Report

Jihadist Gains in Iraq Blindside American Spies

First Crimea, now Iraq. Why does America's $50 billion intelligence community keep getting taken by surprise?

United States intelligence agencies were caught by surprise when fighters from the Islamic State of Iraq and al-Sham (ISIS) seized two major Iraqi cities this week and sent Iraqi defense forces fleeing, current and former U.S. officials said Thursday. With U.S. troops long gone from the country, Washington didn't have the spies on the ground or the surveillance gear in the skies necessary to predict when and where the jihadist group would strike.

The speed and ease with which well-armed and highly trained ISIS fighters took over Mosul, Iraq's second-largest city, and Tikrit, the birthplace of former Iraqi ruler Saddam Hussein, have raised significant doubts about the ability of American intelligence agencies to know when ISIS might strike next, a troubling sign as the Islamist group advances steadily closer to Baghdad. And it harkened back to another recent intelligence miscue, in February, when U.S. spy agencies failed to predict the Russian invasion of Crimea. Both events are likely to raise questions about whether the tens of billions of dollars spent every year on monitoring the world's hot spots is paying off -- and what else the spies might be missing.

The CIA maintains a presence at the U.S. Embassy in Baghdad, but the agency has largely stopped running networks of spies inside the country since U.S. forces left Iraq in December 2011, current and former U.S. officials said. That's in part because the military's secretive Joint Special Operations Command had actually taken the lead on hunting down Iraq's militants. With the JSOC commandos gone, the intelligence agencies have been forced to try to track groups like ISIS through satellite imagery and communications intercepts -- methods that have proven practically useless because the militants relay messages using human couriers, rather than phone and email conversations, and move around in such small groups that they easily blend into the civilian population.

Policymakers in Washington and other allied capitals were similarly unsure of the group's true strength or how to respond. In late May, Secretary of Defense Chuck Hagel met with defense officials from Arab countries in Jeddah, Saudi Arabia, where they agreed that ISIS and other Islamic fighters in Syria and Iraq posed a threat to the entire region, a senior U.S. official said. But no plan on how to counter those groups emerged from the meeting, and there's no indication that U.S. intelligence agencies stepped up monitoring of ISIS fighters in Iraq, who also seized control of Fallujah and parts of Ramadi in January.

"We got caught flat-footed. Period," said Daveed Gartenstein-Ross, a terrorism analyst and senior fellow at the Foundation for Defense of Democracies, who studies ISIS and other al Qaeda-linked groups. Although for the past three years U.S. officials had assessed that ISIS was strong enough "to go toe-to-toe" with the Iraqi military -- a fact the group demonstrated with its operations in Fallujah and Ramadi -- there has been no indication that the U.S. intelligence agencies knew ISIS was about to mount a major offensive to take over two more cities simultaneously, Gartenstein-Ross said.

In the wake of this week's attacks on Mosul and Tikrit, U.S. intelligence agencies have increased the number of high-resolution images taken from satellites, which could help find the location of ISIS forces on the ground, a U.S. official said. But it was unclear whether this information is being provided to Iraqi forces to help them plan airstrikes or other operations.

Two senior U.S. officials acknowledged that the intelligence agencies' assessment of ISIS has been overly broad and lacked the type of specifics that could have actually helped the Iraqi military know when and where to expect an attack. But the greater concern to the Obama administration has been the strength of the Iraqi forces and their actual will to fight, they said.

"This has never been about whether we thought ISIS had the capability to launch attacks. It's always been, do the Iraqis have the capability to defend their country?" one official said. On that score, the U.S. assessment was more on the mark. Obama administration officials have hesitated to provide Iraqi military forces with advanced weapons -- including fighter jets and attack helicopters -- because they've never shown an aptitude for using them or sufficient resolve to fight their enemies, the officials said. The Obama administration had also long feared that Iraqi Prime Minister Nouri al-Maliki, a Shiite with clear antipathy towards the country's Sunni population, would use the armaments against his own people.

The intelligence agencies' inability to predict the latest crisis in Iraq is likely to fuel critics of the Obama administration's management of other global crises, including in Syria and Ukraine. In the case of Russia's seizure of Crimea, in which U.S. spies were also caught by surprise, sophisticated electronic eavesdropping systems run by the National Security Agency were of little use because Russian forces limited their time on telephones and adopted the techniques of jihadists, sending couriers back and forth between their units.

A senior U.S. intelligence official said that analysts had "closely tracked" ISIS and its predecssor organizations for years and, contrary to crticisms, understood that the group was a serious threat. "During the past year, [analysts] routinely provided strategic warning of ISIL’s growing strength in Iraq and increasing threat to Iraq’s stability," the official said, using an alternate acronym for the group. "They also warned about the increasing difficulties Iraq’s security forces faced in combatting ISIL, and the political strains that were contributing to Iraq’s declining stability." Analysts also reported that the group was exploiting political rifts between the ruling Shiite government and the Sunni minority, and that it had taken advantage of the war in neighboring Syria "to strengthen its operational capacity and intensify the threat to the Iraqi Government," the official said. And analysts warned that ISIS was gaining a foothold in Mosul and deepening its influence there as it expressed a "keen interest in targeting Baghdad," the official said.

