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Iraq's Federalism Quandary

Joost Hiltermann, Sean Kane, Raad Alkadiri, The National Interest  |   28 Feb 2012

With U.S. combat troops out of Iraq and that country facing an uncertain future, many challenges hover over the lands of old Mesopotamia. The most ominous is the unsettled struggle over power, territory and resources among the country’s political elites. While often described in straightforward ethnic and sectarian terms, this strife has gone through many phases. Various alliances have come together and broken apart as the power struggle has shifted from a sectarian street war to heightened tensions between Baghdad and the Kurdistan Regional Government (KRG) in Erbil. Most recently, the main axis of confrontation has been between Prime Minister Nouri al-Maliki’s Shia-led government and its putative governing partner, the mostly Sunni Iraqiya list.

One constant that complicates this maelstrom is the unresolved question of what kind of federal structure the new nation should have—essentially, the power-sharing arrangement between those who rule Baghdad, the autonomous government in Erbil and the country’s provincial leaders.

Within this puzzle reside a number of interlocking quandaries. For example, it is grudgingly accepted that the Kurds in northern Iraq should be able to retain the level of autonomy acquired after the Gulf War in 1991. But the details of this arrangement remain in dispute, and it raises some difficult questions: Would Iraq remain viable as a country if other provinces were to pursue similar autonomy? Even in the context of the Kurdistan region, can revenue-sharing arrangements that respect both Kurdish autonomy and Baghdad’s basic sovereign prerogatives be crafted? Would those same arrangements work for oil-rich Basra in Iraq’s South or gas-rich Anbar in its West?

These are not dry, structural matters. They drive deeply into emotionally held convictions on all sides. Iraq’s new constitution describes the country as a federal state, with significant grants of autonomy to Iraqi Kurdistan as well as potentially to future regions throughout the country. But the word federalism remains one of the most charged in the Iraqi political lexicon.

For Kurds, federalism has almost acquired the status of a religious belief system because it is tied to their century-old quest for their own state. But for many Iraqi Arabs, federalism is seen as synonymous with partition. Especially among Iraqi nationalists, there is fear that if the Kurdish federalist vision is implemented, it would bring about what Peter Galbraith, a controversial and influential advisor to the KRG, called “the end of Iraq”.

So far, this fundamental question of governance has generated little more than stalemate. Agreement between the federal government and the KRG on the final contours of their relationship has proved elusive. This stalemate is most consequential in the realm of oil and gas development, which will generate an estimated $1 trillion in revenue over the coming decade. The KRG has proposed a revenue-sharing regimen that not only would protect Kurdistan’s share of the pie but also would reduce the federal government to little more than a cash clearinghouse that disburses oil and gas revenue around the country. Not surprisingly, this proposal is totally unacceptable to Maliki’s regime. In the meantime, the KRG moved defiantly to sign contracts with more than twenty-five international oil companies, including, most recently, the world’s largest, ExxonMobil. Baghdad has rejected the contracts on grounds that they require its approval. For good measure, it also blacklisted the companies that signed them (but has yet to decide what approach to take toward Exxon, which already has contracts in the South).

Meanwhile, the deadlock between Baghdad and Erbil has complicated efforts to establish a workable relationship between the state and Iraq’s other provinces. Given the strong association between federalism and the Kurds’ ultimate desire for statehood, almost any exploration of greater local autonomy by the provinces raises suspicions of a partitionist agenda.

In the current debate, the federalism dispute has come full circle. During the writing of the 2005 constitution—a period of intense civil strife—a powerful group of Shia Islamists openly championed the Kurdish-inspired model of ethnosectarian federalism as a hedge against the return of a Sunni strongman such as Saddam Hussein. Now, however, with U.S. troops gone, Iraq’s Sunni-majority provinces worry about an unchecked and autocratic Shia-led government in Baghdad. Despite their emotional attachment to the notion of a centralized Iraq, leading national Sunni politicians and local leaders have now challenged Baghdad by issuing symbolic declarations of provincial autonomy.

