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Iraq and the Kurds: The High-Stakes Hydrocarbons Gambit
Iraq and the Kurds: The High-Stakes Hydrocarbons Gambit
Table of Contents
  1. Executive Summary
A New Generation of Activists Circumvents Iraq’s Political Paralysis
A New Generation of Activists Circumvents Iraq’s Political Paralysis

Iraq and the Kurds: The High-Stakes Hydrocarbons Gambit

The political standoff between Iraq’s Kurds and the government in Baghdad has left pressing disputes over oil and territories unresolved, intensifying the likelihood of conflict.

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Executive Summary

A simmering conflict over territories and resources in northern Iraq is slowly coming to a boil. In early April 2012, the Kurdistan regional government (KRG) suspended its supply of oil for export through the national Iraqi pipeline, claiming Baghdad had not fully repaid operating costs to producing companies. The federal government responded by threatening to deduct what the oil would have generated in sales from the KRG’s annual budget allocation, potentially halving it. This latest flare-up in perennially tense Erbil-Baghdad relations has highlighted the troubling fact that not only have the two sides failed to resolve their differences but also that, by striking out on unilateral courses, they have deepened them to the point that a solution appears more remote than ever. It is late already, but the best way forward is a deal between Baghdad and Erbil, centred on a federal hydrocarbons law and a compromise on disputed territories. International actors – the UN with its technical expertise, the U.S. given its unique responsibility as well as strategic interest in keeping things on an even keel – should launch a new initiative to bring the two back to the table.

Each side has its narrative, based on history, accumulated grievances and strong sense of entitlement. For now, neither is inclined to settle the conflict peacefully through serious, sustained negotiations, as each believes its fortunes are on the rise, and time is on its side. They are wrong: time is running out, as unilateral, mutually harmful moves are pushing the relationship to the breaking point, with the hydrocarbons-driven stakes and attendant emotions so high that conflict looks more promising to them than accommodation and compromise.

The two unwilling partners in an Iraqi enterprise born of colonial machinations – Arabs and Kurds – have spent 90 years in unhappy cohabitation. Kurds have waited for the moment when they will succeed in removing the shackles of an overbearing, at times highly repressive, central state. They know that when Baghdad is weak, they can take steps to bring their dream of statehood closer to reality, but that when the centre is strong it will use its superior resources to push them back into their place – or worse. This is why the Kurds are so alarmed at attempts by Prime Minister Nouri al-Maliki to amass power at the expense of his rivals and rebuild a strong state, armed with U.S. weaponry, under his unchallenged control.

Ever since arriving in Baghdad on the coattails of the U.S. invasion in 2003, the Kurds understandably have used their new position and the centre’s weakness to develop their own region. They seek to reverse a legacy of discrimination and economic neglect but also to create an escape route should relations with Baghdad sour beyond repair. Yet, in many ways, this approach contains elements of a self-fulfilling prophecy: by pressing their advantage, Kurds inevitably aggravate matters, convincing the federal government that they are aiming for secession – and aiming to take with them a good chunk of disputed territory that Kurds claim as historically part of a notional Kurdistan but that also appears to be immensely rich in oil and gas.

Perhaps most worrying to Baghdad, Kurdish leaders have lured international companies to explore and exploit the region’s suspected hydrocarbons wealth. Nor have they stopped at the Green Line that divides their region from the rest of Iraq; instead, they have signed contracts for acreage located squarely in disputed territories. The latest (and largest) to agree to play this game was ExxonMobil, which arrived on the scene in October 2011, taking six blocks, two of which, along with a corner of a third, lie across the Green Line. It thus placed itself at the heart of the conflict, potentially accelerating the centrifugal forces that are tearing at the Iraqi fabric. While ExxonMobil may have calculated that by doing so it could help bring Baghdad and Erbil to the table and effect progress on a federal hydrocarbons law, the likelier outcome is that both sides will further entrench their positions, thus increasing the chances of violent conflict. From Baghdad’s perspective, the Kurds are making mincemeat of any attempt to have a unified federal oil strategy; increasingly, it views them as untrustworthy partners in government who are seeking to break up the country.

But the Kurds face a problem. While they pursue an independent oil policy and have taken important steps toward that end by drafting their own oil law in 2007 and signing over 40 contracts with foreign oil companies without Baghdad’s input or approval, they lack the means to export their oil without Baghdad’s help and therefore its permission. To date, the federal government has used its control over the national pipeline network, as well as its hold on the treasury and budget, to rein in the Kurds’ ambitions.

