U.S. Purchases Fuel for Afghanistan, Possibly Undermines Own Iran Oil Sanctions

A new report shows that America did not have a method for accurately sourcing at least a billion dollars worth of fuel purchased by America for Afghanistan's Army and security forces. Policy changes were undertaken in November.

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Arif Ali/AFP/GettyImages

Fuel tanker trucks, used to transport fuel to NATO forces in Afghanistan, are seen parked near oil terminals in Pakistan's port city of Karachi on July 4, 2012.

America’s attempts to cripple Iran through economic sanctions may have been undermined by, you guessed it, America.  Yesterday SIGAR, the Special Inspector General for Afghanistan Reconstruction, released a report showing that the U.S. spent nearly $1.1 billion to import fuel for Afghanistan’s National Army (ANA) between 2007 and 2012.  Where the fuel came from is anyone’s guess.

In 1995 President Clinton signed an executive order prohibiting American involvement with petroleum development in Iran.  Afghanistan, however, is largely dependent upon imports for meeting the majority of its energy needs and, while accurate reports of Afghanistan oil imports vary, estimates suggest that up to one-half of Afghanistan fuel (including all gas and oil used for motor vehicles, aircraft, generators, and cooking) comes from Iran.

The SIGAR report shows that until late 2012, the U.S. did not require fuel vendors, usually Afghanistan-owned companies, to provide information on their sources or checked to see if they followed U.S. sanctions.  This information could have been gleaned from oil refineries, which produce a Verified Fuel Passport identifying a fuel’s origin.  For 2013, the Pentagon has requested $323 million to purchase fuel for Afghanistan security forces.

“Our report again demonstrates the critical importance that oversight plays in the contracting process,” said Special Inspector General John F. Sopko. “It is essential that the Department of Defense continues to implement strict controls over the fuel supply process to ensure taxpayer funds are not used in violation of Iranian sanctions.”

The report is evidence that SIGAR has teeth as an oversight body after hitting a rough patch over the past few years.  In January 2011 Maj. Gen. Arnold Fields resigned after three years as the head over a ripping peer review and a vicious congressional testimony.  Afterwards there were two acting SIGAR chiefs before the agency settled on John F. Sopko in July. SIGAR has a budget of about $50 million, and investigates fraud, waste, and abuse in Afghanistan reconstruction projects that total around $19 billion.

The West has cheered the Iran oil sanctions as a major success. From 2011 to 2012, western sanctions halved Iran’s oil exports, leading to billions of dollars in lost revenue and a plunge in value of the Iranian rial.  But in December Iran’s crude oil exports leapt to their highest levels since the European Union sanctions took effect last July, according to Reuters, due to increased orders from China, India, and Japan.

In November Combined Security Transition Command, the organization in charge of buying and supplying the fuel for the Afghan Army and National Police, changed their policy to require all vendors to refuse fuel from Iran.  It is unclear how effective this will be, as the vendors are essentially regulating themselves and their subcontractors.

Even if U.S. money isn’t being spent on Iran oil, the report shows that after twelve years in Afghanistan, the U.S. still inadequately oversees and cooperates with the Afghan forces. SIGAR reports that the Afghan Army often asks the U.S. to purchase fuel without notifying the Afghanistan Ministry of Defense, destroying the chance of any type of complete record on fuel purchased, delivered, and consumed.  In a promising sign for improvement, the U.S. intends to start giving a fuel stipend for Afghan forces to the Ministry of Defense in March instead of supplying units in the field.