All this friction raises questions about whether the constitution contains intrinsic flaws that prevent accommodation. It is based on the idea that federalism should be symmetrical, meaning that levels of autonomy should be equivalent for all regional governments. And therein lies the conundrum. When the constitution was written, it was unrealistic to expect the Kurds to retreat from the self-governance they achieved through their long struggle and blood investment during the Saddam years. Their post-1991 Gulf War autonomy became the effective floor for regional authority in the constitution. But if the rest of Iraq were to get this one-size-fits-all style of autonomy, the survival not only of the central government but of the country itself could be threatened. Hence Baghdad’s hard line with Erbil and fierce response to any new regional initiatives.

We believe that rather than pursuing the principle of symmetrical federalism, Iraq should instead pursue a deliberately asymmetrical federal model under which the level of autonomy granted to the KRG would be exclusive. Such a model would recognize the unique oil-contracting abilities of the KRG while also safeguarding Baghdad’s fiscal and monetary powers as well as authority over oil contracting elsewhere.

According to this concept, Baghdad could negotiate with the provincial governments over precisely what level of autonomy they should enjoy. No longer would the Kurdistan example serve to complicate these separate discussions, and Baghdad would be freed from its current fears that this federalism conundrum threatens to turn Iraq into a mere agglomeration of competing regional entities.

Some might argue that the prospects are dim for implementing such a system at any point soon. To be sure, Iraq faces a number of daunting immediate challenges that in turn have spawned two disparate responses. One is that the only way to keep Iraq together is to fully implement the federal model in the constitution and give Sunnis, Shia and Kurds each the authority to run their own regional affairs—a notion known as soft partition by its American proponents. The other view is that federalism is the worst possible solution for Iraq’s current woes, as it would lead to division and sectarian war.

We believe neither represents a solution. Those who favor the first option should consider the sobering mix of violent protests, arrests and mobilization of state security forces that occurred after the diverse Sunni-Shia-Kurdish province of Diyala sought to declare itself an autonomous region in December 2011. What then might happen if identity-based federalism were attempted on a nationwide scale? Likewise, those who advocate delaying a discussion of federalism until more propitious times need to explain how growing discontent with Baghdad’s governance in non-Kurdish Iraq is to be kept from boiling over in the interim.

In the current strained environment, a system of asymmetric federalism may be the most practical solution for the problems that Iraq faces because it most accurately reflects the country’s enduring ethnic and political realities. No other model is likely to enable the country to reach an acceptable solution for Kurdistan while at the same time ensuring that the central government in Baghdad is viable enough to function. This is not to say that it will guarantee that Iraq comes together into a smoothly functioning democracy. The country’s constitutional flaws are symptoms of the tensions and animosities embedded in the polity, not their source. But it seems clear that the current federal concept retards efforts to resolve the high-stakes competition for power and resources. Removing that barrier could enhance prospects for resolving these conflicts in a reasonably amicable way.

Asymmetrical federalism is not a novel concept. It has been employed in several countries around the world to recognize diversity and manage internal conflict. The theoretical case for asymmetrical federalism in Iraq should begin with an examination of two main stylized models of federalism: “coming together” and “holding together”.

A coming-together model arises when a group of formerly independent or self-governing units join to form a new country. Classic examples include the United States, Australia and the UAE, which formerly consisted of seven independent sheikhdoms. Not surprisingly, those accustomed to ruling themselves are reluctant to abandon power to new national governments. Thus, these coming-together federations are relatively decentralized, with checks on the authority of the central government and the provinces running their own affairs. They also tend to be relatively symmetrical, with all provinces enjoying more or less the same privileges vis-à-vis the center.

In contrast, the holding-together model is usually an attempt to maintain the territorial integrity of an existing state. It often occurs in the case of formerly unitary countries that face ethnically or territorially based secessionist threats. In many cases, attempts are made to reconcile these groups through a grant of special autonomy. The result can be an asymmetrical structure, where the potential breakaway province enjoys heightened self-government compared to other territories in the union. While few countries are purely symmetrical, asymmetrical federations are distinguished by the deliberate nature of these special arrangements, which are protected in laws or the constitution. Recently, in the case of Banda Aceh and Indonesia, asymmetrical arrangements helped end a long-running internal conflict. In other countries, such as Spain, these arrangements have been used to forestall wider conflict by granting cultural and administrative autonomy to Basque and Catalan communities.

