From CNN’s Kyra Phillips

BAGHDAD, Iraq (CNN) — Iraqi forces fighting oil theft have been working to recruit young men from tribes that long have been aiding the smugglers, the country’s oil minister told CNN.

Flames rise from a petroleum well near the Iraqi city of Kirkuk.

“This is what we are going to do in any area where we are going to develop an oil or gas field or lay a new pipeline or carry out any new activity,” Hussein al-Shahristani told CNN on Monday. “We are going to recruit people from the very community.”

Oil is Iraq’s key industry. The country’s budget for 2008 is $48 billion, al-Shahristani said, and a conservative accounting of revenue from the oil sector is about $39 billion to $40 billion.

Al-Shahristani said Iraq’s current oil production is about 2.5 million barrels per day and current export level is about 2 million barrels per day. He said monthly revenue from oil sales is about $5 billion.

He likened the people in Iraq’s oil region who work with oil smugglers to farmers in Afghanistan who grow and sell poppies to insurgents for drug production: They are poor and they need to earn a living.

Al-Shahristani said Iraq plans to change the hearts and minds of people who have been helping smugglers and pipeline saboteurs, particularly in southeastern Iraq, where most of the country’s lucrative oil industry is based.

The tribes along the pipelines have been aware of and have helped facilitate smuggling activities, he said. But that will change as Iraq aggressively recruits locals to join the oil protection forces and builds schools and hospitals for poor communities in oil-producing areas.

The tactic is reminiscent of the U.S. military’s efforts to recruit former Sunni insurgents to join the “awakening,” or Sons of Iraq militia groups.

Al-Shahristani said improvements in oil-metering systems have helped authorities account for exports and production and determine how much or from where oil has been smuggled.

Improvements in aerial surveillance will help deter smugglers, he said, and targeting boats and trucks used by such thieves would “be the best message to the smugglers that they cannot do it anymore.”

Much of the oil-producing region in Iraq is near Iran.

Al-Shahristani said Iraq is attempting to work with Iran to stop not only oil smuggling into Iran but also opium smuggling from Iran into Iraq.

“Both sides realized the dangers in allowing these smugglers to use the borders so freely and we always agree that we have to work together to stop this,” he said.

Iran denies U.S. accusations of another type of smuggling — that military elements in Iran are sneaking weapons to insurgents in Iraq.

But Iran joins Iraq in considering oil and narcotics smuggling “extremely dangerous,” Al-Shahristani said. And, he said, authorities talked to Iranian President Mahmoud Ahmadinejad about these concerns during his visit this week to Iraq.

He said Iraq’s oil revenues will help fund reconstruction and infrastructure improvements. He noted that the corruption he described as rife during Saddam Hussein’s regime and the subsequent Coalition Provisional Authority years has “decreased significantly,” at least as far as oil is concerned.

Al-Shahristani has high hopes for the country’s oil industry. He said the country is working with international oil companies to increase production by 500,000 barrels a day by year’s end.

“We will be working with them for further development of our producing fields with the aim of adding of another a million and half,” he said.

And he foresees production of 6 million barrels a day in five to 10 years, depending on the security situation.

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BBC reports……

Senior Lib Dems quit over EU vote

Mr Clegg faced a split within his party over the referendum vote Three Liberal Democrats have resigned from their frontbench roles after they joined another 12 MPs in defying party orders over the EU referendum vote.Leader Nick Clegg had ordered his 63 MPs to abstain in the vote on calls for a referendum on the EU Lisbon Treaty. But frontbenchers Alistair Carmichael, Tim Farron and David Heath all stepped down so they could vote in favour. Mr Clegg immediately revamped his team. The Conservative call for a referendum was defeated by 311 votes to 248. Mr Clegg wants a wider referendum on whether Britain should remain in the European Union. He told his MPs to abstain from Wednesday night’s vote on whether to hold a referendum on the EU Treaty. ‘Respect their views’ Thirteen Lib Dem MPs defied the party’s whip to side with the Tories. In a later, separate vote on a referendum, proposed by Labour’s Ian Davidson, 14 Lib Dems rebelled. Altogether, 15 MPs ignored Mr Clegg’s calls for abstentions. The resignations are seen as a test of his authority, less than three months after he became leader. Mr Clegg said he “greatly regretted” the loss of the three spokesmen, adding: “Though we have disagreed on this issue I fully understand and respect their strongly held views on the subject.” “However, as they have recognised, the shadow cabinet cannot operate effectively unless the principle of collective responsibility is maintained. “I am grateful for their offer of strong support from the backbenches, and I know that they will all play a very significant role in the future of our party.” Within minutes of the result the party released exchanges of letters between the three and Mr Clegg. He also said that countryside matters, previously looked after by Mr Farron, would transfer to environment spokesman Steve Webb. Justice matters, previously looked after by Mr Heath, will be transferred to form part of home affairs spokesman Chris Huhne’s responsibilities. Mr Heath said: “I couldn’t support a position taken by the party on a three-line whip and therefore consequences are inevitable and I am now on the backbenches as a result. “I’ve been personally committed to a referendum for a very long time and its not just what was in the last manifesto, its what I personally feel. And I wanted to be honest to myself and my constituents.” Mr Carmichael’s role as Scotland and Northern Ireland spokesman will be looked after by international development spokesman Michael Moore. Eight of the other rebels are junior party spokesmen. They are : John Pugh (Treasury), Annette Brooke (children, schools and families), Richard Younger-Ross (culture, media and sport), Martin Horwood (environment), Greg Mulholland (health), Sandra Gidley (health), John Leech (transport) and Mark Williams (Wales). The other four, who have not got posts, are John Hemming, Paul Holmes, Andrew George, and Mike Hancock.

