Tag Archives: Kurdish Oil

New Turkish oil venture signals growing clout of Kurdistan

Leave a reply

As the Middle Eastern socio-political landscape has unraveled in recent years, it has transformed the one-time frosty relations between the Iraqi Kurds and Turkey into one of the most important alliances in the region.

The Arab Spring and the rapidly changing power makeup of the Middle East may have played a key part, but money and the power of economy have echoed louder. Trade between the Kurdistan Region and Turkey is reaching unprecedented heights, none more so than in the field of energy.

The booming economy of Kurdistan is underpinned by its status as the last great oil frontier.  Kurdistan has billion of barrels of oil reserves and remarkably with the majority of the oil not even discovered.

With the oil rush in Kurdistan, Turkey, with an ever-growing thirst for oil to fuel its heated economy, does not want to remain idle while global players capitalise on immense opportunities on its door step.

The growing energy ties between Ankara and Erbil, has not only resulted in strategic and historic contracts between the two governments setting the stage for a rapid rise in trade, but it has slowly led to intertwined destinies of the Turks and Kurds. This drive has led to great unease in Washington, who ironically, only few years ago were frantically trying to reconcile both parties.

The win-win partnership on an economic scale is in tune with the need to redraw strategic alliances and political balance of power in the Middle East. Turkey needs the stable, secular and Western-leaning Kurdistan, in the midst of a Syrian civil war that threatens Turkey at every turn, Shiite domination in Baghdad rekindling animosity and insurgency amongst Sunnis and not forgetting Iran with its nuclear ambitions and its hands deep in regional struggles.

While Syria took center stage in the diplomatic flurries of recent days, leading to the visit of Turkish Prime Minister Recep Tayyip Erdogan to Washington, the announcement by Erdogan as he left on the plane for Washington of a partnership between the state run Turkish Petroleum (TPAO) and US giants Exxon-Mobil to jointly explore for oil in Kurdistan, has significant long-term ramifications.

Not only does Kurdistan and Turkey have the basis for direct exports with the implementation of new oil pipelines, but this places Turkey directly at the grass-roots of the Kurdish oil drive.

According to Erdogan “there’s nothing more normal, more natural than Turkey… to take a step that is based on mutual benefit.” In recent months Ankara has strongly defended their agreements with the Kurdistan Regional Government (KRG) and has also in turn backed the Kurdish rights under the current Iraqi constitution.

The Kurdish oil boom is long the source of Baghdad ire, which views control of oil exports and unresolved nature disputed of territories, as the last placenta by which they can reign in and influence Kurdistan. With contracts with some of the biggest oil companies in the world and strategic agreements with Turkey, Baghdad’s unease has gone into overdrive.

In reality, the oil majors and Turkey know fully well the risks. The ire of Baghdad is considered secondary to their lucrative opportunities and the strategic and political benefits that such moves harness.

These parties are essentially choosing Kurdistan over Baghdad and such measures only makes the KRG more confident in its economic growth, its regional standing and in its stand-off with Baghdad.

Baghdad may have been playing hardball over payments to foreign oil companies, constitutional interpretations and national budget as well as over disputed territories, but with its hands full in the fresh Sunni uprising, maintaining a shaky national coalition and national elections around the corner, it needs the Kurds and Nouri al-Maliki’s government may have to rethink its policies on Kurdistan.

Kurdistan’s message is simple, it will drive on with its national programme and lofty goals, with or without Baghdad.

First Published On: Kurdish Globe

Other Publication Sources: Various Misc.

Kurdish oil exports, one remaining Baghdad noose that Kurds must break

Leave a reply

The latest action by the Iraqi parliament to pass the national 2013 budget despite a boycott by Kurdish MPs is just the tip of the ice-berg in Iraq.

Tensions have been brewing to dangerous levels between the Kurdistan Region and Baghdad for some time and the lack of real intent to mend bridges and cool tensions is testament to Iraqi Prime Minister Nouri al-Maliki’s reluctance to enact a government of partnership and to pursue national reconciliation.

Fast approaching a decade since the liberation of Iraq and the fragmented Iraqi horizon, continuously poisoned by common distrust, lack of unity and lack of true compromise, continues to blight Iraqi society in 2013 much in the same way as it did in 2003.

Maliki’s growing authoritarian policies and the latest decision to pass the budget without Kurdish involvement and approval may have severely irked the Kurds, but it’s wrong to focus merely on the Erbil-Baghdad divide as the source of Iraqi troubles.

The majority of MPs from al-Iraqiya had also boycotted the budget vote and the coalition and power sharing agreement in Baghdad has all but evaporated. Tensions with long-time disaffected Sunnis, greatly encouraged by the Syrian Sunni ascendancy to power, is steadily gathering pace and Sunni demonstrations since the back-end of 2012 still run rife in Sunni strongholds with protestor deaths at the hands of predominantly Shiite forces adding fuel to the fire. Even Shiites within the State of Law, including influential cleric Moqtada al-Sadr, have expressed concern.

Finance minister Rafa al-Essawi and agriculture minister Izzeddin al-Dolah are two high-profile Sunni resignations in recent weeks over the current protests.