Hemmed in by Baghdad and anxious to become economically self-sufficient, Erbil is turning its eyes to another potential outlet for its oil: Turkey. Masoud Barzani, the Kurdish region’s president, reportedly told foreign visitors to his mountain redoubt that if Maliki remains in power beyond the 2014 parliamentary elections, the Kurds would go their own way. Not coincidentally, 2014 is when the Kurdish region expects to complete construction of its own strategic oil pipeline, one that skirts (federal government) Iraqi territory before reaching the border with Turkey. For Kurdish leaders, economic dependency on a democratic neighbour with an attractive window on the West is far preferable to a continued chokehold by a regime displaying authoritarian tendencies – all of which raises the question of what Ankara would do if the Kurds ask it to take their oil without Baghdad’s approval.

Turkey’s main objective in Iraq has been to keep it unified. To this end, it has undertaken economic steps since 2007 that would bind the country’s various parts into an economic union, hoping that politics, especially the relationship between Baghdad and Erbil, would follow suit. It also has encouraged both sides to agree to a federal hydrocarbons law, the added benefit of such legislation being that energy-poor Turkey could import oil and gas from Iraq’s immense southern fields, as well as from the Kurdish region, coming closer to fulfilling its aspiration of becoming a major transit corridor for regional hydrocarbons. The Kurds hope, however, that Turkey’s thirst for oil and gas will align with their own thirst for statehood.

Ankara is unlikely to shift course, frustration with its neighbour’s failure to agree on oil legislation and its eagerness to purchase oil and gas from the Kurdish region notwithstanding. Ideally, it would import Kurdish products without jeopardising its relationship with Baghdad, though that seems beyond reach.

The Kurds have not lost hope. As they see it, a regional crisis – such as war between Iran and the U.S. or the break-up of neighbouring Syria – might constitute a game-changing occurrence, persuading Ankara to risk its relations with Baghdad in exchange for energy security and a stable (Kurdish) buffer against an unpredictable, possibly chaotic, suspiciously pro-Iranian and increasingly authoritarian Arab Iraq. But such scenarios might not unfold and, for a multitude of reasons, one must hope they do not. The answer to the current impasse, in other words, is not to wish for a cataclysmic event with potentially devastating repercussions for all. It is not to bank on the central Iraqi government surrendering resource-rich territories it deems its own and has the means to hold on to by force. And it is not to gamble on a radical move by Turkey toward a separate deal with the KRG when Ankara has its own, deep-seated fears concerning a potentially newly invigorated Kurdish population on its own territory.

For Baghdad and Erbil, reaching a deal will be very difficult. But the alternatives surely would be far worse.

Baghdad/Erbil/Washington/Brussels, 19 April 2012

Maria Fantappie talking to young Iraqis by the Tigris river. CRISISGROUP/Julie David de Lossy

A New Generation of Activists Circumvents Iraq’s Political Paralysis

Researching the talks on forming a new Iraqi ruling coalition, our Senior Adviser for Iraq Maria Fantappie finds a country whose youth, women, civil society, officials and even politicians are hungry for bottom-up change to a stalemated, top-down system of governance. 

BAGHDAD – I have spent much of my career – as an academic, an adviser to the EU and a policy analyst – speaking with high-level policymakers in Iraq. In my many meetings, I have tried to get a grip on the complex political structures of a country ravaged by war, sanctions, foreign occupation and internal conflict. It is easy to be caught into a general tendency to look closest at what is going on at the top, focusing on the government, the challenges it faces inside Iraq and beyond, and the shortcomings of the political system that arose after the U.S.-led invasion of 2003. We tend to forget that when a political system fails to deliver, societies may organise and find solutions on their own.

I visited Baghdad between October and February to research the difficult and lengthy process of forming a government, which has yet to be completed. The cabinet’s composition is new but sadly familiar as well. Appointing technocrats rather than members of the political class to ministerial posts marked an attempt to trigger a transition from a dysfunctional political system. Yet technocrats remain dependent on the old political figures who have little interest in reforming a system that serves them. In that sense, Iraq is at a crossroads. A sense of hope and a readiness for reform run parallel to a stubborn belief that a broken system will continue to sputter along.

