Tag Archives: Dispute

Latest disappointment with oil draft gives Kurds spur to break an already fragile coalition

Oil has unenviably proved as the paradoxical treasure and curse of the Mesopotamian plains. With the third largest oil reserves in the world, Iraq has the potential to become one of the most solid and prosperous economies in the world and bring with it a great standard of living for it people.

However, the gift of nature has seen it empower and finance brutal dictatorial regimes and facilitate a centralisation of power that has been used to forcefully bind Iraq’s disparate social mosaic. Whoever controlled oil had the keys to the gates of Iraq. In this light, the Sunni’s used their control of oil revenues to underpin their power and influence.

Kurdistan was severely affected by policies of exclusion and systematic negligence that saw a very limited amount of its legitimate portion of Iraq’s oil revenues spent on infrastructure. Free from the clutches of dictatorship, the Kurds were able to progress from a standing start by building new roads, hospitals, universities and various facilities.

Given a unique chance to shape the new Iraq, Kurds and Shiites were keen to leave their imprint on the Iraqi oil sector. Ironically, while Sunni’s used oil to consolidate power, the majority of Iraq’s oil wealth is actually located in the Kurdish and Shiite regions, one of the contributing factors to a sense of Sunni despair in post-Saddam Iraq.

Sharing of the cake

Iraq has had a number of significant political handicaps to overcome as it has stumbled on the transitional path to democracy. The format of a new hydrocarbon oil law has proved the most strenuous of laws to agree.

The sharing of the Iraqi cake amongst a number of diverse and embittered groups has had ramifications in a number of spheres, but none more so than in the oil law that has come to epitomise the difficult challenge of keeping all sides happy.

Striking concord on the law oil law has implications on a number of other thorny issues plaguing Iraq such as federalism, balance of power and status of disputed territories

Over four years since the original draft was rejected amidst a highly charged and animated parliament, the task of formulating a draft that would appease all parties appears as elusive as ever.

Kurdish rebuke of new law

Any hope for ratification of the new oil draft that was passed by the Iraqi cabinet and submitted to parliament, were quickly dashed as the presidency of the Kurdistan region condemned efforts to usher the new draft in parliament.

Discussions around the oil law continue to place Kurdistan and Baghdad at loggerheads with the Kurds denouncing the current draft as contradicting the principles of the constitution.

Baghdad has refused to relinquish its historic grasp on the oil industry while the Kurds are keen to explore and develop their immense hydrocarbon potential. According to the Iraqi constitution there is a clear delineation between control of new oil fields and existing oil fields.

As a largely unexplored entity, almost all of Kurdistan’s newfound wealth can be considered as newly discovered.

As the gulf between both parties has grown over oil sharing, Kurdistan has continued a unilateral development of its oil sector with the awarding of dozens of oil contracts to foreign firms to the annoyance of Baghdad that has repeatedly deemed any deals without its consent as illegal.

The stalemate has gathered pace as a number of smaller oil exploration companies have struck black gold in spectacular fashion. As further oil wells are drilled, more flow tests prove successful and more seismic data is undertaken, the strength and potential of Kurdistan swells by the day.

Gulf Keystone Petroleum (GKP) is one British company that has benefited hugely from its eagerness to jump the queue. The potential recoverable resources has seemingly increased by billions of barrels as each new well has proved a success and GKP alone stands to have anything between 7-11 billion barrels of oil on its books. Other companies have included DNO, Genel Energy, Western Zagros and Heritage Oil with degrees of success.

While Kurdistan’s rise as a respectable oil power has been historic, its quest is greatly restricted by the noose that is Baghdad.

Issues over payments to third parties, revenue sharing, transportation of oil and Baghdad’s refusal to recognise any oil contracts signed by the Kurdistan Regional Government (KRG) threatens to derail Kurdish aspirations and at the same time deepen the animosity between Arabs and Kurds.

Kurdistan has been allowed to make limited exports but payment issues have quickly limited throughput.

Whilst Kurdistan is enjoying increasing attention from major global oil giants, threats by Baghdad to blacklist firms signing contracts with Kurdistan have deterred many parties. Only recently Iraq’s Oil Ministry excluded U.S. oil firm Hess Corp from competing in the 4th round of its auction of oil fields.