The puzzle of Iraq’s 2005 constitution is that it introduced a coming-together symmetrical model of federalism rather than building on the clear asymmetrical foundation of the Kurdish safe haven established after the 1991 Gulf War. An examination of the recent history of devolution in Iraq suggests that a holding-together asymmetrical model may better promote stability by serving the interests of all parties.

The genesis of Iraq’s new federal system lies in the aftermath of the 1991 Gulf War, when exile groups stepped out from the regime’s shadow of fear to plot its demise. They were a motley collection of secularists and Islamists, Arabs and Kurds, all with their own visions of a post-Saddam Iraq.

The Kurds had long aimed to build on an autonomy agreement negotiated with the Baathists in the 1970s that was never implemented. Motivated by their desire for a Kurdish state and the fresh horrors of a genocidal Iraqi Army campaign against them in the late 1980s, Kurds in the post-Saddam era pushed for something more extensive: an ethnically based confederation that would afford the Kurds maximum autonomy over their own affairs. The Kurds’ partners in opposition had not given the idea of federalism much thought, but many agreed.

A central ally to the Kurds in this quest was a party then known as the Supreme Council for the Islamic Revolution in Iraq (SCIRI). SCIRI was a Shia Islamist party established by the Iranians in 1982 during the Iran-Iraq War that was dedicated to overthrowing Saddam’s regime. It saw decentralization as both the best guarantee against a return to dictatorship and a good way to protect Shia interests in the new state. In 2007, SCIRI renamed itself the Islamic Supreme Council of Iraq (ISCI), deemphasizing its historical ties to Iran’s revolutionary regime.

ISCI and the Kurds’ calculations on federalism were not solely about identity. The Kurds saw in federalism the freedom to develop their local oil assets, which would allow them the ability to run their own affairs without being financially dependent on Baghdad. Meanwhile, the Shia region in southern Iraq that ISCI was to propose was not coincidentally home to the majority of Iraq’s vast oil reserves.

The United States, following its overthrow of Saddam’s regime in 2003, made no secret of its own preference for a decentralized Iraq, sharing with the opposition the view that this would prevent the return of dictatorship. From the start, the term used was federalism. With their close ties to the Bush administration, the Kurds and certain ISCI leaders returning from exile had a head start that allowed them to leave an outsized imprint on the new state structure. The areas outside the Kurdistan region, which had yet to produce homegrown parties, were not positioned to give strong expression to their populations’ wills.

Yet resistance to federalism began almost right away. Iraqi nationalists, many with links to the former regime, championed the state’s paramount unity but struggled to articulate a practical alternative to the previous, now-discredited centralization. They were joined by what remained of Iraq’s secular elite and important parts of the Shia clerical leadership. Moreover, some Shia Islamist political leaders outside ISCI, now well on their way to gaining significant power in Baghdad, sought to protect their new domain and began to suggest that Iraqis were not yet ready for federalism.

Notwithstanding these objections, the Kurds proved the best organized of the parties that came to the table to draft the new permanent constitution; they also benefited from their strong ties to the U.S. officials who midwifed the new text. The Kurds’ goal was to maximize their autonomy, even emphasizing that Iraq’s union was voluntary and could be reconsidered if Baghdad did not fully respect guarantees to the Kurds in the new constitution. They also promoted the sectarian regionalization of Arab Iraq to ensure that Baghdad would never regain the power to threaten Kurds.

As the drafting process unfolded, those opposed to federalism were so weak and divided that the Kurds and ISCI pushed through language establishing the formation of federal regions with equivalent powers to the Kurdistan region. With Iraq’s sectarian civil conflict brewing, ISCI tabled the proposal for the creation of an oil-rich, nine-governorate “super-region” in the Shia South that it aimed to govern and protect against insurgents operating in the Sunni heartland west and north of Baghdad.