NEW YORK (CNN) — For years, Russian arms dealer Viktor Bout made millions of dollars delivering weapons and ammunition to warlords and militants, officials say.

Thai police escort Russian arms dealer Viktor Bout at the Crime Suppression Bureau in Bangkok.

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On Thursday, Bout and his associate, Andrew Smulian, were arrested in Thailand after a series of events that officials said could have come straight out of a spy novel.

The men’s capture involved law enforcement agencies from at least five countries, including two undercover agents from the U.S. Drug Enforcement Administration posing as Colombian rebels.

Bout and Smulian are accused of conspiracy to provide surface-to-air missiles and other weapons to Colombian rebels, said Michael Garcia, U.S. attorney for the Southern District of New York.

In a complaint filed by a DEA agent, they are said to have conspired to sell millions of dollars worth of weapons to the Revolutionary Armed Forces of Colombia, or FARC.

The U.S. Department of State designated the group as a foreign terrorist organization in 2003.

“This marks the end of the reign of one of the world’s most-wanted arms traffickers,” Garcia said of Bout.

“Someone will undoubtedly write a book about this case someday, and I can tell you that it will read like the very best work of Tom Clancy, only in this case, it won’t be fiction,” said Michael Braun, assistant administrator and chief of operations for the DEA.

Secret meetings

The operation began in January, when Smulian began meeting with two men who claimed to represent FARC but who were actually confidential sources working for the DEA.

The men expressed interest in buying millions of dollars worth of weapons.

At meetings in the Netherlands Antilles, Denmark and Romania, Smulian discussed the details and logistics of the arms deal with the two agents. At one meeting, the agents were given a digital memory stick containing an article about Bout and documents containing photos and specifications for 100 surface-to-air missiles and armor-piercing rocket launchers.

Smulian explained that a delivery system was in place that would allow the weapons to be air-dropped into Colombia, and he told the men that it would cost $5 million to transport the weapons.

During one meeting, Smulian introduced the DEA sources to Bout over the phone.

After that conversation, Smulian told one of the sources that the weapons were ready in Bulgaria. Smulian and Bout set up a face-to-face meeting with them to finalize the deal, and that is what happened Thursday.

The arrests were made Thursday afternoon.

The charges against Bout and Smulian cover the period from November through February, according to a written statement from the U.S. attorney’s office and the DEA.

The United States plans to pursue the extradition of Bout from Thailand, the statement said. There was no mention of Smulian’s fate.

Bout and Smulian are charged with conspiracy to provide material support or resources to a designated foreign terrorist organization. If convicted, each could get a maximum sentence of 15 years in prison, the statement said.

‘I’m not a diamond guy’

Intelligence agencies around the world have tracked Bout for years. Although some of his work has been legitimate, most has not.

He has made deliveries to Africa, Asia and the Mideast using obsolete or surplus Soviet-era cargo planes.

Bout, a former Soviet air force officer who speaks multiple languages, has what is reputed to be the largest private fleet of Soviet-era cargo aircraft in the world, according to U.S. officials.

He acquired the planes shortly after the breakup of the Soviet Union, the U.S. Department of the Treasury said in 2005.

At that time, the U.S. Treasury announced that it was freezing the assets of Bout and his associates, who are all tied to former Liberian President Charles Taylor.

Taylor is being tried on war crimes charges by the Special Court for Sierra Leone.

Intelligence officials said Bout shipped large quantities of small arms to civil wars across Africa and Asia, often taking diamonds in payment from West African fighters.

A 2006 article in Foreign Policy magazine said that although Bout served many third-world leaders, he also aided organizations such as the United Nations.

“He made countless trips for the United Nations into the same areas where he supplied the weapons that sparked the humanitarian crises in the first place,” the article charged. It said Bout probably committed multiple violations of U.N. arms embargoes.

British intelligence officials found evidence in Afghanistan that Bout had shipped arms to the Taliban and al Qaeda, as well as circumstantial evidence that he shipped weapons technology into Iraq.

And the U.S. government said it received information that Bout profited $50 million from supplying the Taliban with military equipment when they ruled Afghanistan.

Bout, who is said to be the inspiration for Nicolas Cage’s arms dealer character in the movie “Lord of War,” told CNN in 2002 that he never sold arms to the Taliban or al Qaeda. He also denied providing weapons and missile-guidance technology to Iraq.

Bout said that his air transport company is legitimate and that he ferried a variety of cargo to Africa and to Afghanistan since 1992.

He denied that any of it was done illegally or that he was paid in “blood diamonds” from Africa.

“It’s a lie,” he said. “I never touched diamonds in my life, and I’m not a diamond guy, and I don’t want to go into that business.”

Some reports at the time claimed that Bout flew into Afghanistan just before September 11, 2001. But Bout told CNN that the last time he was in Afghanistan was 1996 and that he never met terror mastermind Osama bin Laden.