Kurdish ire

The strong Kurdish reaction to the passing of budget in Baghdad was understandable.

With only 168 out of 325 MPs present due to the boycott, the bill may have been passed due to a “technicality” with a thin majority obtained but not involving the Kurds who are such vital components of the coalition and in the union with Iraq is a dangerous development.

Oil sharing and foreign oil contracts are not new bones of contention between the Kurds and Baghdad. Oil exports in Kurdistan have been very much stop-start for a number of years. The source of discontent in the 2013 budget was the amount set aside to pay oil companies in Kurdistan, with the Kurdistan Regional Government (KRG) insisting it is owed $3.5 billion for costs accumulated by foreign oil companies over the past 3 years whilst Baghdad has allotted only $644.33 million in the latest budget.

This issue was one of the main reasons the 2013 budget was not ratified although the Iraqi cabinet approved the budget in October.

The frequent theme from Baghdad over the past several years is that oil contracts signed by KRG are illegal, in spite of the stipulations afforded in the national constitution. Therefore it is hardly surprising that Baghdad continues a hard-handed approach in dealing with the oil sharing issue. Ironically, passing a national hydrocarbon law gathering dust since 2007 that would end all disputes is not even seen as an immediate priority.

The State of Law had argued that Kurds were not entitled to compensation as they had not contributed their fair share to national exports.

As Kurds have insisted for years, any revenue from oil exports in Kurdistan will go to a central pot where Kurds will take their allotted share. Narrow-minded political goals in Baghdad, has failed to realise that a strong oil industry in Kurdistan is a bonus for all Iraqis. Baghdad may have costs of foreign oil companies to cover but what about the billions of surplus revenue that follows? Anyone would think Baghdad is taking a financial loss in dealing with Kurdish oil.

Budget imbalance

Baghdad has continuously refused to pay Peshmerga costs which are stipulated in the constitution. Yet it has been paying salaries of Sahwa Council Sunni militia for a number of years to appease Sunnis and has even increased their salaries in this year’s budget to try and dampen Sunni demonstrations.

Furthermore, whilst Kurdistan develops at a rapid pace but fails to receive fair share of revenues it needs, the province of Nineveh failed to spend around $6 billion of its $10 billion share in the 2012 budget. There is a similar pattern in other provinces.

Next steps for the Kurds

Undoubtedly, the budget issue will make prospects of reconciliation worse between Erbil and Baghdad. The continued halt of oil exports by Kurdistan may seem logical, but it’s counter-productive as Kurdistan needs to press-ahead with its oil industry and economic growth.

The KRG oil ministry confirmed it will not send any agreed quantities of oil unless Baghdad pays the relevant costs to foreign companies.

Control of oil exports is one remaining noose that Baghdad has around the Kurds. If the Kurds have an independent oil infrastructure and an oil pipeline purely on Kurdish soil, it greatly diminishes Baghdad’s bargaining power.

Kurdistan has greatly flourished in recent years whilst the south continues to lag behind, do the Kurds continue with ties in Baghdad or take unilateral measures in deciding national interests?

It begs the question of whether Baghdad sees the Kurds as true partners and looks to Kurdish achievements as an achievement for all of Iraq or does it want to see Kurdistan undermined, regress and stagnate? The Kurds would say recent disputes over Dijla Operations Command, halting of oil exports and now the national budget answers that question.

Baghdad has been intent on scaring oil companies from working in Kurdistan for a while. Giving the option to oil companies of either “us or them” is anything but the tone of partnership.

Kurdistan needs to break that noose, develop an independent oil pipeline and accumulate revenues directly and pay foreign companies from their own budget.

This stance was also suggested by Iraqi Kurdish MP Muhsin al-Saadoun as a measure against the federal government for side-lining the Kurds.

Naturally, Maliki led coalition hit back by threatening to deduct Kurdistan Region’s share of the federal budget.

Either way, something has to give and inaction by the Kurdish leadership is a non-starter. Kurdistan must ensure the destiny of Kurdish affairs is determined by Kurdish hands.

What real benefit have the Kurds ever received from Iraq’s immense oil wealth since Iraq’s creation? Now Kurdish oil must be the source of Kurdistan’s prosperity and to give back to its long-time suffering people and should not be viewed as somewhat of a curse.

Other issues

The Shiite-government announcement of the formation of a new military force under the name of the “al-Jazeera and Badiya Force” situated in the disputed city of Sinjar, which borders Syria is yet another confrontational step by Maliki. A pro-Assad Baghdad is vying for control of its Syrian borders, possibly due to pressure from Iran, with signs this week that the violence is spilling across the border. Kurds have a far different view of Assad and are unlikely to relinquish border control in their own territories to propel Baghdad’s goals in Syria.

Baghdad decision not to pay foreign companies could well be a punishment for Kurdistan’s growing partnership with Turkey and its anti-Assad stance.

Since Maliki assumed a second term in office, Iraq has been in decline. With Sunni’s growing boldness in standing-up to Shiite dominance, who will be around to broker the next government or mediate between Sunnis and Shiites? It certainly won’t be the Kurds.

