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Oil for Soil: Toward a Grand Bargain on Iraq and the Kurds
Oil for Soil: Toward a Grand Bargain on Iraq and the Kurds
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  1. Executive Summary

Oil for Soil: Toward a Grand Bargain on Iraq and the Kurds

A long-festering conflict over Kirkuk and other disputed territories is threatening to disrupt the current fragile relative peace in Iraq by blocking legislative progress and political accommodation.

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Executive Summary

A long-festering conflict over Kirkuk and other disputed territories is threatening to disrupt the current fragile relative peace in Iraq by blocking legislative progress and political accommodation. Two events in particular stand out: a two-month stalemate in July-September in negotiations over a provincial elections law in which Kirkuk’s unresolved status was the principal obstacle and, during this period, a campaign by the Iraqi army in and around the Kurdish-controlled disputed district of Khanaqin. To avoid a breakdown over the issue of Kirkuk, the current piecemeal approach should be discarded in favour of a grand bargain involving all core issues: Kirkuk and other disputed territories, revenue sharing and the hydrocarbons law, as well as federalism and constitutional revisions.

Despite some progress, Iraq’s legislative agenda, promoted by the U.S. in order to capitalise on recent security gains, is bogged down. The main culprit is a dispute over territories claimed by the Kurds as historically belonging to Kurdistan – territories that contain as much as 13 per cent of Iraq’s proven oil reserves. This conflict reflects a deep schism between Arabs and Kurds that began with the creation of modern Iraq after World War I; has simmered for decades, marked by intermittent conflict and accommodation; and was revitalised due to the vacuum and resulting opportunities generated by the Baath regime’s demise in 2003. In its ethnically-driven intensity, ability to drag in regional players such as Turkey and Iran and potentially devastating impact on efforts to rebuild a fragmented state, it matches and arguably exceeds the Sunni-Shiite divide that spawned the 2005-2007 sectarian war.

Stymied in their quest to incorporate disputed territories into the Kurdistan region by constitutional means, Kurdish leaders have signalled their intent to hold politics in Baghdad hostage to their demands. At the same time, the Iraqi government’s growing military assertiveness is challenging the Kurds’ de facto control over these territories. Rising acrimony and frustration are jeopardising the current relative peace, undermining prospects for national unity and, in the longer term, threatening Iraq’s territorial integrity.

Rather than items that can be individually and sequentially addressed, Iraq’s principal conflicts – concerning oil, disputed territories, federalism and constitutional revisions – have become thoroughly interwoven. Federalism cannot be implemented without agreement on how the oil industry will be managed and revenues will be distributed. Progress on a federal hydrocarbons law and a companion revenue-sharing law is inconceivable without agreement on the disposition of disputed territories that boast major oil fields, such as Kirkuk. And the constitution review has faltered over failure to settle all those questions, the solutions to which will need to be reflected in amendments reached by consensus.

How to move forward? If there is a way out, it lies in a comprehensive approach that takes into account the principal stakeholders’ core requirements. A sober assessment of these requirements suggests a possible package deal revolving around a fundamental “oil-for-soil” trade-off: in exchange for at least deferring their exclusive claim on Kirkuk for ten years, the Kurds would obtain demarcation and security guarantees for their internal boundary with the rest of Iraq, as well as the right to manage and profit from their own mineral wealth. Such a deal would codify the significant gains the Kurds have made since they achieved limited autonomy in the wake of the 1991 Gulf War and especially after April 2003, while simultaneously respecting an Arab-Iraqi – as well as neighbouring states’ – red line regarding Kirkuk.

This package entails painful concessions from all sides, which they are unlikely to make without strong international involvement. The UN Assistance Mission for Iraq (UNAMI) has been providing technical support on a range of issues and, since late 2007, has devoted the bulk of its efforts to the question of disputed internal boundaries. It will need stronger backing from the U.S. and its allies, which have an abiding interest in Iraq’s stabilisation yet have played a passive bystander role that has confused Iraqi stakeholders and encouraged them to press maximalist demands. The U.S. should make it a priority to steer Iraq’s political actors toward a grand bargain they are unlikely to reach on their own and to secure its outcome through political, financial and diplomatic support.

