x Abu Dhabi, UAEFriday 28 July 2017

In setting energy policy, Kurds flex their independence

Kurdish Iraq has pressed ahead with its pipeline link to Turkey and is increasing exports, as well as completing deals with international oil companies.

When a referendum on independence for the Kurdish region was held alongside the 2005 parliamentary elections in Iraq, the result was more than conclusive – 98.8 per cent of Kurds voted in favour of an independent Kurdistan.

Now, with Erbil and Baghdad at loggerheads over the former’s independent oil exports to Turkey and the latter’s threat to cut the Kurdistan Regional Government’s (KRG) funding in response, the issue of independence has raised its head again.

As an Islamist insurgency rages in the south, the KRG’s control over the north has looked impressive by comparison, with little violence in the Kurdish region apart from last September’s attack on Erbil, in which a number of soldiers were killed and dozens injured.

But increasingly, it is energy policy where the Kurds are able to demonstrate their growing independence. As oil exploration and development in the south is hampered by violence and economic malaise, Kurdish Iraq has pressed ahead with its pipeline link to Turkey and is increasing exports every week.

It has also signed agreements with many of the world’s major international oil companies independently of Baghdad, much to the chagrin of the south.

“There is the sense that the Kurds feel that they should be getting a larger share of Iraqi’s overall wealth and should have more of it devolved for them to manage and spend, while Baghdad feels that the Kurds are not contributing their fair share to the economy and pushing for too much,” said Richard Mallinson, a geopolitical analyst and Iraq expert at Energy Aspects in London.

“Both sides have an eye to the long term and the fact that independent oil sales would be another plank in the autonomy platform that the Kurds have been bulling up.”

The KRG deputy finance minister, Rashid Tahir, was quoted by the local newspaper Rudaw earlier this year as saying that if a solution could not be reached with Baghdad over the budget then “we have no choice but to separate”.

“It would be like a father who encourages his son to separate from the family. If they want us to separate, we thank them and we take our own path,” he said.

Analysts say that Kurdish Iraq would struggle to support itself if a break with Iraq came tomorrow. An estimated 80 per cent of spending in the region goes to salaries, and the KRG could not switch exports on and overnight receive enough money to break all links with the south. “It wouldn’t be able to pay the bills,” said Shwan Zulul, head of Carduchi Consulting in London.

There are territorial issues too, Shwan says, with disputed regions such as the city of Kirkuk, with its sizeable Arab and Kurdish populations. These regions also contain the bulk of northern Iraq’s oil, a guaranteed source of conflict between Iraq and a future Kurdish state. Iraq, for its part, would lose the Kurdish border with Turkey.

Then there is the international element, said Mr Mallinson, with sizeable Kurdish populations in Iran, Turkey and Syria.

“Some advocates of an independent Kurdistan argue that the desire has been suppressed for decades, if not longer, because they are spread among several countries, so any change in one of those countries would have big ramifications for its neighbours,” he said.

He points out that while the Turkish president, Recep Tayyip Erdogan, reached a ceasefire with the militant Kurdistan Workers’ Party last March – ending a bloody campaign in the south-east of Turkey – there has been no conclusion on what the future holds for Turkish Kurds. They will be looking at what happens in Iraq.

Others have said that the pipeline with Turkey demonstrates a willingness on the part of Mr Erdogan to deal with a separate Kurdish entity in Iraq.

“The recurrent, traditional argument against Kurdish independence was that there would be a reluctance on the part of Turkey to go all the way and let the Kurds export oil from the KRG area in the event of independence. That problem now seems significantly diminished,” said Reidar Visser, a research fellow at the Norwegian Insitute of International Affairs.

On the other hand, he said that the increasing federalist ambitions of Syrian Kurds – who have all but carved out their own state in eastern Syria as the civil war rages – could force a rethink of Turkish policy towards the Kurdish region.

“They may see the danger of a domino effect that could ultimately impact eastern Turkey itself,” Mr Visser said.

In the end, it will be the international community that would need to get on board if the Kurdish region was to separate from Iraq. The recent involvement of the American vice president, Joe Biden, in the spat between Baghdad and Erbil suggest that the United States would prefer to see a compromise rather than a split, Mr Mallinson said.

“A big change in Iraq would not only have implications for Iraq’s security, it would also have impacts elsewhere in the region. The US spent a lot of blood and treasure to get Iraq to where it is today, and it doesn’t want that to fundamentally alter that or go backwards,” he said.

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