A previous statement by Kurdistan President Massoud Barzani summed up current sentiments, “Iraq’s citizens are simply tired of Baghdad’s … language of threat and intimidation, which in the cynical pursuit of narrow political agendas only serves to create division and strife.”

First Published On: Kurdish Globe

Other Publication Sources: Various Misc.

A long-term oil law, the making or breaking of Iraq

Leave a reply

“This deal cannot solve all the problems currently but it is considered a good step,” Kurdish Prime Minister Nechirvan Barzani

One of the greatest items of contention in Iraq has been a formula to share its immense oil wealth amongst its distrusted and fragmented ethno-social mosaic. Since oil was discovered in Iraq almost a century ago, it has been akin to more of a curse than a blessing for the ordinary people.

It’s difficult not to imagine what Iraq would have been like today if its oil wealth was not in the hands of tyrants and those who have abused Iraq’s treasure.

Kurdistan oil is home to estimated 45 billion barrels of oil and trillions cubic feet of gas, yet ironically the Kurds have seen the oil in the past used to purchase arsenal in their repression them and destroy their villages and livelihoods. It is a little wonder that the Kurds were keen to muster a level of autonomy on their energy reserves as part of the Iraqi constitution negotiated in 2005.

Although, the Iraqi constitution has clear stipulations around oil exploration, revenue sharing, export and control of federal regions, oil has been a contentious thorn in relations between the Kurdistan Regional Government (KRG) and Baghdad.

Oil minnows have flocked to the region as the early pace-setters and for the like of Gulf Keystone Petroleum, Addax, Heritage Oil, Western Zagros, Genel Energy and many more, the early bird really does catch the worm. Such is the spectacular promise and potential of energy in Kurdistan that akin to a rags-to-riches story, juniors have become majors in their own right almost overnight.

Oil giants coming off the fence

Any oil company anywhere in the world would have been misguided not to see the unravelling of the newest and perhaps last global oil frontier before their very eyes. However, while some smaller companies jumped in with both feet at the rewards and the lucrative terms of the Production Sharing Agreements (PSA) on offer, oil majors, while licking their lips at what was on offer, sat on the fence to preserve their interests and contracts further south and to appease Baghdad.

In spite of Baghdad’s fierce rhetoric against the KRG deeming their contracts signed with foreign companies as “illegal” and sending stern warning to oil companies, oil majors could simply no longer remain idle.

A spate of oil majors such as Chevron, Total and Gazprom have recently joined the fray with ExxonMobil’s oil deal a little short of a year ago serving as the ice breaker. Whilst from 2003 onwards there was a rush of juniors, now there appears to be a rush of majors keen not to lose out on the limited spots remaining at the Kurdish oil counter. Royal Dutch Shell is the latest major rumoured to be in discussions with the KRG which will serve as another symbolic feather in the cap for Kurdistan.

The possibility of Shell signing an agreement with Kurdistan, after twice coming close in the past before pulling back, comes as Baghdad continued to threaten ExxonMobil this week. As part of the timelines of the PSA with the KRG, ExxonMobil is starting logistical preparations to dig its first exploration well.

In reality none of the oil majors need to be reminded about the threats on offer, they are all fully aware. Furthermore, they have first class law teams and their confidence in the legal dealing with Kurdistan is a major endorsement to KRG policies. The fact that Baghdad effectively asked these companies to take sides makes the feat all the greater.

ExxonMobil has a major interest in the southern lucrative West Qurna-1 oilfield and Shell has its supergiant Majnoon field in addition to a multibillion gas venture.

But just what can Baghdad do to actually implement their threats? What would be left for Baghdad if it blacklisted all these oil majors? Simply put, Baghdad will do some sabre-rattling but ultimately it can’t afford to shoot itself in the foot and lose out.

Resolution over oil payments

The Kurdistan oil export taps have been frequently used in recent years for political gains, threats and concessions. While the production rate has been modest, it has the potential to significantly ramp up output.

Last week an agreement was ratified between the KRG and Baghdad ensuring that oil exports could continue and a dispute over oil payments could end with the Kurdistan receiving 147,000 barrels of oil products per day.

Lack of payment to foreign oil companies in Kurdistan and the stop-start nature of oil exports and thus oil revenues for these companies has been the only major blemish in an otherwise spectacular rise of the Kurdistan energy sector.

Kurdistan will keep export at around 140,000 bpd per day this month before ramping up to 200,000 bpd for the remainder of the year. In turn, Baghdad would pay around $857 million owed to foreign companies working in Kurdistan.

“It was agreed to form a permanent committee to follow up on the terms agreed, and give the committee authority to resolve any obstacles blocking implementation,” a KRG statement confirmed.

This committee is perhaps the most important step of all. If any side has any reason to doubt any elements of the oil revenues or the activities of any party, including foreign oil companies, then it must address them legally, politically and with clear audits, accounts and evidence to eliminate any doubt, accusations or grey areas.