There is little time to waste. As U.S. forces are set to draw down in the next couple of years, Washington’s leverage will diminish and, along with it, chances for a workable deal. This serves no one’s interest. The most likely alternative to an agreement is a new outbreak of violent strife over unsettled claims in a fragmented polity governed by chaos and fear.

Kirkuk/Brussels, 28 October 2008

Iraqi demonstrators gather during an anti-government protests against unemployment, corruption in Baghdad, Iraq on 7 October 2019. AFP via Anadolu Agency/Murtadha Sudani

Widespread Protests Point to Iraq’s Cycle of Social Crisis

A surge in street protests in Iraq has left some 110 people dead and exposed a rift between the government and a population frustrated by poor governance, inadequate services and miserable living conditions. To avert further violence, the authorities and protesters should open dialogue channels.

Street protests have engulfed Baghdad and southern cities such as Nasiriya and Diwaniya since 1 October, causing a staggering death toll of at least 110 victims in seven days. This deadliest outburst of violence from popular protests since the 2003 U.S. invasion has shaken the foundations of the already fragile government led by Prime Minister Adel Abdul Mahdi.

The prime minister is on thin ice. In the aftermath of the May 2018 elections, a drawn-out tug of war over government formation produced broadly acceptable but politically weak office holders. Neither the prime minister nor any of his cabinet members belong to the main parliamentary blocs (al-Fatah, a Shiite Islamist coalition with links to paramilitary groups and Iran, and Sairoun, an alliance between followers of populist Shiite cleric Moqtada Sadr and the Communist Party). None enjoys significant support within his or her own party. Furthermore, Washington’s “maximum pressure” campaign on Iran and Tehran’s response are putting a severe strain on this government, a partner to both. Already squeezed by Iran and the U.S., the prime minister now also faces pressure from parliament and the street for not delivering the reforms that a significant part of the population has been demanding for some time.

Iraq’s government and protesters need a framework for negotiating reforms and a common vision for the country’s future.

In order to break out of this dangerous dynamic, Iraq’s government and protesters need a framework for negotiating reforms and a common vision for the country’s future.

Viral Anger Fuels a Protest Wave

Street protests have erupted on a regular basis since 2015, in most cases motivated by manifest failures of governance, lack of services and miserable living conditions. This time around, what helped the protests gain strength was Prime Minister Abdul Mahdi’s decision at the end of September to demote a popular senior commander of the war with ISIS, General Abdul-Wahab al-Saadi of the Counter-Terrorism Service (CTS), who had become a national icon for his heroism and integrity. Anger greeted the decision on social media, with many interpreting it as yet another expression of the prime minister’s feebleness in standing up to corruption in the security forces. The CTS is in competition with al-Hashd al-Shaabi, an array of paramilitary groups, the most powerful of which are linked to Iran. Those critical of Iran’s role in Iraq additionally saw the prime minister as giving in to the Hashd by demoting the general.

The affair quickly blossomed into something broader. As anger over the prime minister’s decision went viral online, social media influencers, largely Facebook users, encouraged people to join protests. On 1 October, protesters gathered in Baghdad’s Tahrir Square and in cities across the south, and security forces opened fire to disperse them. The next day, security agencies banned access to social media. The heavy-handed response caused the first casualties, adding to popular fury. On 3 October, early in the morning, the authorities imposed a curfew in Baghdad and southern cities, blocked access to major street intersections and government buildings, and shut down the internet. Fear of repression acted as a disincentive in some areas, including in Basra, which had been a protest hub during previous rounds.

Tensions increased further over the weekend of 4-5 October. Protesters torched the offices of leading Shiite Islamist parties in Nasiriya (including Daawa, Hikma and Asaeb Ahl al-Haq) and paramilitary groups, and masked men in civilian clothing attacked media outlets in Baghdad. The number of victims grew quickly, mostly on the protesters’ side but also among the security forces.