The result was the 2005 constitution, which prescribes a federal system with two exceptional characteristics: It hollows out the national government through radical devolution to federal regions that can mostly ignore Baghdad on many important matters, including most importantly oil and gas management and revenue sharing. It also provides minimal barriers to prevent the provinces outside of Iraqi Kurdistan from forming new autonomous regions, either standing alone or in conjunction with other provinces, with no limit on their size or number.

From the start, these features raised sharp fears regarding the viability and unity of the new state, prompting a near-unanimous rejection of the new charter by the Sunni Arab community in the October 2005 constitutional referendum. In recent years, the Sunnis have been increasingly joined in their objections by most of the newly empowered Shia Islamist parties, which have grown accustomed to ruling Baghdad. Even ISCI, the principal Arab proponent of Kurdish-style federalism in the rest of Iraq, appears to have shelved its project for a Shia super-region in the face of popular opposition. A Kurdish constitutional veto, however, has so far prevented any meaningful reconsideration of Iraq’s new federal architecture.

At the cusp of the U.S. troop withdrawal in late 2011, Iraq found itself in a peculiar situation. The majority of its political class outside the Kurdistan region, including the most powerful actors in Baghdad, has publicly objected to the constitution’s basic structure. Yet an early review of the constitution in 2007, intended to broaden its appeal, quickly foundered. Partially this is because the review committee took a symmetrical approach. It proposed to adjust the balance of power not just between Baghdad and any future regions but also to bring the Kurdistan region into line with a more centralized state structure. The latter crossed a clear Kurdish red line, prompting the veto threat that killed the amendment process. No clear avenue now exists on how to address this short circuit.

After six years of experience with the implementation of the constitution, two things have become clear. First, the type of countrywide sectarian regionalization advocated by the Kurds and ISCI remains unpopular outside Kurdistan. Second, there is rising discontent in the provinces with Baghdad’s poor and nonresponsive governance. Especially over the last year, there appears to be a growing sentiment similar to that expressed by the governor of Nineveh, Atheel al-Nujaifi: the people of his province support giving the provinces greater power instead of creating independent regions, but if Baghdad does not respond, they might go down the latter path.

The stalemate between Baghdad and Erbil has hampered any response to these grievances. The Kurdistan region can veto any reconsideration of Iraq’s state structure—and the controversy over the Kurdish model of federalism tars any calls for devolution of authority and greater local control outside Kurdistan as promoting partition. Maliki has pointedly reacted to interest in decentralization, saying that the country is not ready for federalism in its western, central or southern regions and that differences should be addressed through common action on administrative deficits rather than by “division or secession.”

Yet in the past year, calls for new regions have grown louder as political disputes in the center contribute to more troubled governance. Meanwhile, a growing sense of political marginalization from Baghdad and victimization by government-controlled security forces continues to amplify interest in decentralization in the country’s predominantly Sunni West and Northwest.

Unsurprisingly, Kurdish leaders have sought to embrace renewed interest in decentralization as supporting their view of the Iraqi state, but there are key distinctions. The most obvious is the absence of an ethnic agenda. Calls for decentralization in predominantly Arab provinces are driven primarily by functional rather than ethnic motives: better government and more effective distribution of resources are the principal goals, rather than the creation of multiprovince autonomous cantons as a precursor to possible independence. Indeed, most Arab proponents of decentralization frequently distinguish their federalism projects from those of Kurdistan.

Decentralization appears to enjoy strong support in the southern oil-producing provinces of Basra, Maysan and Dhi Qar. The difference between the contribution to state revenues by Iraq’s richest oil province, Basra, and the development funds it receives through the federal budget has driven local leaders there to campaign repeatedly to establish the province as a separate federal region. Rumblings in support of decentralization have also been heard from Basra’s neighbors, with occasional talk of creating a three-province, oil-rich region. Meanwhile, in south-central Iraq, the Wasit Provincial Council has reportedly made a formal request to hold a regional referendum, and the Shia holy provinces of Najaf and Karbala have considered forming regions out of a desire for greater local control of the lucrative religious-pilgrimage trade.