(The official also said that prior to the Russian invasion of Crimea, the "[intelligence community] warned that that the region was a flashpoint for a possible military conflict and that the Russians were preparing military assets for possible deployment to Ukraine.  Intelligence analysts underscored that such operations could be executed with little additional warning.")

But the responsibility for failing to counter ISIS in Iraq cannot solely be placed at the feet of U.S. intelligence agencies. When American forces were stationed in the country, they built one of the most successful battlefield intelligence systems in the history of American warfare. The NSA monitored every phone call, email, or text message in Iraq, and it provided leads on the location of jihadists and insurgents to drone pilots and special operations forces, who captured or killed them. U.S. commandos working hand in hand with the CIA also developed an extensive network of human spies.

But when U.S. forces left Iraq in 2011, all that intelligence power went with them. The Iraqi government failed to secure an agreement that would have allowed the United States to maintain some physical presence in Iraq, which it needed to run the intelligence networks at full throttle. Today, that intelligence capability has withered.

"The United States has so many intelligence collection efforts occurring simultaneously. It's especially difficult to collect in a place where we have no presence," said Christopher Harmer, a former Navy officer and an analyst with the Institute for the Study of War. Given the lack of human spies in particular, Harmer said that the United States would be outmatched in Iraq against ISIS because of its reliance on couriers and the diligence with which it avoids phones and email, which can be tracked. "What ISIS is best at is exactly what we are worst at. We just don't have a good human intelligence network" in Iraq, Harmer said.

If the United States has any hopes of gaining some intelligence insights into Iraq, it might look to the autonomous Kurdish region in the north. "The Kurds begged the U.S. to keep a base in Kurdistan" prior to the troop withdrawal, said David Tafuri, who served as the Rule of Law Coordinator for Iraq with the State Department in 2006 and 2007, and is now a partner with the law firm Squire Patton Boggs. "They would have given the U.S. whatever it wanted to have a base here. And if we did, we'd be in a much better position to monitor this situation," Tafuri said.

Iraqi officials have been eager to get their hands on U.S. military and intelligence equipment to assist in their struggle against jihadists. On May 8, Foreign Policy reported that the Iraqi government was actively seeking armed aerial drones from the United States to combat al Qaeda militants in the increasingly violent Anbar province, where fighters from Syria were believed to be spilling over into Iraq. And in a significant reversal, Iraqi officials said they would welcome American military drone operators back into the country to target the militants on its behalf, according to people with knowledge of the matter. But to date, the United States has only agreed to give Iraq 10 small ScanEagle drones, which are launched from a catapult and carry no weapons. Those should arrive by the end of the summer, the White House said Thursday.

Iran, the United States' most nettlesome adversary in the entire region, is moving much faster. According to press reports, a 150-man unit of the Quds Force, the elite wing of Iran's Revolutionary Guard, had been sent to Iraq to bolster the Maliki government and fight ISIS. Other accounts suggest that a joint Iranian-Iraqi force has retaken all or most of Tikrit.

"We have seen reports but we cannot confirm them," White House Press Secretary Jay Carney said Thursday. Asked by a reporter whether the Obama administration would caution Iraq not to seek assistance from its neighbor, Carney said, "I think that this is an issue of the government of Iraq, and our view is they ought to make prudent decisions about how they deal with the [ISIS] threat in the interests of national unity."

This article has been updated to include comments from a senior U.S. intelligence official about analysts' reporting on ISIS prior to its attacks on Mosul and Tikrit.

STR / AFP

Report

Iraq's Insurgency and the Threat to Oil

Americans might have forgotten about the Iraq war, but they’re about to feel it at the gas pump.

Oil markets are finally rattling after militants from the Islamic State of Iraq and the Levant took over a series of key Iraqi cities Tuesday and Wednesday, including the country's second largest, and reportedly surrounded Iraq's biggest oil refinery.

The insurgent drive poses little immediate threat to oil production or exports from OPEC's second-largest producer, which explains why oil prices haven't exploded. But Iraq's disarray, coupled with a series of stubborn crude-supply outages in Libya, Sudan, Nigeria, and ongoing sanctions on Iranian exports, portends a summer of high oil prices with potentially dire effects on the global economy.

Depending on Iraq's ability to rally its own security forces and successfully fight the group, the uprising could also upend Baghdad's plans to increase oil production in other parts of the country and assert control over exports in the semi-autonomous northern region of Kurdistan. All that becomes hugely important when global oil markets are looking at growth in Iraqi production as the great hope to keep the world fully supplied.

"Iraq needs to deliver; it's as simple as that. This is not good, irrespective of whether there's a short-term impact or not," said Amrita Sen, an oil markets analyst at Energy Aspects Ltd, an energy consultancy in London. "You need a lot of incremental supply increase from Iraq, which the current dynamics are saying is not going to happen," Sen said.