Basis for political concord

Such is the Kurdish sentiment on the enactment of a balanced oil law that it has formed a key prerequisite for Kurdish support of the current coalition.

However, much like the many promises over the implementation of article 140, the lack of reconciliation on oil law has served to only antagonise the Kurds.

While Baghdad has criticised the Kurds over the awarding of oil contracts, it has continued to encourage development of its oil industry with a number of contracts already signed and a fourth round of bidding currently on the table and scheduled to be finalised by January. This is in addition three major natural gas fields that were auctioned to foreign firms last year.

Baghdad has continued to encourage major oil films while at the same time the national oil draft has gathered dust. Iraq currently produces around 2.7 million barrels of oil per day (bpd) and has an ambitious target to multiply this to 12 million bpd in less than 6 years.

Grapple for power

Although pluralist governance and federalism was a key cornerstone of the constitution, Baghdad’s attempts of solidifying central control and diluting regional powers have been evident in recent years.

As the autonomy of the Kurdistan Region has continuously strengthened, one of the remaining ‘sticks’ to wane Kurdish advancement is Baghdad’s hegemony over oil.

Many countries have welcomed the potential role of Kurdistan as a core supplier to the long-awaited Nabucco gas pipeline but it was ironically Iraq that condemned and jeopardised such motions.

Potential deals by the Iraqi oil ministry to supply gas to Europe places a further cloud on Kurdish ambitions.

At the end of the day, billions barrels of oil are facts that speak volumes. As the economic and wealth of Kurdistan expands so does its influence and strategic power. One of major factors that saw the once unthinkable visit of a Turkish prime minister was the growing economic ties between Turkey and Kurdistan as much as a political thawing.

The likes of Turkey may have been weary of Kurdish oil been used to power its independence in the past but the reward as many foreign investors have discovered is too good to miss.

In the meantime, it could be a while yet before a draft oil law is passed by parliament. The new dispute over the hydrocarbon law may at the same time strike a fatal blow to an already sick political alliance in Baghdad.

First Published On: Kurdish Globe

Other Publication Sources: eKurd, Various Misc.

While much of the attention since the liberation of Iraq has been occupied by the sectarian strife of the south, heightened tension between the Kurdistan Regional Government (KRG) and Baghdad are increasingly the object of much focus.

Although international mediums have concentrated on the tense relationships in recent times, none of the issues are particularly new and too often have been merely brushed under the political rug for the sake of progress.

Time and again political agreements such as with the constitution and key laws have been fraught with protraction, acrimony and difficulty. On many occasions, Iraqi’s agreed to disagree under fierce pressure from the US, intent on showcasing a new democratic Iraq and political progress amongst the feuding elite, whilst in reality the problems were simply postponed.

Ironically, even when the Iraqis did find concord on political notions after what may be deemed as “classic compromise”, in the aftermath not all sides had the stomach to implement the measures it entailed. Article 140 is a prime example of a legal stipulation that has been overlooked and prolonged, for the simple reason that ultimately Baghdad does not want to implement the motions for fear of its underlying implications – Kurdish control of oil.

The Kurdistan Region since 1991 has been practically independent and as such reintegration with the rest of Iraq was never going to be easy. Kurdistan has been relatively stable and protected, while bloodshed and terror has ensued further south. It is evident that the Kurds have benefitted from the situation, economically and politically, becoming kingmakers in the new Iraq. Now voices in Iraq cry of overreaching and hostile actions. 

A look across the 300-mile or so “trigger line” that spans from Syria to Iran covering disputed territories paints its own story of why friction is a common theme as the Arab-Kurd divide becomes murky. However, it’s hardly a secret that ethnic and historical pride aside, one can not overlook the simple fact that this line weaves through an immense amount of oil.

As compromise on issues such disputed territories, particularly Kirkuk and article 140, national hydrocarbon law and federalism has become more difficult to muster, both sides have seemingly dug their heels in.

