Baghdad and Erbil Battle for Iraq | The National Interest
By Joost R. Hiltermann
The August 1 announcement by the Kurdistan Regional Government (KRG) that it was ready to resume oil exports through the Iraqi pipeline after a four-month suspension concluded what was rather like a nasty school-yard brawl in the manner such scuffles invariably end: with a bloody nose and some tears. Will a handshake soon follow?
The federal government in Baghdad and the Kurdish government in Erbil long have been at loggerheads over a range of issues that, at their core, concern the nature of Iraq’s federal system and the Kurdish region’s future. They disagree especially over the extent of the region’s powers, including the authority to sign oil contracts; the status of territories claimed by the Kurds as part of Kurdistan; and payment for the Kurds’ regional guard force as well as federal budget allocations more generally. Although the 2005 constitution addresses these questions, its many ambiguities and gaps make it subject to varying interpretations. Both sides have employed these weapons to great effect.
The conflict escalated sharply late last year when ExxonMobil became the first major oil company to sign with the Kurdistan Regional Government, then aggravated the situation by taking exploration blocks located squarely in disputed territories. The Iraqi government threatened to punish the company, which holds significant concessions in the South, but has yet to take any concrete retaliatory steps. Instead, Chevron, Total and Gazprom have now followed in ExxonMobil’s footsteps, with others queuing up.
With the Kurdish region’s growing production potential, the question has been how the oil will get to market in the absence of a federal hydrocarbons law and as long as relations between Baghdad and Erbil remain as deeply frayed as they have been. For now, Baghdad controls the export pipeline, but the KRG hopes that, with Turkey’s consent, it will be able to skirt the Baghdad-controlled pipeline and pump the oil northward once the necessary infrastructure has been built. In the words of the KRG’s mineral-resources minister Ashti Hawrami, “The oil will flow… . When you have one million barrels a day stranded, it will find its way to the market despite the political haggling.”
Earlier this year, an agreement signed by the federal and Kurdish governments in February 2011 broke apart over Erbil’s allegation that Baghdad had failed to compensate fully the three companies with KRG contracts that have put oil into the export pipeline. Baghdad declared itself ready to pay but said it was awaiting expense receipts from the KRG for an audit; Erbil replied it had given Baghdad all it needed. The matter reached an impasse when, on April 1, the KRG pulled the plug on its exports, saying it would resume them only once Baghdad coughed up the money it owed and pledged to make future payments in a timely manner.
FULL ARTICLE (The National Interest)
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