BAGHDAD, Jan 14 (Reuters) - Iraqi militants are taking most of the $1.5 billion a year that is stolen from Iraq's main oil refinery through smuggling and corruption, the government told parliament on Sunday. Speaking at the second reading of the 2007 budget, Deputy Prime Minister Barham Salih said crime was behind the crisis in the oil industry, which is struggling to meet Iraq's own fuel needs despite having the world's third biggest reserves. "We have a system and an administration which encourage corruption," said Salih, who has oversight over the economy. "We are losing $1.5 billion at Baiji refinery alone and most of this money is channelled to terrorists who are using it to target us and target our nation." Baiji, 180 km (115 miles) north of Baghdad, provides most of Iraq's domestically refined fuel. It lies in Saddam Hussein's home province of Salahaddin, where insurgents from the Sunni Arab minority are strong. This year's budget foresees government spending of $41 billion. Officials have estimated that smuggling of Iraq's main resource, as well as other corruption, has cost the country several billion dollars a year since the U.S. invasion.