Protests, Politics and Participation

For a growing part of the population, resorting to street action has become the only meaningful form of participation in politics. Recurrent failure of governance and blatant incompetence and corruption, manifested most glaringly in the army’s humiliating collapse in the face of the ISIS onslaught in 2014, have left most Iraqis deeply disillusioned about politicians of all stripes, and disdainful of the notion that voting in elections can deliver change. By contrast, many see street protests as a more effective way to force politicians’ collective hand, as evidenced by government efforts to improve the water supply in the south after riots in the summer of 2018 over the lack of clean water.

The large majority of protesters are millennials under 30, an age group that makes up 67 per cent of the population.

This trend is amplified by a generational factor. The large majority of protesters are millennials under 30, an age group that makes up 67 per cent of the population. They came of age seeing the same faces taking turns and failing at governance. They did not experience the Saddam Hussein regime’s repression. Nor are they inclined to give much credit to current leaders for the roles they claim to have played in resisting that regime, regardless of how accurate those claims may be.

But though many come from the same age bracket, the protesters otherwise represent a cross-section of society that spans both sectarian and class differences. They include lower middle-class youths with no access to quality education or state employment as well as well-educated, English-speaking, upper middle-class individuals involved in private-sector initiatives and civic organisations. They share the experience of growing up in a political system dominated by a narrow elite that has failed to create prospects for a liveable future, despite the country’s enormous resources; they distrust formal politics and its democratic mechanisms such as elections, which they see as directly manipulated by those in power. Street protests are their effort at advancing a political agenda by other means.

Whether they can succeed is another question. Thus far, protests are proving to be an effective means of challenging the political system and leadership, but it is less clear how they can advance the radical change for which protesters are calling. They present the government with a mission impossible: delivering immediate solutions to problems that require long-term strategies, whether for improving governance, bettering service provision or reforming the entire political system.

Protests [...] present the government with a mission impossible: delivering immediate solutions to problems that require long-term strategies.

Against this backdrop, Baghdad has tended to focus on ad hoc, short-term fixes. On 6 October, for example, the prime minister gathered his cabinet for an emergency meeting and adopted a seventeen-point plan that included housing programs for low-income families and monthly stipends for the unemployed. The government does not, however, appear to have a strategy for coming together with the protest movement around a shared vision for the country’s future.

Protesters, for their part, lack an intermediary who can bring concrete proposals to the government. Their interest in maintaining their autonomy from a political system they oppose has kept their movement leaderless. As the government fails to address the protesters’ real concerns and the security forces move to suppress the protests, killing scores, protesters’ rejection of any sort of engagement with the government only hardens, and the movement begins to respond to violence with violence.

For the time being, the country is caught up in a destructive blame game. Protesters blame the leadership for the repression. Security officials blame the protesters for resorting to violence. Political and religious leaders blame each other for the crisis without themselves taking responsibility. On 4 October, Grand Ayatollah Ali al-Sistani, the Shiites’ paramount religious leader, denounced the largest political blocs and the government for failing to deliver long-promised reforms. On the same day, Moqtada al-Sadr, the Shiite cleric who leads the biggest parliamentary bloc, Sairoun, called on the prime minister to resign and for new elections to be held under international supervision; he also instructed his party’s lawmakers to boycott the next parliamentary session.

Manoeuvring Between Tehran and Washington

If the prime minister manages to survive politically, he will be even weaker and more vulnerable to pressure from the largest political blocs. The fallout from the protests will further complicate his efforts to pursue a foreign policy aimed at insulating the country from the unfolding U.S.-Iran competition, as well as his attempts to carry out political reforms. If he loses his post and the government collapses, instability will almost certainly grow. The challenge would then be to form a new government with a prime minister sufficiently neutral to be acceptable to both pro-U.S. and pro-Iranian political forces.

Iran may prefer a weak and dependable government in Baghdad, but it has no interest in Iraq descending into chaos.