But grassroots support for regionalization has not yet been sufficient to spur administrative change. Basra leaders failed in their 2008 attempt to secure popular support for a referendum on establishing the province as a region. Their most recent effort, in July 2011, was tellingly headlined in the Iraqi press as Basra “demands secession.” At the same time, the party that holds the reins of power in Baghdad, Prime Minister Maliki’s State of Law coalition, has neutralized southern proponents of local decentralization and tabled individual requests by Basra and Wasit to organize local referendums on becoming regions.

The most recent manifestations of support for autonomous regions in Iraq’s predominantly Sunni provinces are somewhat different, born of a pervasive sense of alienation and sectarian discrimination by Baghdad. Pro-federalism sentiment in the oil-rich Shia South may create huge uncertainty over the country’s economic future, but sectarian-tinged moves by Sunni-majority provinces to seek regional status and Baghdad’s strong response have left Iraq on a political knife-edge.

These tensions came to a dramatic head in October 2011 when, following a wave of arrests of alleged conspirators in a Baathist coup plot, the provincial government of Salahuddin, a governorate north of Baghdad, symbolically voted to become an autonomous region. Other Sunni-majority provinces, including Nineveh and Anbar, quickly said they were prepared to follow suit if Baghdad did not do a better job of responding to their demands.

The provincial government in Diyala, a mixed Sunni-Shia-Kurd province in northeastern Iraq, went a step further. In December 2011, it adopted its own symbolic declaration of autonomy. The blowback was troubling. Baghdad-controlled security forces were quickly mobilized to the province, thousands of Shia demonstrators stormed the provincial government headquarters, unidentified armed groups blocked major highways and members of the mainly Sunni political bloc that sponsored the measure fled the province ahead of arrest warrants. Almost simultaneously, serious disputes erupted between Maliki and two of the most prominent national Sunni politicians who had supported Salahuddin’s and Diyala’s calls for federalism. One of them, Vice President Tariq al-Hashimi, fled to the Kurdistan region to escape his own arrest warrant for alleged involvement in assassination plots. The other, a deputy prime minister, has had his cabinet participation frozen.

Some national-level proponents of decentralization for these provinces may indeed have the more pernicious agenda that Baghdad attributes to them: using federalism as a way to destroy Iraq’s new political order, with the hope that a new, Sunni-nationalist-dominated state can emerge from the embers. But in the midst of this controversy, it is important to recall that the driving local motive in Salahuddin and Diyala was not separation. Salahuddin’s council in fact emphasized that it wanted to remain part of a “united Iraq.” There also have been no explicit calls for the creation of a multiprovince Sunni region. Instead, provincial leaders in Salahuddin, Diyala, Anbar and Nineveh are looking at a single-province-as-region model, precisely to avoid accusations that they seek to destroy Iraqi unity.

Moreover, there is no consistent popular support for federalism in these provinces. In fact, powerful local tribes in Anbar have organized public protests against the idea of transforming their province into a region. Local opinion polls show frustration with the central government but no desire for Kurdish-style autonomy. Respondents consistently favor Baghdad’s control over oil revenues to protect national unity, but they also want greater local administration of basic services and reconstruction.

To fully appreciate how an asymmetrical model could address this impasse, consider how centralized administration of the governorates by Baghdad works at present. Governors and provincial councils have limited direct budgets, no control over local public-sector hiring and no formal say over projects undertaken by federal ministries within their provinces. In many cases, the bulk of the security forces operating in the governorates report directly to the prime minister’s office, and access to the minority share of capital-investment funds given to provincial councils requires a laborious series of approvals from multiple ministries in Baghdad.

In our view, the complaints of the Arab provinces of Iraq could be addressed through more empowered local administration, greater local say over security and greater distribution of oil revenues. And this in fact is close to what the heads of Iraq’s fifteen provincial councils outside the Kurdistan region laid out in a joint letter to Prime Minster Maliki last October, when they asked for more functional revenue sharing and a greater local say on both public-sector hiring and environmental and customs policy.

Finally, it is important to recognize that this is a markedly different prescription from the relationship between the federal government and the Kurdistan region. The gulf between the centralization endured by the provinces and the virtual autonomy enjoyed by the Kurdistan region leaves ample room for an asymmetrical model to raise the status of the provinces without approaching the kind of regionalization seen as a threat to national unity.

