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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
Water Wars? Lessons from the Middle East & North Africa
Water Wars? Lessons from the Middle East & North Africa

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

The Royal Engineers Boat Group, a British military unit, patrols the Shatt al-Arab waterway between Iran and Iraq in October 2006. FLICKR/David Axe

Water Wars? Lessons from the Middle East & North Africa

In a keynote speech for the World Water Week in Stockholm on 28 August 2016, our MENA Program Director Joost Hiltermann assesses the role of water in Middle East conflicts – even, potentially, when used in the cultivation of Yemen’s beloved stimulant, qat.

I want to thank the organisers – AGWA, the Rockefeller Foundation, SIWI and UNESCO-IHP – for inviting me to speak here today, and in particular Anders Jägerskog of SIDA at the Swedish Embassy in Amman for his support.

I head the Middle East & North Africa Program at the International Crisis Group, an independent organisation working through field-based analysis and high-level advocacy to prevent and resolve deadly conflict. In that capacity I have asked myself at times: Why haven’t we worked on water and conflict in the region I cover? Aren’t there plenty of reasons to do so? Indeed, conflict over water was practically invented in the Middle East. I’m going to do something now that I don’t often do: I’m going to quote from the Bible. It’s Sunday, after all.

This is from Genesis:

“Isaac’s servants also dug in the Gerar Valley and discovered a well of fresh water. But then the shepherds from Gerar came and claimed the spring. ‘This is our water’, they said, and they argued over it with Isaac’s herdsmen. So Isaac named the well Esek (which means ‘argument’). Isaac’s men then dug another well, but again there was a dispute over it. So Isaac named it Sitnah (which means ‘hostility’). Abandoning that one, Isaac moved on and dug another well. This time there was no dispute over it, so Isaac named the place Rehoboth (which means ‘open space’), for he said, ‘At last the Lord has created enough space for us to prosper in this land’”.

Well, dream on, I say! There appear to be no open spaces left in the Middle East, and “argument” and “hostility” have become the name of the game.

Instead of a sermon, though, I’m going to say a few things about how water relates to the potential for conflict. As an organisation, we have focused on the drivers of, and actors in, “hot” conflict, of which we have plenty in the region right now: Syria, Iraq, Yemen, Libya, always Palestine/Israel, and others. This distracts from the important underlying, longer-term issues that require attention, such as pressures on water resources. One can find examples of disputes over water triggering a “hot” war, but not many, at least not in recent times. The obvious one that comes to mind is the Iran-Iraq war in the 1980s and the fight over access to the Shatt al-Arab, the waterway that is the confluence of the Tigris and Euphrates as they flow toward the …eh… Persian Gulf? Arab Gulf? You see, there is another problem right there. Let’s just say “the Gulf,” and agree that we all know what we’re talking about.

But other than that war (about which more in a minute), I can’t cite any recent examples. Yet once we take a closer look at the water question, we find interesting things. There is a very good piece in a recent issue of Middle East Report that discusses developments in a place called Wadi Barada in Syria and how these relate to the 2011 popular uprising against the rule of Bashar al-Assad. It turns out that the fact that the river that runs through Wadi Barada dried up in the mid-1990s was a key contributing factor to why that area of the country joined the uprising. It’s clear from this example that any student or activist interested in the relationship between water and conflict would do well to pay close attention to developments such as these well before they lead to violent conflict. More about Wadi Barada in a moment.

What I have learned from my little research before this conference is that, broadly speaking, there are three categories of water and conflict: conflicts over access to water, conflicts over the allocation of water, and the use of water as a weapon in conflict. I will give examples of each, but let me first give some general characteristics about these three categories: (1) issues of access, allocation, and use as weapon can occur in internal and in cross-border situations (the term “transboundary” can denote both internal and cross-border); (2) they can be a cause, a contributing factor, or a pretext for armed conflict; and (3) they can be aggravated by weak governance resulting in poor water management. The question of state policy is important in all cases.

First, access. Conflicts over access usually concern a body of water or a water basin, and are made worse if they have a transboundary dimension. Let’s take another look at the example of the Shatt al-Arab. Access to this waterway has long been a matter of dispute between Iran and Iraq. To Iraq, the river provides critical access to the Gulf; it’s almost existential. To Iran, which has a long coast line on the Gulf, the matter is different, but because it has cities with major oil facilities on the Shatt it needs the river for transportation. Iraq had exclusive access to the Shatt in the early 1970s when Iran, for a number of reasons – of which access to the Shatt was one – began supporting Kurdish rebels in northern Iraq in order to press the Iraqi government to make concessions. Which it did: in 1975 the Shah and Saddam Hussein signed the Algiers Agreement, in which they undertook to share the Shatt by dividing it along the thalweg, the line connecting the river’s lowest points.