While this agreement serves as a major relief or in the words of KRG Oil Minister Ashti Hawrami “a big breakthrough” and a promising step towards a new oil law, it is hardly comprehensive and may serve as another false dawn.

The bones of contentions stretch much deeper than just payments to oil companies. The question of federal autonomy and more importantly territorial disputes are etched much deeper. The issues of oil, article 140 and disputes territories and KRG foreign policies are very much intertwined.

Baghdad’s last remaining grip on Kurdistan is in the oil sector. It was naturally alarmed with the signing of landmark oil exportation deals between the KRG and Turkey in recent months. With the proviso of an independent oil pipeline under implementation, Kurds have much more control over the energy sector.

The national hydrocarbon law has stalled since 2007 and without formal ratification of an oil sharing law the Iraqi energy sector will remain rocky at best.

Iraq’s oil infrastructure is in urgent need of revitalisation and Iraq is in urgent need of additional revenue for it’s much needed and delayed reconstruction.

Oil for all of Iraq

Ironically, whilst Baghdad has accused the Kurds of manipulating its oil reserves, the oil in Kurdistan belongs to all of Iraq. The KRG has made it clear from the outset that they will abide by the 17% ratio agreed with Baghdad.

It is outdated mentalities that prevent Baghdad from realising that should Kurdistan gain then so does the whole of Iraq. Arab nationalists are quick to remind Kurds that Kurdistan is actually on Iraqi soil but then by the same token, treat Kurds like they are trespassers on their own soil, even if the Kurdish rise to prominence is essentially a major gain for all of Iraq

Kurdish oil exports and payments of foreign companies was actually on the of key prerequisites of the Kurdish political parties supporting Iraqi Prime Minister Nouri al-Maliki and joining the coalition and thus there was already agreements in principle, but in Iraq agreements are not always worth the paper they are written on.

The successful passing of a national oil law in Iraq could be the making or breaking of Iraq such is the immense oil resources Iraq has at stake. If it was not for oil, Baghdad would have given disputed Kurdish territories back to the Kurds many months ago, would have implemented article 140 and would not have implemented its Arabisation policy in the first place.

First Published On: Kurdish Globe

Other Publication Sources: Various Misc.

Turkey and Kurdistan’s new focus on “what unites us rather than what divides us”

Leave a reply

As the political gulf between Baghdad and Kurdistan continues to grow at a rapid rate, and Ankara revaluates its position in Iraq and the Middle East, the alliance between Turkey and Kurdistan assumes a new dawn.

The Middle East crisis has meant that sectarian, political, economic and strategic tides have dramatically shifted.

As Turkey’s “zero problems” policy with their neighbours has slowly unravelled, this has continuously made Ankara and Kurdistan natural allies, a far cry from the more tenuous relations of just a few years ago.

In recent weeks both the Kurdistan President Massaud Barzani and Kurdistan Prime Minister Nechirvan Barzani have participated in productive and high-profile visits to Turkey, a symbol of the growing respect and solidarity that is pushing the two parties together.

Too often relations in the past have been based on the ideals of “what divides us, rather than what unites us”. Turkey may have a historical fear of Kurdish nationalism but it has slowly come to terms with the huge benefits that stability and constructive relations with the Kurds bring.

While politics plays a big part, especially, as the political earthquake across the Middle East has left governments scurrying to revaluate their positions, ultimately money talks and no rational government can ignore the massive trade and energy opportunities that come with a growing economic power-house such as Kurdistan.

Iraq is already Turkeys biggest trade partner, with Kurdistan accounting for the majority of that trade.

Kurdistan is the next energy hub of the Middle East and with its immense oil and gas reserves, Turkey stands to benefit tremendously with a close alliance with the Kurds.

This led to an inevitable energy pact with Turkey and Kurdistan that was always going to stir tensions in Baghdad.

Oil pipeline enhances autonomy

Kurdistan and Turkey used the international energy conference hosted in Erbil to outline details of a new pipeline that will drastically alter the political and economic map of Iraq and the greater region.

Kurdistan Minister of Natural Resources, Ashti Hawrami, confirmed the proposal of a new pipeline to be built within the next 12 months with a capacity of 1 million barrel per day that will carry Kurdish oil and gas via the Kirkuk-Ceyhan pipeline to Turkey.

The first phase of the pipeline scheduled for completion by October 2012 will carry crude from the Taq Taq oilfield. The second phase is due for completion by August 2013.

Kurdistan then plans to build a separate pipeline by 2014 that would connect to refineries in Ceyhan.

The new pipeline will greatly diminish Kurdistan’s dependence on Baghdad both for exportation of oil and import of refined oil products and also ensure that Kurdistan has an oil exportation infrastructure solely within their territory.

Baghdad unsurprisingly denounced the deal with a repeat of its usual rhetoric that all deals must be ratified by the federal government. Nechirvan Barzani reiterated the long-time Kurdish position that their oil deals fall within the remits of the constitution, while stating at the energy conference, “unlike some of the officials of the federal government in Baghdad, we believe that our policies in the field of energy and natural resources should be based on cooperation and coordination, and not on hostility, confrontation and retaliation.”

