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

The Kurdish Globe - - REGIONAL - By Bash­dar Pusho Is­maeel

cott, 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.

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 inde- pen­dent 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."

Iraqi Pres­i­dent Jalal Tal­a­bani and Kur­dish re­gional Pres­i­dent Mas­soud Barzani open a cer­e­mo­nial valve dur­ing an event to cel­e­brate the start of oil ex­port from Kur­dis­tan in June 2009.

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