Kur­dish oil rift with Bagh­dad - not just a case of econ­omy but po­lit­i­cal lever­age and au­ton­omy

The Kurdish Globe - - NEWS - By Bash­dar Pusho Is­maeel

The Kur­dis­tan Re­gional Govern­ment (KRG) and the Iraqi federal govern­ment af­ter months of ne­go­ti­a­tions failed to find a break­through over the is­sues of oil ex­ports from Kur­dis­tan, rev­enue shar­ing and the na­tional budget.

The KRG was quick to re­fute claims by Iraqi Deputy Prime Min­is­ter for en­ergy Hus­sain alShahris­tani that Kur­dis­tan had agreed to ex­ports via SOMO, the federal govern­ment mar­ket­ing ve­hi­cle. KRG spokesman Safeen Diza­yee quickly down­played such claims, “ab­so­lutely we have not reached any agree­ment to ex­port oil via SOMO. The di­a­logue and dis­cus­sions are still un­der­way”.

Ahead of the all-im­por­tant Iraqi na­tional elec­tions this year, Bagh­dad has politi­cised the is­sue of oil ex­ports and with­held the Kur­dish share of the federal budget as a show of strength.

Ul­ti­mately, it doesn’t come down to money and eco­nom­ics but down to con­trol, au­ton­omy and lack of trust. One must not for­get that un­der the Iraqi con­sti­tu­tion Kur­dis­tan is only en­ti­tled to re­ceive 17% of the budget. If 300,000 bdp or so has caused so much ten­sion then imag­ine when it rises to 400,000 bpd and then the more am­bi­tious tar­gets set by Kur­dis­tan of 1 mil­lion bdp by 2015 and 2 mil­lion by 2019.

Iraq reaps the ben­e­fit of over two-thirds of Kur­dish out­put. Iron­i­cally, this is the same oil that Bagh­dad never re­ally knew Kur­dis­tan even had and is a lu­cra­tive bonus for Bagh­dad. The vast ma­jor­ity of the re­serves dis­cov­ered in Kur­dis­tan have come in the pe­riod af­ter 2003.

Does Bagh­dad re­joice that the na­tional re­serves have been boosted to such a large ex­tent by Kur­dish dis­cov­er­ies? Quite the op­po­site. Such dis­cov­er­ies have been met with doubt, lack of trust, threats and rifts. Why? Be­cause such dis­cov­er­ies are lit­er­ally the fuel for Kur­dish in­de­pen­dence and Bagh­dad loses one of the re­main­ing nooses over the re­gion.

What con­trol would Bagh­dad have re­main­ing on the re­gion if they could ex­port their own oil and re­ceive funds in a non-Bagh­dad con­trolled bank ac­count and ac­tu­ally re­ceive much more than they ever could painstak­ingly get from Bagh­dad?

Hence, the new in­de­pen­dent Kur­dish pipe­line to Turkey and the fact that 400,000 bpd is merely wait­ing to be sold at Cey­han sent Bagh­dad’s anx­i­ety into over­drive.

In re­al­ity, Bagh­dad would agree too many Kur­dish terms. As al­ready men­tioned, they serve to re­ceive the greater ben­e­fit any­way – just as long as Bagh­dad’s con­trol is not com­pro­mised.

As we have seen with the fail­ure to pay salaries and pro­vide the re­gions share of the budget, Bagh­dad wants to be con­trol­ling the po­lit­i­cal shots. As long as Bagh­dad re­tains the up­per­hand then Kur­dis­tan will be un­der the mercy of Bagh­dad.

It came as no sur­prise that the Iraqi Fi­nance Min­istry has warned that it could not pay Kur­dish salaries un­less the re­gion re­sumed oil ex­ports. Of course, Bagh­dad will not have a “face a liq­uid­ity cri­sis” as they claim if they paid from such huge funds un­der their con­trol. This is just for po­lit­i­cal lever­age.

Iraqi Prime Min­is­ter Nouri al-Ma­liki, wants to force the KRG into a deal. With­hold­ing salaries or cre­at­ing cri­sis in Kur­dis­tan is a form of po­lit­i­cal black­mail to put the heat on the Kurds.

This is where the ironic twist only in­ten­si­fies. There is lit­er­ally mil­lions of dol­lar worth of Kur­dish oil ready to be sold and yet the Kurds do not have funds to pay their own salaries?

Turkey re­cently reaf­firmed its com­mit­ment to the sym­bolic en­ergy deals with the Kurds. The Kurds can­not con­tinue to be bul­lied over what is their na­tional trea­sure.

What Iraqi oil funds did Sad­dam use to build Kur­dis­tan and boost its in­fra­struc­ture? Ac­tu­ally, it used the oil funds to de­stroy Kur­dis­tan and kill Kurds. Now, in the Iraqi demo­cratic age, the Kurds are ex­pected to han­dover Kur­dish oil to boost Iraq.

This is a defin­ing mo­ment in Kur­dish his­tory. The Kurds dare not suc­cumb to the wills of Bagh­dad again. The Kurds have played a role in the cre­ation of the Ma­liki hand. Af­ter dozens of failed prom­ises, they must think twice be­fore any post-elec­tion agree­ment or fu­ture con­ces­sions in Bagh­dad.

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