Militants Seize Iraq-Jordan Border as Kerry Visits Baghdad

June 23 (Bloomberg) -- An al-Qaeda breakaway group seized more territory on Iraq’s borders with Jordan and Syria as U.S. Secretary of State John Kerry arrived in Baghdad to try to get political leaders to set aside sectarian divisions and confront the growing threat. Bloomberg's Phil Mattingly reports on “Bloomberg Surveillance.” (Source: Bloomberg)

U.S. Secretary of State John Kerry called on Iraqi leaders to unite against an al-Qaeda breakaway group amid reports it drove the army from a key oil refinery and extended territorial gains as far as the Jordanian border.

After almost two weeks of fighting for control of the refinery at Baiji, north of Baghdad, the Iraqi army withdrew from remaining positions there late yesterday, local police said by phone. It’s now in the control of tribes fighting alongside the Islamic State in Iraq and the Levant, Al-Arabiya television reported, citing Abu Abd al-Nuaimi, a spokesman for the tribal group. Government spokesman Ali al-Musawi and the Oil Ministry in Baghdad couldn’t immediately be reached for comment.

ISIL has consolidated its hold over swaths of Iraq, OPEC’s second-biggest oil producer, since capturing Mosul, the country’s biggest northern city, on June 10. Kerry’s visit to Baghdad yesterday added to U.S. pressure on Iraqi leaders, including Shiite premier Nouri al-Maliki, to form a more inclusive government. Maliki has been accused of sidelining Iraq’s Sunni minority, prompting some of them to side with ISIL.

Al-Qaeda’s Heirs

Kerry, after meeting with Maliki and other ministers and party leaders, told reporters that Iraq faces an “existential threat.” He said U.S. support “will be intense, sustained, and if Iraq’s leaders take the necessary steps to bring the country together, it will be effective.”

Photographer: Karim Sahib/AFP via Getty Images

Iraqi Turkmen forces patrol a checkpoint in the northern city of Tuz Khurmatu, close to locations of the Islamic State in Iraq and the Levant fighters, on June 21, 2014. Close

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Photographer: Karim Sahib/AFP via Getty Images

Iraqi Turkmen forces patrol a checkpoint in the northern city of Tuz Khurmatu, close to locations of the Islamic State in Iraq and the Levant fighters, on June 21, 2014.

Jordan Deploys

In addition to Baiji, the latest captures for the Sunni insurgents include the Traibil crossing post with Jordan and the Al-Waleed entry into Syria. Those are also in the hands of ISIL’s tribal allies, Hameed Ahmed Hashim, a member of the provincial council in the Iraqi province of Anbar near the frontier, said by phone yesterday. He denied earlier reports on state-run Iraqiya television that the positions had been recaptured by the army.

Jordan sent tanks and troops to reinforce its border with Iraq, Al Arabiya television said.

President Barack Obama told CBS television that the fighting could spread to “allies like Jordan” as the militants “amass more arms, more resources,” according to a transcript.

Oil prices have risen on the turmoil in Iraq, with Brent crude trading near a nine-month high. Brent for August settlement pared gains yesterday, dropping 0.6 percent to $114.12 a barrel.

Militia Parades

Baiji has been a target for the militants since their initial surge two weeks ago, with conflicting reports of who controlled it. It’s Iraq’s largest refinery, with a capacity of 310,000 barrels a day. The facility’s shutdown amid the fighting has caused shortfalls in Iraq’s northern Kurdish region, authorities there said yesterday.

The unrest in Iraq has raised fears of another sectarian civil war similar to the one that engulfed the country in the years after the 2003 U.S. invasion, and the one raging now in neighboring Syria, where ISIL rose to prominence fighting to oust President Bashar al-Assad.

ISIL militants and their Sunni supporters now control territory in Iraq from Mosul in the north to the Jordan border in the west, and south toward the environs of Baghdad -- areas that have largely Sunni populations.

Shiite politicians and religious leaders have called on volunteers to take up arms. Thousands of armed Shiite militiamen staged military-style parades on June 21 in cities including Baghdad and Basra, Najaf and Kut in the south, where Shiites make up most of the population, according to footage on Al Arabiya television. Many of Iraq’s Shiite leaders, including Maliki, have received support from Iran, the region’s main Shiite power, which has said ISIL must be stopped.

Kurdish Future

The conflict has also fueled concern that Iraq may fragment. Kurdish leader Massoud Barzani, whose northern region already enjoys substantial autonomy and has escaped the recent fighting, said the time has come for the Iraqi Kurds to “determine their future,” in an interview with CNN.

The U.S. is pressing Iraq’s politicians, who are negotiating a new coalition after April elections left no party with a majority, to accelerate the process and form a broad-based administration capable of rallying the population against ISIL. “The future of Iraq depends primarily on the ability of Iraq’s leaders to come together and take a stand united against ISIL,” Kerry said in Baghdad.

Obama declined last week to say that he continues to have confidence in Maliki, spurring speculation that the U.S. may seek to back another premier. Kerry said the U.S. won’t choose a leader for Iraq or set conditions for who can join its next government.

Coalition Wrangling

After the previous election in March 2010, it took about eight months to form a coalition. Kerry said Maliki has pledged to start the process of forming a government by July 1.

The U.S. invasion helped bring Iraq’s Shiite majority to power, alienating Sunnis who dominated the country during Saddam Hussein’s era.

“Clearly Kerry is carrying a message to Maliki to change the system,” Theodore Karasik, director of research at the Institute for Near East and Gulf Military Analysis in Dubai, said in a phone interview. “America and its allies want to see a change at the top but this is going have to be acceptable to Iran because Tehran’s man in Baghdad is Maliki.”

Crude oil shipments from southern Iraq, which holds 60 percent of the nation’s reserves according to the U.S. Energy Information Administration, have been mostly unaffected by the fighting. Kurds are defending the Kirkuk oilfield in the north, where exports have been halted since March by attacks on the pipeline. Iraq pumped 3.3 million barrels a day last month.

Special Forces

Obama has authorized the deployment of as many as 300 special operations advisers to Iraq, while stressing that the burden is on Iraqi leaders to resolve the crisis. The U.S. withdrew its last combat troops from Iraq three years ago.

Kerry said the forces are entering the country and taking up their “various assignments.” He said Obama has reserved the right to decide on further action such as air strikes against ISIL.

To contact the reporters on this story: Khalid Al-Ansary in Baghdad at kalansary@bloomberg.net; Mariam Fam in Cairo at mfam1@bloomberg.net; Nicole Gaouette in Baghdad at ngaouette@bloomberg.net

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net Ben Holland, Jim Silver

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