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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

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

Iraq: The Battle to Come

Originally published in The New York Review of Books

As an eight-month battle to retake Mosul from ISIS is coming to an end in the labyrinthine alleyways of the Old City, a parallel battle to defeat its fighters in the Syrian town of Raqqa is gathering force. But further battles await: downstream along the Euphrates in Deir al-Zour, in the vast desert that spans the Iraq–Syria border, and in a large chunk of territory west of the Iraqi city of Kirkuk. To members of the US-led coalition and to Western audiences, this has been a necessary military campaign, directed at a jihadist group whose brutal methods and ambition to carry out attacks in western capitals pose an intolerable threat.

To local people, the picture is decidedly different. ISIS’s military defeat, which Western officials believe will come sometime later this year or early next, will hardly put an end to the conflicts that gave rise to the group. For much of the battle against ISIS has taken place in a region that has been fought over ever since oil was found in Kirkuk in the 1930s. The deeper conflicts here—between Arabs and Kurds, between Shia and Sunni, between neighboring powers such as Iran and Turkey, and among the Kurds themselves—will only escalate as the victors, fortified by weapons supplies and military training provided by foreign governments, engage in a mad scramble for the spoils.

When ISIS conquered Iraq’s predominantly Sunni Arab areas three years ago, it faced off with Kurdish forces along a frontline that ran through the middle of what one might call the borderlands between Arab Iraq, with Baghdad as its capital, and Kurdish Iraq, which is governed from Erbil in the north. Kurdish leaders claim that significant parts of these so-called disputed territories are “Kurdistani,” by which they mean that even if the local population is not majority-Kurdish, it nevertheless should be incorporated into the Kurdish region—and thus into a desired future Kurdish state. Many local Arabs, on the other hand, insist that these areas are inalienably Iraqi and must remain under Baghdad’s authority.

The problem of the disputed territories was recognized in the post-2003 Iraqi constitution, which laid out a plan for resolving their status. That never came to pass. Then, ISIS’s arrival provided Kurdish leaders with what they thought was an opportunity to settle the matter in their favor, having gained considerable territory in the fight against the jihadist group. But this has only inflamed tensions further.

Kurdish leaders rightly see ISIS as the result of an ideological marriage between Arab chauvinists and Islamist radicals, both equally intolerant of the ethnic and religious “other,” with the religious strand currently dominant. But many Kurds fail to appreciate that among Sunni Arabs in northern Iraq, ISIS also draws on anger over Kurdish actions in the disputed territories, especially around Mosul and in Kirkuk. With the central government weak, many of these local Arabs appear to accept the protection of just about any political group that will keep the Kurds away, even if that group is ISIS.

It is important to remember that ISIS began in Iraq and that the majority of its leadership and followers are Iraqi (even if it was founded by Abu Musab al-Zarqawi, a Jordanian); it has been able to attract foreign elements mainly because of its willingness to fight the Syrian regime and its pledge to establish a caliphate. ISIS’s military defeat may take care of the foreign component, but surviving Iraqi followers, deeply enmeshed in the local population through family and tribal ties, will pose a long-term challenge, including in the disputed territories.

Read the full article at The New York Review of Books.