In 1980, Iraqi forces invaded Iran by crossing the Shatt into Khuzestan. Saddam wanted to take advantage of post-revolution disarray in Tehran to deal the regime a setback or even bring it to collapse. The issue of the Shatt was merely one of a number of grievances Iraq had vis-à-vis Iran, but Saddam mentioned it as the primary casus belli. It was clearly a pretext for the invasion, not the main reason. (During the war, the Shatt was unnavigable; afterward it was again shared, if uneasily, between the two protagonists.)

So the Iran-Iraq war example offers the following: a conflict at least partly over access to a vital waterway; a combination of cause, contributing factor, and pretext, but arguably mainly the latter; a transboundary/international conflict; and instead of weak governance the actions of two autocratic governments that had little political will and limited capacity to establish mechanisms for resolving disputes.

Second, allocation. Here I go back to the example of the Wadi Barada, which is located between Damascus and the border with Lebanon. Because of the exponential growth of the capital in recent decades, including in the direction of Lebanon in the form of large housing estates for army officers and Alawite and Druze elites, water was diverted from the spring that fed the river flowing through the Wadi Barada in order to provide drinking water for the expanding population, and by the mid-1990s the river had dried up. Perhaps no surprise, therefore, that when protests broke out in southern Syria in the spring of 2011, the people of Wadi Barada quickly joined in, giving voice to their own specific grievances. Their main demands on the government were: (1) restore the river; (2) give access to clean drinking water; and (3) provide fair compensation for the agricultural lands expropriated in the 1970s and 1980s.

The plight of these locals was the direct result of state policies: discriminatory water allocation by an autocratic state and land expropriation, without redress (in the absence of an independent judiciary). After government negotiators met with representatives of the area, they made certain promises, but then nothing happened, the protests continued, and soon government forces came to suppress them. The result was an active and violent revolt, in tune with what was going on elsewhere in Syria, but in the case of Wadi Barada specifically because of what had happened earlier with the land expropriations and water diversion. Discriminatory water allocation therefore was an important contributing factor to the uprising in that part of Syria.

Third, as weapon. I’m not about to throw this bottle of water at you, but … the threat to unleash water collected behind a dam on a city can be quite powerful. The Iraqi regime feared Iran might be planning something along these lines when the latter invaded northern Iraq in the last year of the war, in 1988, aiming for the Darbandikhan dam that sits on the Diyala river; opening it could have flooded Baghdad downstream. Likewise, the Mosul dam became a strategic asset in 2014 after the Islamic State overran Iraqi government positions and captured Mosul and surroundings in June 2014. The risk of waters being unleashed and submerging Mosul threatened to turn a river into a weapon of war. (There has also been a risk of the dam’s collapse as a result of structural faults and lack of maintenance.)

So what is to be done? It is clear that those involved in conflict prevention need to take a closer look at the predictors of deadly conflict when it concerns water disputes:

Firstly, look more closely at disputes over access to water, water allocation, and the potential use of water as a weapon, and assess how they are being managed, by what mechanisms, by what degree of governance, what the recourse is, and so on.

Secondly, analyse the strength and adaptability of institutions and processes of transboundary water management and dispute resolution between riparian governments: how robust are these? Could they break down? How and when?

Thirdly, in times of conflict and crisis: Determine how to achieve water management despite such adverse conditions, and include it as an essential element of a peace settlement and post-conflict peace building.

That’s the agenda we face. Now I’ll end with a short anecdote. Some years ago, I was in Sanaa, and one of the meetings we had was with the minister of water, a very smart and engaging man, who for an hour related to us the difficulties of stamping out the culture of qat chewing, with qat being the kind of rather useless agricultural product whose cultivation was nevertheless consuming inordinate amounts of water. It was getting to be close to 2pm, however, and so rather late in the ministry’s working day, and the minister made it clear that the meeting was over, and it was time for him to hasten home … and preside over his afternoon qat chew.

Cultural habits are deeply ingrained. The misallocation of water for qat production in Yemen is going to run up against more pressing needs for water, and will trigger conflict sooner or later. The current war is not over water, but when it is ended – and let’s hope that moment will come soon – it will be incumbent on policymakers to tackle the knotty qat question, lest Yemen find itself in a Wadi Barada-type of situation sometime down the line.

Thank you.