Iraq’s Kurds still dream of their own state, but for now their fortunes remain tied to Baghdad. Mostly because of their own restive Kurdish minorities, neighboring countries will simply not countenance an independent Kurdistan. In the meantime, nationalist Iraqis resent what they see as the Kurds’ influence over the constitution aimed at furthering their independence by hollowing out the Iraqi state. Absent a reset, this set of affairs is a recipe for what could be a perpetual cycle of recrimination and internal strife.

Some Iraqi nationalists may be starting to conclude privately that Erbil is more trouble than it is worth in terms of the country’s territorial integrity. But all must accept that whatever Kurdish nationalists may dream, both sides are stuck with each other for the time being. After decades of bloody armed struggle, it took the cataclysmic 2003 U.S. invasion for the Kurdistan region’s autonomy to be enshrined in the Iraqi constitution. A crisis of similar magnitude would be required for the Middle East’s century-old, post-Ottoman order to be shattered and international borders redrawn.

Short of apocalyptic regional war, reexamining the federalism question appears to be necessary for Iraq to move toward some degree of stability. The straightforward way would be a redrafting of the constitution with authority of the Kurdistan region and other provinces delineated in separate chapters. But Iraqi politics are much messier than that ideal. In 2010, the country spent more than nine months forming a still-incomplete coalition government—it is unlikely the same parties could successfully undertake a comprehensive constitutional overhaul.

A possible asymmetric solution must identify key areas of dispute and recast the debate to affirm the KRG’s autonomy without applying the same concept to other provinces and eviscerating Baghdad’s sovereignty. An elevated administrative status for the provinces could be negotiated among Arab parties and local leaders. Given the difficulties in wholesale revision of the constitution, this change would come via legislative and political means rather than a constitutional amendment.

This represents a second-best outcome but is realistically as far as the envelope can be pushed under present circumstances. Initial understandings could then be codified in the constitution once circumstances permit. Indeed, any progress must present benefits compelling enough to challenge the status quo. In other words, each of the three levels of government described in the constitution—provincial, regional and national—would need to see clear benefits from an asymmetrical system for the idea to gain traction.

The path to pursuing this complex trifecta is perhaps through a bilateral deal between Baghdad and Erbil on oil and revenue sharing, followed by constitutional amendments that remove the threat of Kurdish-style regionalization elsewhere in Iraq, especially by Iraq’s main wealth producer, oil-rich Basra. In order to accept these arrangements and put aside their current constitutional right to form autonomous regions, the governorates should quickly receive tangible administrative empowerment from Baghdad. The concrete proposals included in last October’s joint letter by the heads of Iraq’s fifteen provincial councils could form the basis of these latter talks.

Oil has been at the heart of the federalism dispute from the beginning. At present, with a standoff over legislation governing oversight of the hydrocarbon sector, a deal between Baghdad and Erbil on oil matters feels a long way off. But there are potential trade-offs that could improve confidence between the two sides and lay the groundwork for a more stable, asymmetrical federal system.

In its essence, such a deal would entail the federal government guaranteeing the KRG an automatic share of oil revenues, authority to sign oil contracts, and access to the oil- and gas-export infrastructure necessary to develop a long-term platform for self-governance. (The KRG is currently unable to export the oil it produces and its day-to-day operational funding is subject to the vagaries of Baghdad’s annual budgetary process.) In return, the KRG would recognize the center’s paramount authority on oil revenue handling and setting national oil- and gas-contracting standards. Kurdish leaders also would need to agree that these arrangements apply only to the Kurdistan region and undertake not to oppose laws or constitutional amendments that consolidate Baghdad’s oil and fiscal powers elsewhere.

Several factors could potentially make such a deal attractive to both sides. In the absence of an independent pipeline network to neighboring states, Kurdish hydrocarbon exports are dependent on infrastructure controlled by Baghdad. The KRG could build its own pipelines, but the Kurdish region is landlocked and can only export through Iran and Turkey. Both countries are wary of an independent Iraqi Kurdistan as a model that could inspire their own restive Kurdish minorities. A more promising option is a negotiated deal, where Kurdish exports could be guaranteed unfettered flow through the national Baghdad-controlled pipelines in return for the KRG conducting all crude sales through the federal government, with revenue collection through the federal treasury. This meets Kurdish export needs and recognizes Baghdad’s role in selling and collecting oil revenues.