Washington’s post-invasion attempt to remake Iraq has entrenched ethno-sectarian politics in the country. It empowered political parties organised along ethnic or sectarian lines, and rendered it almost impossible to rise through government ranks without affiliating with one of these parties. Ethno-sectarian politics, together with the oil-based economy, has discouraged meritocracy in the public sector, which employs the majority of the working population. Instead it has encouraged patronage, which consigns public sector employees and (indirectly) everyone else to dependence on the political class for access to quality health care, education and jobs. This political class is largely discredited, its policies dysfunctional and unpopular, but Iraqis feel the system would not work without it.

Maria Fantappie during a meeting with a tribal leader. CRISISGROUP/Julie David de Lossy

Because the political class generally benefits from this vicious cycle, I am not surprised when some of them openly say: “We want to keep things this way. It is more convenient for everyone”. But some of the newly appointed technocrats are desperate to break out of the cycle. I am here to understand how that might be done.

The Green Zone

A typical week begins with a meeting with a newly appointed government minister. He sends an armoured car for me, making it easier to get through the checkpoints that abound in the city. The driver takes me into the Green Zone, a fortified area in which many Iraqi officials live and work, though most ministries are located elsewhere in the city. Parts of it have long been off limits, but since the U.S. invasion, this section of the city was cut off from the rest of Baghdad, its high walls and barbed-wire fencing translating the stark disconnect between government and society into a concrete geographical division.

One of the new government’s first decisions, taken in December, was to reopen parts of the Green Zone to the public in the early mornings and late evenings. My driver, Abbas, recalls the moment as exhilarating, and insists that today we traverse the 14 July bridge – a privilege the U.S.-led occupation authority and subsequent Iraqi governments once restricted to persons with the appropriate government-issued badge. “This bridge was closed to us for 15 years,” he says as he drives across it. “They wanted to keep this part of the city for themselves”.

Concrete walls and barbed wire protecting the Green Zone, Baghdad. CRISISGROUP/Julie David de Lossy

At my appointment the minister leads us into a meeting room and we begin talking about his role in the government. He is a technocrat, and claims that he did not want his job, but that the new prime minister, Adil Abdul-Mahdi, an old friend, pressured him to accept. He is keen to improve service provision, yet describes himself as doomed to fail or with little chance of success. He insists that he will be thwarted by a senior cadre of officials in his ministry, who have vested interests in keeping things exactly as they are.

He says: “Whatever reforms I may have in mind I cannot implement through my ministry. Before starting any reform from the top, I would need to replace all general directors [senior posts in the Iraqi administration] or to appoint them to different tasks. Several gained their positions through affiliation with parties that are powerful in parliament or connected to militias. Firing them is impossible”. This system is so entrenched that he has little choice but to play the same game.

He also has to watch his own back, taking care not to alienate others within the government who might become vindictive rivals, or to make a misstep that an adversary might be able to characterise as corrupt. In a system rife with abuse, accusations of corruption – whether warranted or not – are a common way to dispose of political enemies. “Look at that,” he tells me, pointing at a black briefcase on the floor. “Every day at 5:30pm, a car comes to my home with paperwork for me to sign. I have to read each paper, carefully, making sure that none of what I sign will incriminate me later. That is half a day of work right there lost in signing papers … without improving anything”.

A Generational Shift

Iraqis, and especially millennials, have grown up in a political system that offers little participation or representation. Yet, regardless of their level of education, many also have developed an aspiration for realising civic rights and accountability, whose absence has fuelled disillusion and disengagement across society.

As a female professional, I am particularly sensitive to this challenge. Many women of my generation are disillusioned with ossified political institutions resistant to change. In our youth, we were taught to believe in equal opportunity. But as we grow older, we find that change takes much longer than we expected, even in institutions that purport to champion equal opportunity.

As I research how to break the stalemate of Iraq’s political system, I see similar patterns. Merely speaking about political reform is not going to generate solutions. Political elites too often manipulate these ideas to serve their own purposes, emptying them of content. Most of the leaders I speak with fit a similar profile: male, middle-aged, their roots in the same political establishment. This is not where solutions to Iraq’s deep challenges will come from.

Mutanabbi Street in central Baghdad. CRISISGROUP/Julie David de Lossy

As my days of meetings turn into a week, I wonder what new forces might be brought to bear to make change. I think I need to look at Iraqi politics from a new perspective. Maybe it is time to identify who from outside the political class could drive change.