The fact that Turkey had a high-profile representation including Energy and Natural Resources Taner Yildiz, demonstrated Ankara’s willingness to deal with Kurds directly at the expense of angering Baghdad.

The one last rope that Baghdad has over Kurdistan is over oil. By taking export infrastructure, size and format of exports and receipt of the respective revenues, Kurdistan seeks to break that rope. Currently, oil exports in Kurdistan are halted over dispute of payments to foreign parties.

However, dispute over oil exports is just tip of the iceberg as relations between Baghdad and Erbil have drastically declined, with Massaud Barzani in repeated remarks making it very clear that Kurds will no longer tolerate the policies of Nouri al-Maliki and will take matters into their own hands if the situation doesn’t change.

The fact that Barzani openly repeated this warning in Ankara to Turkish leaders shows an increasingly confident Kurdistan but also shows that Turkey is slowly coming to terms with realities on the ground.

Zero problems policy backfires

At the current time Turkey is far from its doctrine of zero problems with its neighbours. Its increasingly dragged into the uprising in Syria as its opposition to Bashar al-Assad has accelerated, especially as Damascus renews its ties and support of the PKK. Its relations with Iran has cooled as Tehran has sided with Assad, refused to backdown over its nuclear ambitions while becoming uncomfortable with the idea of Turkey hosting a NATO anti-missile shield just next door. Its relations with Baghdad have deteriorated with harsh exchange of words in recent weeks between Turkish Prime Minister Recep Tayyip Erdogan and Maliki that were exasperated with Ankara affectively affording protection to exiled Sunni Vice-President, Tariq al-Hashemi and accusing Maliki of monopolising power and stoking sectarian tensions.

The end result is that Turkey needs the secular Kurds as a strategic political ally and as a key buffer to Shiite dominance, to put pressure on Iraqi Kurds to leverage influence over the Kurds in Syria to back the Arab dominated Syrian opposition, and as a way of maintaining equilibrium in a fast changing region.

In addition, as one of the fastest growing economies in the world, Turkish energy demands are increasing all the time. It has an overriding reliance on Russia and particularly Iran which provides a third of its gas supplies, for its energy needs.

Turkey is already a key part of the 1 million bpd Baku-Tbilisi-Ceyhan (BTC) oil pipeline from the Caspian Sea. Oil and gas supplies from Kurdistan will quench its own energy first but also allow it to diversify its current dependence on limited sources, whilst at the same time confirming its role as a strategic energy hub of Europe that will bring with its levies and taxes billions of dollars of revenue to Turkey.

Oil in Kurdistan belongs to Kurds

On paper Iraq is one of richest countries in the world with its immense oil reserves. However, for decades upon end the people have endured suffering as opposed to prosperity for their divine gift.

In the example of Kurdistan, oil revenues were used not to promote unity and brotherhood but to purchase apparatus to systemically oppress the Kurds and destroy their villages and livelihood.

One can only imagine what Kurdistan or the rest of Iraq for that matter would look like if vast oil revenues were used in a rightful and productive manner.

Now the pages of history have turned and a new dawn has arrived. Kurdistan can look to Baghdad for their rewards from the oil reserves and rely on Arab sentiments, or take matters into their own hands and use oil in Kurdistan for their own benefit.

This doesn’t mean that Kurds will not abide by the constitution or their allocated share of revenues; it just means that it doesn’t wait indefinitely for fairness and equitable distribution of wealth that Hawrami has alluded to.

Indeed the implementation of revenue sharing and Iraqis getting a fair slice of the cake whilst adhering to a constitution approved by the majority of the population can bring unity. But this is Iraq after all and one shouldn’t hold it breath with distant dreams.

Note of caution to Kurds

Whilst relations with Turkey are increasingly strong with the crisis in the Middle East and Turkey’s frosty relations with their neighbours pushing them closer to the Kurds, in the Middle East nothing is irreversible.

Turkey is still weary of Kurdish independence, anxious over the possibility of another Kurdistan developing on its doorstep in Syria and above all has a major Kurdish problem that it has failed to effectively address for many decades.

Furthermore, any ties or deal should be as much on Kurdish terms as Turkish terms. The need for unity in Kurdistan is as great as ever as is the need to become self-sufficient and protect their future and not rely on existing socio-political sentiment that can later undercut the Kurds as witnessed in the past.

First Published On: Kurdish Globe

Other Publication Sources: Various Misc.

The growing strategic role of the KRG in the region

Leave a reply

Once considered the “problem” of the Kurdish nationalist struggles in Turkey and Iran, the KRG is now a ray of hope for peace and mediation

As a major Turkish military incursion into Kurdistan slowly wanes in the aftermath of the fierce national backlash that resulted from the deadliest PKK attack since 1993, attention needs to urgently move towards a long-term solution to Kurdish struggle in Turkey.

The continuous cycle of PKK attacks met by the military might of Turkey has been raging for decades with no clear end-game in sight. Unless Turkey makes serious diplomatic overtures and the PKK shows real intent to lay down their arms the prospect of peace will be as distant as ever.