Second, the present nationwide revenue-sharing scheme is a source of leverage for Baghdad. The next decade’s projected oil exports from central and southern Iraq will dwarf the best-case scenario for Kurdish production. In draft legislation, the KRG has sought to protect its share of this growing national revenue and control over how to spend it. But it has irritated Baghdad by insisting that spending authority be symmetrically decentralized across the rest of Iraq, which would leave the federal government close to penniless and hence powerless. Baghdad should offer a clear choice: Kurdistan can receive a guaranteed automatic share of national oil revenue, but only if it accepts legal arrangements that protect the central government’s fiscal power outside of Kurdistan. Alternatively, the Kurdistan region could become financially self-reliant, controlling all revenue and taxes collected within its boundaries, including from oil and gas—but give up any grants from the federal budget.

Finally, on the issue of oil-contracting authority, the KRG and the federal government should consider a compromise where Erbil gradually standardizes its oil-contract terms with Baghdad’s. In return, Baghdad would need to acknowledge the KRG’s autonomous licensing authority and stop blocking international investment in Kurdistan’s oil fields. Erbil would also recognize Baghdad’s right to oversee oil contracting outside the Kurdistan region, allowing Arab Iraqis to determine amongst themselves the federal government’s role in supervising southern oil and gas contracts.

Both Kurds and Shia Islamists intended for the new constitution to promote decentralization. Indeed, given the starting point, a highly centralized Saddam-era state, the KRG achieved remarkable success in introducing a federal structure that contains the basic features of a coming-together model: highly decentralized with existing and future federal regions granted the same powers. A chain reaction toward this outcome might even be initiated were a single additional province—perhaps oil-rich Basra—to successfully grasp the chalice of regional status.

Yet Iraq is not a set of former colonies or emirates coming together to form a new country. It is a ninety-year-old, historically centralized state that has grappled for decades with the latent Kurdish desire for independence. Moreover, Iraq’s oil and gas is geographically distributed in a way that highlights the country’s ethnic and sectarian fault lines. In this context, full local control of oil resources—a feature of symmetrical, coming-together federations such as the United States, Canada and the UAE—could be dangerously destabilizing in Iraq, leading to large regional wealth disparities. And radical decentralization is not popular among Iraq’s Arab majority—even as Sunni areas chafe under the perceived excesses of the new order.

The incentives generated by the 2005 constitution force Baghdad and Erbil to make a strategic choice. Under the charter’s most radical option, Kurdistan would establish some form of self-sufficient autarky. This would be a poor outcome for all involved. The KRG would need to raise capital for export pipelines, persuade hostile neighbors to accept Kurdish hydrocarbon exports and rely on its own comparatively meager revenues to fund its regional administration. In Baghdad, preoccupation with Arab-Kurdish tensions would stunt development of the state. In addition, with Erbil continuing to block constitutional changes, Baghdad could one day be gutted by new autonomy movements in oil-rich Basra or gas-rich Anbar. In contrast, by isolating and containing the dispute between Baghdad and Erbil, an asymmetrical model would reinforce Iraqi unity and free the rest of the country to choose alternative governance arrangements on their own merits. This could at least provide a framework to consider the grievances of provincial leaders and perhaps defuse the potentially grave crisis sparked by angered Sunnis’ symbolic declarations of autonomy.

In short, Iraq is a textbook candidate for a holding-together, asymmetrical model of federalism. Merely elucidating the concept will not lead to its implementation. But doing so may be a basis for reframing the debate to facilitate a workable and lasting solution to Iraq’s foundational issues.

 

Joost R. Hiltermann is deputy program director for the Middle East and North Africa at the International Crisis Group. Sean Kane is a Truman Security Fellow and a former United Nations official in Iraq. Raad Alkadiri is partner and head of markets and country strategies at PFC Energy in Washington, DC.

 
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