Kurdistan manoeuvres to become a major feeder to Europe

Commencement of oil exports and discussion on revising Nabucco gas pipeline using Kurdistan supplies marks a new milestone in the Kurdish experience. Kurdish joy at such developments is easy to see, as they strive to become a strategic “bread-basket” of Europe, Turkey and also Iraq. However, the “battle” is not quite won. ¬†Key decision remain to be made by regional and European powers that will redefine the shape and existence of the Kurdistan Region

If the “new” Iraq is to be taking seriously, then the first fundamental step is to abide by the core principles that underline the new Iraq. Iraq is a democratic country, with an elected constitution, is based on the equal status and rights of all its ethnicities, enforced by the principles of federalism they have chosen to adopt.

However, in Iraq progress has been painfully slow and negotiations have been ubiquitously tainted and protracted. Amongst the fundamental disagreements in the new Iraq, is how to share and develop its immense oil wealth.

In the absence of a national hydro-carbon law, the Kurdistan Regional Government (KRG), has drafted its own regional oil legislation and signed a number of contracts with foreign oil companies.

Constant bickering between Baghdad, who has deemed all such contracts as “illegal” and Erbil, has served the benefit of no side. Oil has been misused for decades in Iraq, particularly by Saddam Hussein, to declare war on neighbouring countries and oppress the Kurdish population.

One can only imagine what kind of Iraq we would have today, all of Iraq for that matter, had the oil been managed affectively and used with regards to the rights and benefits of all the population.

The Kurdistan Region is awashed with invaluable oil and gas reserves, and the Kurds, particularly in light of their plight under the “old” Iraq, are owed by the new face of Baghdad, to enjoy the privileges of the divine gift of nature and utilise oil for productive benefit – to see their region prosper, expand and modernise, rather than ironically use oil from their historical lands, to bomb those very lands.

The real sticking-point is the new prominence of the Kurds, after years of serving in the back pages of the history books. The worry of Baghdad is the strengthening of the Kurdish experience and their potential new role as the “bread-basket” of Europe. With Oil exports finally approved and talk of reviving the Nabucco gas pipeline, a project backed by the European Union to counter the over dependence on Russian supplies, Kurdistan could well enter a new chapter in its history.

How will their long-time adversaries, such as Turkey and Arab nationalists, feel about a new strategic Kurdistan that can support the world rather than merely rely on world support, is open to debate. Clearly, the problem in both respects is seeing a Kurdistan that escapes under their direct sphere of influence and into the hands of other grateful recipients.

Approval of oil exports

Oil exports were finally approved from the Kurdistan Region in early May. This is a symbolic milestone in Kurdish history, but one that will ultimately benefit the whole of Iraq. Revenues from oil sales will be deposited directly into the federal government account, thus the Kurds get only a 17% benefit from this, while the rest of Iraq, who has ironically been at such loggerheads with the idea, will a receive the other much needed 83% of these revenues.

The region is onset to commence oil exports on the 1st of June with Norwegian oil company DNO, completing preparation to export an average 60,000 barrels a day from the Tawke oil field to the Turkish port of Ceyhan via a new 45km pipeline.

Oil exports in the Taq Taq field, roughly constituting 40,000 barrels per day would also begin via tankers and existing pipelines in the near future.

Oil or “black gold” as it is referred, is a bonus or gift to any country. The long-standing disputed over control of Kirkuk spanning several decades, is ultimately heated by the very simple fact that it is one of the richest parts of the world.

Baghdad’s evident reluctance in seeing Kurds control oil or Kirkuk for that matter, hinges on the fact this will facilitate a Kurdistan that is much stronger, more stable but ultimately one that has little reliance on Baghdad.

Kurdish self-sufficiency could be completed once it gains significant oil revenues that it is entailed too. Hence, this is the source of anxiety emanating from Turkey. Seeing a Kurdistan Region that is growing in stature and confidence, with European and world powers increasingly keen to benefit from its vast resource, places Turkey in a different corner.

Of course, we must not forget that the control of oil reserves has long been linked by analysis and experts as the final piece of the Kurdish jigsaw in obtaining independence if it chose that path. In simple terms, as a largely autonomous federal region or fully independent state, oil makes these dreams economically viable.

Furthermore, the Iraqi constitution has defined a new Iraq that may be against the wishes of neighbouring countries. However, such neighbours have to realign their policies and relationships in line with this reality.

The increasing warming of the Turkish government in recent times to the KRG is testimony to the realisation of this new reality, however, hard it may be to swallow.

Now European talk of using the Kurdistan Region to revive the Nabucco pipeline that flows through Erzurum in Turkey, places the Turkish government in yet another conundrum.

Reviving the Nabucco gas pipeline

Austria’s OMV and Hungary’s MOL have teamed up with Crescent Petroleum and Dana Gas companies from the United Arab Emirates to extract the gas from Khor Mor and Chamchamal fields in the Kurdistan Region.

The consortium have expressed their belief that supplies will be sufficient to initiate the long- planned Nabucco pipeline, designed to extract gas from central Asia, after meeting local needs and Turkish demand.

The key problem however, is Baghdad’s reluctance that any agreements can be signed without its approval. Kurds, in the same manner as the oil stand-offs have insisted that such agreements over gas exportation is backed by the terms in the Iraqi constitution.

Whether European countries and particularly Turkey, for which Nabucco remains an important project, presses ahead with the Kurdish project without tacit approval from Baghdad, will have great significance for the KRG and the region.

This wills legitimise the Kurdistan experience in another way – a way that is not connected to Baghdad, forming a new strategic position for the Kurdistan Region.

While Turkey remains highly-reluctant to effectively rubber stamp Kurdish “independence”, clearly the Kurdistan Region is on the road to realising its potential as a key entity and a strategic partner of the West.

This journey may have a long way to go, but in the not so distant future, the Kurds will no longer survive based on hand-outs from states, but will be making their own crucial “handouts”.

After all a pro Western, non-Arab secular democratic state that is close proximity to Europe and with immense natural resource doesn’t come along too often.

What now for Baghdad?

In spite of the agreement to authorise oil exports from the Kurdistan Region, Baghdad is mindful that this does not serve as a carte-blanche for the region. Baghdad is still very much against the principle of Kurdish “unilateralism” and is still keen on forging a stronger centre at the expense of federalism.

However, a number of factors may sway opinion in Baghdad. Firstly, the drastic hit that the national budget has taken with the fall in oil revenues has greatly impacted the Iraqi economy and reconstruction projects that have been ear-marked. Allowing the Kurds to bridge that gap, has become more important than nationalistic quarrels.

Secondly, if neighbouring, European countries or the European Union for that matter, sides with the Kurds and accepts they are not breaking the “law” and only following a constitution which gives them their democratic rights, then to save embarrassment, Baghdad may be better to accept the new Kurdish position and affectively be seen to have made the decision to “endorse” it.

With talk that Kurdish export capacity could reach 1 million barrels of oil in just several years, this may be time for celebration for Kurds, Iraq, the region and Europe. Perhaps, all sides can win after all by working with each other than against each other.

First Published On: Kurdish Globe

Other Publication Sources: Peyamner, Various Misc.

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