The Kurdish Regional Government (KRG) has found itself in the cross-fire between PKK and PJAK on one side and Turkey and Iran on the other over the years. Too often in the past the Turkish and Iranian governments have been quick to label the Kurdistan Region as the “problem”, even though the true foundations of their struggles were laid at home.

Increasingly there is now growing appreciation and recognition of the KRG as the fulcrum of any potential resolution and the facilitator of peace. As the official Kurdish representation in the region and with growing economical, strategic and strategic clout, the Kurdistan Region has become the hub of the Kurdish renaissance everywhere and indeed become a real interlocutor of the Kurdish nationalist struggles in Turkey, Iran and Syria.

This week Kurdistan Region president Massoud Barzani paid a visit to Tehran with the goal of reinforcing bilateral ties, a sense of brotherhood and emphasizing the shared goals of both governments. Iran’s Foreign Minister Ali Akbar Salehi’s and Barzani both decreed this week that the issue of PJAK rebels, at war with Iran was “over”. This was a symbolic statement and if the long-term situation is upheld then this proves a significant achievement for all sides.

There is no doubt that it was more the mediation of the Kurdistan Region than the firepower of Iran that resulted in the accomplishment of a ceasefire between PJAK and Tehran.

In a similar vein Barzani is due to make an official visit to Turkish sometime this month at the request of Turkish Prime Minister Recep Tayyip Erdogan. The common theme will be ensuring the peace and security of the Turkish border, reemphasizing strong ties between Erbil and Ankara but also the direct involvement of the KRG in facilitating a solution that can appease all sites and achieve elusive peace.

PKK leader Murat Karayılan’s recent statement reaffirmed the belief that Barzani will be at the forefront of a peaceful solution to the Turkish struggle in Turkey.

Barzani message is likely to be a reiteration of a tough line with the PKK, that the Kurdistan region can no longer accept any entity that will jeopardize their crucial relations with Turkey. However, Barzani will also make clear to Ankara of the need to settle their internal affairs in a peaceful and democratic fashion and not punish all Kurds within Turkey as well as the Kurdistan region for the actions of a few.

Turkey has tried and frequently failed to entice the KRG into a direct struggle with fellow Kurds and at the same time has failed to enact practical reform that the Turkish Kurds have so long craved with their democratic opening program a case of stop-start at best.

The solution to the PKK struggle lies in Turkey’s hand and with the right overtures and the crucial support of the KRG there is every chance that true peace can be achieved in Turkey.

In order to achieve such a vital solution, the Turkish government must pay serious heed to the demands of the PKK and allow direct and constructive negotiations with the PKK leadership. Turkey cannot simply choose to ignore the PKK demands, take for granted the Kurdish desire in Turkey by continuously neglecting democratic and constitutional reform and at the same time to choose to violate the sovereignty of the Kurdistan Region.

If Turkey is intent on true and long lasting resolution to its age-old Kurdish dilemma then it needs to make difficult choices and choose a clear way forward. It cannot exclusively be on terms that they the dictate and expect resolutions as they desire. There many factors and parties that Turkey need to consider and Ankara must make difficult sacrifices.

First Published On: Kurdish Globe

Other Publication Sources: Various Misc.

As kingmakers, ensuring the right king is made is paramount to the Kurds

Leave a reply

Months of painstaking preparations for the national elections and weeks of the controversial counting of the votes are finally over. However, before the Iraqi political bandwagon ponders a breather, the real work starts now.

The final election results encapsulated an enthralling, tense and close contest. This was a crucial milestone for the new Iraq and even more so as all sides of the Iraqi ethno-sectarian mosaic turned out in good proportion, striving to make a difference from years of frustrating post-war turmoil, instability, sectarianism and lacklustre living standards. The elections provide hope of a declined sectarian divide in Iraqi politics and the possibility of the establishment of the first all encompassing coalition in Iraq housing the embittered groups.

In reality however, the process of government forming will prove protracted and could well linger for many months longer.

None will be more weary of the future political shape and eager to strike the right alliance than the Kurds. The Kurds will likely be kingmakers again, as the only other distinct ethnic group with power, their support to the remaining Arab political rivals in Iyad al-Allawi, Nouri al-Maliki and Abdul Aziz al-Hakim will hold crucial sway to surpassing the all-important 163 seat mark to form government.

As such, their role as “kingmakers” carries enormous responsibility on Kurdish aspirations and the Kurdish people. Been kingmaker is one thing, ensuring the right king is “made” is another.

In the aftermath of the last elections, Kurds were in a more powerful bargaining position than in today. After a Sunni boycott and a larger allocation of seats per population for the Kurdistan region, the Kurds decided to side with Maliki’s Shiite alliance in what initially seemed to good affect.

The Kurds were able to assume the posts of President, Foreign Minister and Vice Prime Minister. However, as the months and years rolled by, while the Kurds dug their heels in at times to the desired affect and many bills reflected Kurdish jockeying, the key disputes and national goals of the Kurds become increasingly distant and stagnant in resolution.

