x Abu Dhabi, UAESaturday 20 January 2018

Oil pipeline politics take a toll on Kurdish business

The political row was ignited late last year after it emerged that the Kurdistan Regional Authority planned to build an oil pipeline and sell crude independently to Turkey, breaking sovereignty norms.

Above, chairlifts that take riders across two separate parks in Erbil. Lee Hoagland / The National
Above, chairlifts that take riders across two separate parks in Erbil. Lee Hoagland / The National

ERBIL // Maher Akrawe was making a killing with his business in Erbil late last year.

The surge of contracts and investment projects provided plentiful opportunities for the construction contractor.

Today, he is taking small works on existing projects and complaining that business has dried up ever since political tensions between Erbil and Baghdad peaked this year.

“It’s not the same,” Mr Akrawe said. “There’s no money. Everyone is being affected here.”

The political row was ignited late last year after it emerged that the Kurdistan Regional Authority (KRG) planned to build an oil pipeline and sell crude independently to Turkey, breaking sovereignty norms. The government in Baghdad retaliated by cutting the Kurdish region from the national budget.

“What was not expected was Baghdad taking such measures and mixing political files with the salaries of Kurdistan employees and the lives of its citizens, while talks continue between the two sides,” said the KRG spokesman Safeen Dizayee.

This week, tensions simmered further after a Kurdish officer employed as part of Iraq’s presidential guard shot dead a Shiite journalist in Baghdad.

The prime minister, Nouri Al Maliki, said in televised address: “It will be my responsibility to avenge this killing and blood can only be expiated by blood.”

The consequences of the political tension is reflected across the Kurdish region – from the ministries all the way down to the private sector.

The Arab League chose Erbil to be this year’s Arab capital of tourism. Policymakers from the KRG and Baghdad provided a US$20 million budget to promote the project, but it has become mired in the political stalemate.

“Some of the initiatives have been stopped due to money issues,” said Nozad Hadi, the governor of Erbil. “This too has been affected by the Baghdad-Erbil relationship.”

At Erbil’s ancient Qaysari Bazaar, shopkeepers complain of a decline in sales as a result of austerity.

“Everyone here, all the business owners are just sitting,” said Tony Fuad, who runs the Abu Jawdat jewellery shop at the bazaar. “Sales are down by 50 per cent.”

Pavements, which were meant to be renovated through government contracts, have been left unattended, he said. “It’s not walkable. The workers left after they didn’t get their salaries for three months. It’s miserable.”

Tenders are being squeezed, while contracts are on the decline, said Mohannad Madi, the owner of the popular Al Afandi Lebanese restaurant in Erbil, along with a number of other businesses in varied sectors.

“It’s a crisis,” he said. “A big crisis. The first two quarters of the year – you can’t compensate for the losses. The timing is critical. By the time Iraq’s elections scheduled for next month are done we will soon be heading towards Ramadan, which is a dead season.”

A breakthrough came on March 20 when the KRG agreed to export crude via Baghdad’s oil pipeline through the Iraq government-controlled company State Oil Marketing Organisation as “a gesture of goodwill.”

“Let’s hope for this problem to be resolved soon,” Mr Akrawe said. “It can’t continue like this.”

halsayegh@thenational.ae

Follow us on Twitter @Ind_Insights