A Somewhat Self-governed Society

It is clear that society is not sitting back and watching, but already organising itself from the bottom-up. Iraqis have had practice at this. During the 1990s, the decade of UN-imposed sanctions, Iraqis developed an impressive ability to adapt to hardship. The younger generation learned from their parents’ experience.

To be sure, the crisis of political representation has not energised every person in this new generation. For some, it has fostered disengagement, if not nihilism. This alienation is what has led many youths to take up arms – against other Iraqis during the civil war from 2005 to 2007 and to fight the Islamic State, or ISIS, between 2014 and 2017 – or to leave the country.

But in others, the representation crisis has triggered a pragmatic, constructive response. “If the government won’t do it, we will,” one 22-year-old tells me. Young Iraqis and women, for whom it is hardest to gain access to formal politics while staying independent, have found in civil society opportunities for political participation, and have launched or joined initiatives that develop solutions to policy problems that the political class has been unable to address. Some of these organisations have been operational for years, but many of them formed in 2014, when accumulated governance failures allowed ISIS to conquer large swathes of the country. Eventually, the government, with the aid of paramilitary groups, retook all this territory. But the organisational energy generated by the 2014 shock endures, and a new generation of civil society activists is emerging.

Many of these civic activists argue for a new social contract based on citizenship and merit instead of patronage and unquestioned loyalty. They put forward a civil and social rights agenda, with top priority on improving education and health care and a renewed focus on climate change.

A Lawyer’s Story

I decide to meet a group of women activists, all leading members of civil society organisations working on everything from improving women’s rights to political participation. It is to take place at Hanaa Edwar’s home and office in Baghdad’s Karrada neighbourhood. Hanaa heads Amal (“hope” in Arabic), an association committed to development and the respect of human rights in Iraq.

Activist Hanaa Edwar in her garden with a group of activists. CRISISGROUP/Julie David de Lossy

I enter a small, impeccably trimmed garden. Six poodles run around excitedly, but there is no sign of Hanaa or anyone else. I make my way through the quiet, austere interior to the reception area.

I am soon welcomed by Shaima (all names of activists mentioned below are pseudonyms), a 28-year-old freshly graduated from the College of Law in Baghdad. Together with other young lawyers, Shaima began volunteering in 2016 and then established an NGO dedicated to advancing a women’s rights agenda in parliament. She explains, “For a long time women have been waiting to be granted their rights. We want to [make women] an active part of the solution through the skills and knowledge we offer”. The group is working to speed up passage of the domestic violence law in parliament, amending discriminatory articles in the penal code (some clauses prescribe different punishments for men and women who have committed the same offence) and contesting religious courts’ authority over marriage and divorce. “We are also working to have women become judges on the federal court, which has no female representatives,” she tells me.

Piece by piece, Shaima shows me the pertinent legislation: those bills that parliament has passed, those that are being drafted and others that have yet to be amended or replaced. Yet cooperation with parliament has been difficult, she says. “The women’s committee has gradually lost its relevance. In the new parliament [elected in May 2018], the committee has been merged with the human rights committee, as only a few lawmakers were interested in being on it,” she explains.

Women are severely under-represented in the Iraqi political system, notwithstanding the women’s quota in parliament (the constitution allocates 25 per cent of seats to women). Reform of the political system and access to political participation for women are deeply inter-related. Many of the women civic activists are religious, and precisely because of their faith they denounce Islamist parties that use sectarian identity and religion as tools for perpetuating their power. Shaima articulates it this way: “As long as you have a political system that redistributes posts on the basis of ethnicity and religious belonging, you will have the same political parties in power. These parties – many of which are Islamist – will fill the women’s quota only with women affiliated with them, who have no interest in advancing women’s rights as citizens. Absence of reform of the political system and discrimination against women are part of the same problem,” she says.

A Water Activist’s Story

My next meeting with the new civil society generation is at the headquarters of the Iraq Civil Society Solidarity Initiative. It is located in an ordinary house in central Karrada that has been transformed into a shared working space for various initiatives. One undertaking is devoted to the protection of Iraq’s water resources. The government has been in negotiations with Turkey over the Tigris and the Euphrates waters – both rivers originate in Turkey – and with Iran over waters of Tigris tributaries. Turkey and Iran are rerouting the rivers and building dams, greatly reducing the flow of water into Iraq. Since the government has made little progress toward restoring the flow, Hussein, a volunteer, says his organisation has focused efforts on water management inside Iraq.