As Maliki’s influence and credibility slowly rose, especially in light of improving security conditions from the brink of civil war, the Kurds who supported Maliki at key times, become increasingly despondent with the more hard-line government stance and Baghdad’s laboured approach to the implementation of key articles of the constitution.

However, this should not come as a great surprise. While Maliki may hardly be first choice for a Kurdish partner based on the tenuous political marriage, Allawi is hardly the flavour of the month either. The same foot-dragging was employed by Allawi as Interim Prime Minister of Iraq prior to the 2005 legislative elections, which saw slow progress on Kurdish-sided disputes. The growing nationalist stance of Allawi’s al-Iraqiya group, particularly concerning Kirkuk and other disputed territories is hardly an ice breaker either. Although a secular Shiite, the tough nationalistic tone of Allawi and his non-sectarian basis saw his alliance as a new logical platform for the Sunni voice.

This places the Kurds into a difficult predicament, which in theory has been made more challenging by the structure of the elections this time around. Firstly, disunity within Kurdish ranks with Change Movement (Gorran) running on a separate list to the KDP and PUK, potentially cost the Kurds a number of seats. Gorran won over sixty-thousand votes in Kirkuk but ultimately did not meet the necessary threshold to gain seats.

The other crucial factor was the Kurdistan Region receiving a modest rise in the number of national assembly seats which were increased from 275 to 325, with the rest of the south picking up the majority of the allocation of extra seats. Furthermore, bigger Sunni turnouts in the north and north-western provinces also contributed to a dilution of Kurdish power in these mixed provinces, which they had assumed almost by default in the last elections.

Kurdish support should not come cheap, and if its means that the coalition building process drags on for another few months, then so be it. It is better for Kurds to get firm and written guarantees this time around even if they are perceived as stalling the political process and pressured by Baghdad and Washington to “back down”, rather than to wait another four years for the resolution of key issues impacting the Kurdistan Region to be further sidelined and become stale.

The Kurdish alliance won 43 seats with other Kurdish parties claiming another 14 seats in total. The voting was generally well-spread with no party coming through as clear winners. Ultimate victors were Allawi’s al-Iraqiya group with 91 seats but this was only two more than Maliki’s State of Law coalition. As a result, this means that the permutations for coalitions are more ajar and thus the negotiation and bartrering process will be as delicate as ever.

Certainly, marginalising any bloc will come with its own headache, while attaining a broad reconciliation will still prove to be a bitter pill to swallow for the new Iraq.

Adding to the heated mix is the tricky allocation of the key ministerial posts. While the Kurds enjoyed a fair share of key positions in the past government, distribution of key posts to appease Kurdish, Shiite and Sunni sentiments will not be so straightforward. The running for the next President, held by Kurdish leader Jalal Talabani, is already gathering heat with some Arab sides proclaiming that the President as a representative of the Iraqi nation should be an Arab. However, more crucially, the Kurds need to focus on positions that will ultimately hold influence and sway within Iraq itself. For example, the posts of Ministry of Oil or the Interior Ministry will be a lot more beneficial to the Kurds than positions that are high on paper but may do little to directly favour Kurdish interests in reality.

Meanwhile, as credible as the newfound opposition is to the Kurdistan Region, this will almost certainly have negative connotations if Kurds enter Baghdad divided. With the rise of Arab nationalist parties, Kurds can ill afford disharmony on the national stage. Disputes over article 140, national budget, status and funding of Peshermarga forces and not to mention the oil sharing, are only going to get fiercer before any resolution becomes more likely.

Attempts by Kurdistan President Massaud Barzani to ensure a united front in Baghdad, and pledges by Gorran leaders to maintain unity on Kurdish national issues is an absolute minimum if Kurds expect any fruit from any prospective alliance they strike.

First Published On: Kurdish Globe

Other Publication Sources: Hewler Post (Kurdish), Peyamner, Various Misc.

DNO dispute places an avoidable cloud on the Kurdistan Region

Leave a reply

At a time when the Kurdistan Regional Government (KRG) is actively seeking foreign investment and the strengthening of its relationships with major international partners, the DNO fiasco serves as a major blow to the region.

The KRG has worked tirelessly to attract direct interest and investment predominantly in its oil sector, much to the dismay of the Iraqi central government. Already the stance of Baghdad towards what it labels as “illegal” contracts signed by the KRG, has deterred major oil companies mindful of meddling in political disputes. Now the publicity around this case unnecessarily raises concerns on investments in the region.

The fallout is a lot more politically relevant than any amount of commercials, at the centre of this dispute, would ever matter. Baghdad wasted no time in using this case to bolster its case against the KRG.

The dispute arose when the Oslo Stock Exchange (OSE) made public details of a DNO sale of shares in October 2008, in an ongoing dispute in the oil-companies delay in providing information. More specifically it highlighted the involvement of the KRG in acting as intermediaries in the transaction in question.

Such publicity and coverage around the KRG “role” was met naturally by stiff defence by Kurdish officials, who have remained insistent that their part in the deal was to only facilitate the sale on behalf of Genel Energy, the beneficiaries of the shares, and to help DNO at a time where exports in the region were been hampered by ongoing wrangles with Baghdad.