The insurgent group, known as ISIL or ISIS, pushed Iraqi security forces out of Mosul -- the second-most populated city -- on Tuesday before driving further south to take Tikrit, Saddam Hussein's hometown. On Wednesday, the group seemed to have taken over the Baiji refinery, the main domestic source of Iraq's refined petroleum products.

After initially shrugging off the attacks, oil markets started to worry a bit Wednesday. Prices for Brent crude traded in London rose slightly, to just under $110 a barrel; crude traded in New York also inched up to about $105 a barrel in early trading, before slipping a bit in the early afternoon. Oil markets got no relief from OPEC, which concluded its regular meeting in Vienna pledging to keep output the same.

If oil prices haven't skyrocketed even higher on news that a group so bad that even al Qaeda fights it has taken over a big chunk of territory in one of the world's biggest oil-producing nations, that's because Iraq's oil production and exports are mostly in the south, far from the offensive. Iraqi government officials said Tuesday that the state of emergency declared after the Mosul takeover won't affect Iraqi exports.

One reason: The 400,000-barrel-per-day northern oil-export pipeline that snakes past Mosul on its way to Turkey has been out of commission since March because of terrorist attacks anyway, so the ISIS offensive hasn't taken any additional oil out of the export market yet.

In May, Iraq notched a near-record level of crude exports out of its Persian Gulf terminal in Basra, though overall Iraqi exports are still below the 2.8 million barrels a day reached earlier this year because of the damaged northern pipeline. Ongoing repairs on the pipeline have been disrupted because of the ISIS offensive, raising questions over just when that export route will again be safe and operational, despite Iraqi promises Wednesday that repair work continues.

But the bigger concerns are two-fold: The ISIS offensive comes at a time when global oil markets could soon look tight due to supply disruptions in a number of big producers, and it could have important knock-on effects on Iraqi oil production over the medium term.

Although OPEC seems content with global oil supplies, that's largely because of continued growth in U.S. oil production, which has risen more than 1 million barrels a day since the beginning of last year. But traditional suppliers are faltering: Libyan oil production has fallen to about 10 percent of levels before militants took over eastern areas of that country; South Sudan's modest oil production has roughly been cut in half by the civil war there; and Western sanctions are keeping roughly 1 million barrels of Iranian oil off the market.

Even before the latest news out of Iraq, oil-market observers were counting on Saudi Arabia, the world's swing oil producer, to churn out record levels of crude later this year to cover the supply shortfall. It could be hard-pressed to make up those missing barrels and any additional Iraqi oil taken off the market by ISIS. And whatever effort Saudi Arabia makes will ensure that oil markets are tauter and jitterier later in the year, magnifying the price fallout of geopolitical disturbances.

If the Saudis produce an additional million or so barrels a day, "there is no spare capacity in the system. So ultimately, the situation is very, very bullish" for future oil prices, Sen said.

So far, other than the city of Mosul, the insurgents have steered clear of eastern Kurdistan, which is trying to ramp up its oil production and which has often touted its relatively better security situation as a way to attract foreign investment. One concern is that, if the militants turn east, they could threaten Kurdish oil fields and take out some Iraqi production.

For now, companies operating in the region appear calm. Chevron said, "Our activities continue as normal in the region." A spokesman for Genel Energy, a Turco-British firm operating in Kurdistan, said that because ISIS is apparently avoiding taking on Kurdish forces directly, "There should therefore be no disruption in oil production or shipment on the [Kurdish] side."

However, Baghdad's efforts to fight the militants could have knock-on effects on the huge oil fields in southern Iraq that account for the bulk of Iraqi output. Every time the Iraqi government moves troops from the south to fight militants in other parts of the country, oil companies' operations are disrupted because of security concerns. In fact, Sen said, the increased cost of security is undermining the appeal of Iraq's massive and easy-to-extract oil reserves.

The ISIS offensive could have another, longer-lasting effect on Iraq's oil sector. For months, Baghdad and the Kurdish region have been at loggerheads over Kurdish plans to export oil directly to Turkey; the central government says all Iraq's oil belongs to it, while the regional government figures direct oil exports are the only way it can get a fair share of Iraq's oil wealth. Just before the ISIS attacks, in fact, Baghdad had threatened Kurdistan again over its oil exports.

All that could change if Baghdad has to call in the Kurdish cavalry, in the form of hardy Kurdish peshmerga troops, to quell the uprising. Some former Iraqi officers have already said the peshmerga, experienced in fighting guerrillas, are the only option; Iraq's foreign minister said Wednesday that Iraqi and Kurdish troops could work together to recapture Mosul.

If Baghdad has to rely on Kurdish troops to end the ISIS offensive, that could well soften Iraq's attitude toward Kurdish oil exports. It may not be great for keeping the country's coffers full, but might be just the thing for keeping the country itself.

Safin Hamed - AFP - Getty