Neither the U.S. nor Iran would like to see the situation spin out of control. Iran may prefer a weak and dependable government in Baghdad, but it has no interest in Iraq descending into chaos. Iraq’s stability is key for Tehran to continue trading with its neighbour, a lifeline in the face of U.S. economic sanctions. Tehran has invested in forging relations with all Iraqi political forces represented in parliament, and strategically resorts to these allies (al-Fatah in particular) to exert pressure on the U.S. in order to remove or reduce the influence of U.S. troops in Iraq. Street protests introduce an element of uncertainty that worries Tehran. This may explain why its affiliated paramilitaries have taken repressive steps to contain this risk and reportedly participated in the crackdown. The fact that some protesters may be motivated by anti-Iranian animus – several have chanted anti-Iranian slogans – is of further concern to Tehran, whose influence in Iraq could be at stake. Many Iraqi Shiites look at the paramilitaries, the Shiite political parties and Iran as complicit in the country’s governance failure and corruption.

That said, the protests could also turn in Iran’s favour. If the Sadrists carry out their threat to boycott parliament or stage a no-confidence vote, the prime minister will be increasingly dependent on Iran’s ally al-Fatah, which has stood by his side during the crisis.

Pushing for a change in government could be like opening a Pandora’s box, given a stagnating political system, mounting popular frustrations and the perennial difficulty of forming a government.

As for the U.S., it has every reason to want Iraq to remain stable. Its military presence helps prevent the resurgence of ISIS, whose fighters for now are lying low. It also counts on political forces in the country to stand as a counterweight to Iranian influence. But herein lies risk as well. Some in the Trump administration see protesters’ anti-Iran slogans, together with popular expressions of support for General al-Saadi, as an expression of mounting anti-Iranian sentiments. U.S. officials who deem Abdul Mahdi indecisive and powerless may push to replace him with someone more dedicated to reforms and, just as importantly, to signing contracts with U.S. companies that would decrease Iraq’s energy dependency on Iran. Yet pushing for a change in government could be like opening a Pandora’s box, given a stagnating political system, mounting popular frustrations and the perennial difficulty of forming a government.

Ultimately, any attempt by either Iran or the U.S. to manipulate the protest movement could further destabilise an extremely fragile situation and make Iraq’s teetering leadership less able to sustain the delicate balancing act between the country’s two powerful backers.

The Way Forward

Past attempts to change Iraqi governance from within have foundered on the resistance of a political class that has high stakes in its continuation. As things stand, it is unlikely that the prime minister will be able to deliver reforms, especially now that his already limited parliamentary support may crumble under the protests’ weight. Likewise, calls for change from outside the realm of formal politics, such as through street protests, have failed to compel the government to commit to concrete remedial action beyond applying band-aids. More dangerously, they are now leading to violent clashes with the security forces. The government and countries that have supported Iraq in the fight against ISIS (the U.S., EU member states and Iran) and care about its stability have reason for concern that this situation will lead to recurrent flare-ups and crises.

The present crisis once again has illustrated that Iraq’s leadership cannot continue to buy social peace with a mix of oil-generated income distribution and repression.

To address the current crisis, the government should order the security forces to exercise maximum restraint in confronting the protests, ban paramilitary groups from policing the protests and launch an investigation into the excessive use of force, focusing in particular on snipers who reportedly targeted both protesters and members of the security forces. The larger parliamentary blocs also should shoulder their responsibility in defusing the crisis. Instead of calling on the prime minister to resign, Sairoun and Fatah should jointly press the government to prepare reform bills aimed at making the bureaucracy more agile in Baghdad and the provinces, bolstering accountability mechanisms to combat corruption, and encouraging government cooperation with the private sector and civic organisations.

Finding a long-term fix will be more difficult. The present crisis once again has illustrated that Iraq’s leadership cannot continue to buy social peace with a mix of oil-generated income distribution and repression. To break the crisis cycle, the government and the protest movement need to develop channels for dialogue and cooperation. Civic organisations, some of which are organised under the umbrella of the Iraqi Civil Society Solidarity Initiative, as well as private-sector figures, should better organise the protest movement and operate as intermediaries to formulate a set of coherent proposals as a basis for discussions with the government. The government should take such an initiative seriously as a way to reach out to the protesters and prevent another (possibly violent) cycle of mass mobilisation. And Iraq’s international donors should help facilitate a dialogue to arrive at a common vision for the country’s future and then provide the necessary capacity and funding to carry it out.