The KRG suspended DNO operations until it could sufficiently repair the “unjustifiable and incalculable” damage that it had done to its reputation.

Although, in later meeting betweens the KRG and OSE the government was cleared of any wrongdoing, the revelation and ensuing controversy was embarrassing. In the short-term, under such spotlight there could be no immediate repair to the KRG’s image.

DNO was one of the first foreign companies to start work in the region and mooted as the first foreign company to pump crude in Iraq since the 1970’s. The productive gains of DNO in its successful drilling in the Tawke oil fields simultaneously served as a remarkable political milestone for the Iraqi Kurds.

DNO started exports in June, much to the jubilation of the region. It is evident that success of DNO was important to the KRG not primarily due to the revenue streams that it unearthed to the region, but more due its symbolic importance to the region. Clearly, this stance by KRG was vindicated by increased heightened interest and economic coverage in the region upon commencement of exports.

As such, KRG’s willingness and desire to aid its foreign partner is understandable, however, in the circus that can be the media spotlight, the move by the KRG was risky and avoidable. Whether the questions posed have any substance is one side of the equation, however, the mere fact that such questions are asked of a government has undesirable and long-term ramifications, even if it has been clearly proved by the KRG to the satisfaction of OSE that they have done no wrongdoing, or more importantly that they were never the object of the investigation in any shape or form.

The KRG should never have taken the risk of becoming directly or indirectly embroiled in such a far-reaching saga. Alternative and less murky facilitation of the finances would have avoided such allegations at government officials. DNO itself should have sought alternative means of short-term funding.

To many observers without insight into the exact nature of the deals, it is naturally unusual that a government would act as a mediator of such cash-raising initiatives. Without publication of the full extent of the dealings, with selective information as was published by OSE, people will draw their own predictable conclusions on the part of the Kurdish government.

Furthermore, why did the OSE reveal such information if it knew that the KRG was not implicated wrongly in the deal, knowing full well that it was not a Kurdish organisation that would be affected but essentially the region itself?

More importantly, it is the job of DNO to ensure full compliance with Norwegian laws and regulations, why did it take so long to release the relevant information requested to the OSE? It should have acted much sooner, in the knowledge of what potential releases by the OSE would entail to both itself and its Kurdish partners.

OSE released this information under a freedom of information law, propelled by requests from newspapers. It begs the question, whether those who pressurised the OSE to release the information had political and commercials gains in the knowledge of the likely storm that this would bring.

Although, “risky” in the eyes of some investors, the lucrative returns on the momentous untapped Kurdistan market is plain to see. Many smaller oil companies have struck gold in the region and DNO is no different. The fact that its shares plummeted by over 50% upon the announcement by the KRG that it would suspend its operation for six weeks and would reserve the right to revoke DNO’s contract, tells its own story.

While payment terms have not been agreed for its recent exports, for companies such as DNO its simply a case of bridging short-term financial exploration burdens, once the Production Sharing Agreement (PSA) kick in, its financial clout increases dramatically.

This is clearly the reason behind its decision to sell a portion of its shares to create necessary capital that would allow it to assume its unprecedented windfall when exports commence.

While the lack of a national hydrocarbon law, owed to intense disputes between the Iraqi mosaic on sharing the immensely rich Iraqi cake, has proved a major obstacle, Baghdad’s agreement to authorise limited exports from the Kurdistan Region started a surge of interest in the region.

Kurdistan has the capacity and the capability to become one of the major oil and gas producers in the world, and the race to take “early” advantage has paid healthy dividends to a number of international companies. Some companies scrambled to increase their financial and strategic clout to assume a stronger hand in the region. For example, Heritage Oil Ltd is in the process of merging with Turkey’s Genel Energy International Ltd. While more recently, china’s second-largest oil company, China Petrochemical Corp., agreed the purchase of Addax Petroleum Corp.

In the aftermath of the DNO dispute, there has been perception of increased risk to licenses in the Kurdistan Region. This has placed the KRG in a highly-difficult position. While the threat to oust DNO altogether certainly got hold of Norwegian ears, any action to carry out this threat would see the KRG lose just as much as DNO, as it would seriously undermine general operations in the area and may in fact increase spotlight on the debacle further.

Regardless of the fact that they may not be at direct fault in an internal Norwegian issue, the KRG must work hard to remedy its image as much as it has demanded DNO do to their satisfaction. There is a much bigger picture, than the operations of a single company in this case.

Already, StatoilHydro ASA, Norway’s biggest oil and gas producer, involved in the preliminary bidding of some contracts in Iraq, expressed that it was monitoring the DNO situation.

Fortunately, the furore over this dispute has died down significantly after various meetings and mediations with the share value of DNO on the rise after dramatic falls. However, the KRG can ill-afford the smallest of controversies, lest give their adversaries in the region the ammunition to undermine their development and quest for prosperity and strategic standing.

In spite of this case, the immense interest in investing in the region, underpinned by some of the most favourable foreigner friendly legislation around, will be unaffected once the dust settles.

First Published On: Kurdish Globe

Other Publication Sources: Peyamner, Various Misc.