waeli's political rivals, says the government suspects Ismail of involvement in a string of assassinations but doesn't have sufficient evidence to push for an arrest yet. For now, Ismail, who denied any involvement in smuggling in an interview with the Al-Watan newspaper in April, is keeping a low profile in Kuwait. (He did not address Ameri's charges, and NEWSWEEK was not able to reach him independently for comment.)

Mohammed Waeli also denied any accusations of wrongdoing in a phone interview with NEWSWEEK. When asked about the fact that several Iraqi officials had accused him and his brother of oil smuggling, Waeli grew agitated. "What is this official's name?" he demanded. "I will not answer this question unless you give me his name to be able to talk frankly about this subject." When the governor calmed down, he claimed that Ismail had been living in Kuwait for the past two years and rarely visited Basra. "These accusations come from political reasons and they are not true," Waeli said. "I challenge them to prove I am smuggling oil. Those people who make these accusations are smuggling oil themselves."

When Operation Charge of the Knights kicked off in March, few Iraqis, even government officials, had much confidence in Maliki's forces. The Sadrists and their Mahdi Army fighters saw the operation as a personal attack and fought back hard. More than 1,000 soldiers deserted early on. Maliki's headquarters were pounded by mortars and rockets night and day. "There was a 72-hour period where it looked like the [Iraqi] Army was going to fall apart," says one U.S. official familiar with the Basra operation, who asked for anonymity because of the sensitivity of the subject. "At one point we thought [Maliki] was kidnapped: there were just two blue dots on the map—the Army—surrounded by a sea of red." Ismail was on the list of the criminals the security forces were going after in Basra, and Maliki kept the operation a secret from the governor. But whatever ideas Maliki may have had about confronting Mohammed Waeli directly were quickly abandoned. "He was warned about how dangerous it could be to arrest the governor," says Latif.

Even though Maliki called Waeli in for a public dressing-down during the operation, he remains in his post. According to one official at the meeting, Maliki criticized the local government and blamed much of the insecurity on them. As soon as Maliki was finished talking, Waeli got up to leave the room, but the prime minister asked him to sit down again. Waeli eventually left without saying a word.

The Basra operation has generally been portrayed as a success. Several militia leaders were killed by U.S. airstrikes and Special Operations forces, while rank-and-file fighters melted away after an Iranian-brokered truce was signed. Families are again strolling along the Shatt al-Arab, a river formed by the confluence of the Tigris and the Euphrates, at sunset. After dark, young couples flirt beneath gazebos dotting the corniche. Booze is being sold again, albeit discreetly, and CD salesmen now openly offer Arabic and Western pop music. The FPS guards suspected of oil smuggling have been packed off for retraining, replaced by Iraqi Army soldiers.

But oil smuggling continues: on a recent visit, the creeks south of the city were again full of boats, waiting to load up with oil. Atheel Salman, director of the Abu Fulus port, says the smuggling is virtually impossible to stop. And as long as Waeli remains in office, there's a chance that his Fadhila loyalists could resume their operations. For his part, Waeli says he's not leaving unless he loses in the provincial elections, which are supposed to be held later this year. "All the attempts to remove me have failed because … I was elected by the people," he says. "No official can remove me from my position except by legal means." Even that is likely to be a fight.