Members of the Iraqi Civil Society Solidarity Initiative at their office in Baghdad. CRISISGROUP/Julie David de Lossy

“The idea of environmental activism is relatively new in Iraq,” says Hussein, who is still in his twenties and in 2016 became the executive director of an initiative for the protection of the Tigris. He notes, “Sectarianism and terrorism might end as politics evolve, but the issue of water is going to last. The protection of water resources is going to affect the very existence of Iraq. We need to make people responsible for the way they manage and use water”. Hussein’s goal through his organisation is to work with farmers whose livelihood depends on the two rivers to improve irrigation and raise awareness about the importance of water management.

One of his organisation’s activities is holding youth camps in Iraq’s southern marshes, which offer young people from different parts of the country a chance to observe agricultural practices in this sensitive ecosystem. “We are also engaging with activists from Iraqi Kurdistan and bringing them to the south. When it comes to nature, we should work together regardless of political differences,” Hussein declares. I ask Ali, another activist, what sparked his interest in protecting the environment. He says he was deeply touched by a visit to a family in the marshes whose cow had died due to lack of water.

Intrigued, I want to find out if youth activism on the water issue is matched by equal attention on the government’s side. Hussein arranges an appointment for me at the Ministry of Water Resources.

An Official’s Story

At a section of the Ministry of Water Resources in central Baghdad I’m welcomed by Marwa, a 32-year-old agricultural engineer. I have requested an appointment with the national director of irrigation projects. She welcomes me in the reception area and escorts me to the general director’s office. It is crowded with visitors. When she presents my request to the director’s secretary, he responds bureaucratically: “If she wants to meet the general director, she will have to provide me with a written request”. We turn and leave the noisy room behind us.

Marwa invites me to her office on the second floor. We walk through dark corridors with broken windows, flickering neon lights and a makeshift cardboard ceiling. Marwa shares an office with a female colleague. The two desks are loaded down with papers. Maps of Iraq’s waterways are stacked on the floor next to a kettle, a computer made in 1998 and a defunct keyboard. She proudly shows me the origami figurines with which she has decorated her office. “I learned this on YouTube,” she says of her hobby.

Linking the grassroots to the state bureaucracy is a departure from years of failed top-down reforms.

Marwa turns on the kettle and offers me coffee. She starts: “I am embarrassed to show you my office. You see, this is what we actually do from 9am to 2pm: we produce papers all day long. We can only use one computer for printing, and its keyboard is broken. We run from floor to floor to ask directors and general directors to sign these papers, and then we come back to our office”.

The ministry has its own water management initiative. It selects local leaders and puts them in charge of water distribution. The initiative is similar to the one started by the civil society activists, but the ministry’s version usually involves local leaders who are close to major political forces, and it appears to end up benefiting some who are closer to the local parties’ representatives.

While describing the initiative’s limited impact, Marwa pauses to say: “I volunteered to sit on a committee in charge of cooperation with civil society initiatives on water. At least, we can see some results through them. I often use the ministry’s data and pass this on to the activists. They might make better use of it”. She smiles. The depth of cooperation with civil society initiatives depends on the government official. Marwa is somewhat unusual. Many Iraqi officials distrust civil society organisations because they suspect them of being foreign-funded and because they resent outside oversight of their work.

Bridging the Gap

I never get my appointment with the general director. But as Marwa accompanies me back to the foyer, she shows me pictures on her phone of an initiative of her own at the ministry. She has distributed red lapel pins representing the campaign to stop violence against women, office by office, to everyone throughout the ministry. As she bids me goodbye, she says: “I really can’t stand doing nothing”.

As a public sector employee and part-time activist, Marwa is struggling against the odds to bridge the yawning gap between government and society, connecting a sluggish bureaucracy to civil society initiatives. And while hers may be an individual endeavour, linking the grassroots to the state bureaucracy is a departure from years of failed top-down reforms.

Now it is time for the government to step up as well, and make the issues that civil society has championed its own priority, working in coordination with organisations and individuals like the ones I met. After all, these issues – from women’s equality to water management – are critical to Iraq’s future. In working to address them, the country’s political leaders should know that they have allies. And these are not just in faraway capitals, but close by, in their own communities, primed to help.