On the one hand, a rejuvenated Baghdad is somewhat on a mission to rescind Kurdish powers, thwart their demands and form a new strong centre. This is best highlighted by the refusal of Baghdad to recognise oil contracts signed by the KRG and in reluctance to deal with the issue of disputed territories.

The fear is simple, Kurdish expansion in terms of land, power and economy will push the country further towards de facto disintegration, even if in reality it may have occurred long-ago.

With the US engaging in its elusive exit strategy and beginning its much anticipated withdrawal, its eyes are firmly on political reconciliation. Washington has placed much focus on reconciling both governments in fear of leaving an Iraq on the verge of all out war. The Pentagon has expressed it anxiety with what it calls as the “most dangerous” development in Iraq, but in reality these problems did not arise overnight but with the very foundation of the state. 

Recently, influential senator John McCain and a number of aides visited Kurdistan on the back of a recent visit by US Defence Secretary Robert Gates, with the easing of the current stand-off likely to be on the agenda.

The US must not overlook the very fact that the Kurds and Arabs have been at odds for decades over influence, autonomy and natural resources. Fear of Kurdish power and demands, is the very reason Saddam Hussein went to such great lengths to repress the Kurdish community.

In this historic land that houses different ethnicities and sects, only an all encompassing and “future proof” solution can work. This can be achieved by a loose federation, with borders decided via internationally recognised and legitimate referendums, which no sides can dispute. It is ultimately the people that should decide their fate, taking the argument around the importance of implementing article 140 a full circle.

Under US pressure, Iraqi Prime Minister Nouri al-Maliki travelled to Kurdistan with hope of striking reconciliatory tones with Kurdistan President, Massoud Barzani, and the Iraqi president, Jalal Talabani. Although the meeting was symbolic, given that al-Maliki and Barzani had not spoken in over a year, smiles in public are unlikely to change moods in the background.

Both sides agreed to create committees to deal with disputes, however, such committees have proven ineffective in the past and in essence may change little if the appetite for such principles does not change from the top.

Iraqis need a roadmap and legal starting point to underline their negotiations and as such there is not better product than the blueprint of the country – its constitution. There should be room for compromise and negotiation, but primarily on the principles of this document. The sidelining of this document, the calls to deem key articles as void or attempts to make wholesale changes to the constitution is a prelude to the collapse of the “heart beat” of Iraq and thus its demise.

In all essence two national armies are employed in Iraq, with as much animosity for each other as ever. As the disputed borderline becomes cloudy, so do the lines of responsibility, engagement and control. As tensions have reached dangerous heights, this has pitted the Kurdish and Iraqi forces ominously on a collision course. A number of recent incidents have been averted, while clearly the message from the respective commanders was shoot on order.

Ill-feeling has not been helped by a string of bombings in the Nineveh province and disputed territories with al-Qaeda keen as ever to foster instability. This has led to a war of words between both sides as the KRG have warned about the increasing violence and has accused al-Hadba of fermenting the escalations. Sentiments are hardly aided by the fact that the Kurds boycotted the new Nineveh administration after been deprived of practically all key positions by al-Hadba.

Now, not only two armies roam this province but also now in essence two administrations. If Kurds are deprived of power as a minority in Mosul, then the Kurds may choose to do likewise in Kirkuk. The call for compromise on hypocritical foundations is recipe for future problems.

With key Iraqi parliamentary elections around the corner, this may provide room for a breakthrough as sides look to build alliances. However, all too often in Iraq it has been a case of one step forward and two steps back, simply because animosity has been masked by short-term tactical gains.

Kurds are ever-weary of a stronger revitalized Baghdad and anxious about the prospect of US withdrawal. Their stance has also served as a warning to their US counterparts that in spite of pressure and mounting friction, they are not going to be the ones that budge over what they deem as legitimate rights.

Focus on ethnic tensions further north, must not mask the sectarian bloodshed that still firmly grips Iraq, as recent bombings have ripped through the heart of Baghdad. The question of how the Iraqi cake can be affectively shared between the Iraqi mosaic is as pertinent as ever.

First Published On: Kurdish Globe

Other Publication Sources: Peyamner, Various Misc.