Stalemate, Not
Statehood, for Iraqi Kurdistan
U.S.
Secretary of State John Kerry chats with President Masoud Barzani upon arrival
at the Kurdistan Regional Government Presidential Compound in Erbil, Iraq, on
June 24, 2014. [State Department photo/public domain]
Editor’s Note: The Kurds are the largest
nation in the Middle East without a state of their own and their quest for more
rights and at times independence has led to civil wars, unrest, and
near-genocidal levels of killing. Iraq has often been the center of the Kurdish
struggle, and the decline of the Iraqi state since 2003 – and the latest
dysfunction manifest in its efforts to fight the Islamic State – seems to offer
opportunities for Iraqi Kurds to carve out their own state. Denise Natali, an
expert on the Kurds at the National Defense University, challenges this claim.
She argues that the Iraqi Kurds’ current in-between status is likely to endure
and, indeed, offers benefits for Kurdish leaders.
***
Since the creation of a weak federal Iraqi state a decade ago, the
Kurdistan Regional Government (KRG) has moved toward what many analysts, pundits, and Kurds consider
a desired end state: independence. Taking advantage of the ambiguous 2005 Iraqi
constitution, disfranchised Sunni Arab community, sectarian conflicts, and
dysfunctional Iraqi government, the KRG has developed
its own energy sector; assumed de
facto control over disputed lands; and created a
cohort of influential supporters to lobby
Kurdish interests in Washington and abroad. These trends
have been further bolstered by the Islamic State threat, which has allowed the
KRG to access U.S. and coalition military support, further expand its
territorial reach, and challenge Baghdad with “independent” oil exports.
Yet a deeper look into the Iraqi Kurdish trajectory reveals a more
complicated and interrupted scenario defined by legal, economic, and geopolitical
constraints. The KRG may have created new “facts on the ground” that strengthen
its internal sovereignty and international recognition, but it remains a
landlocked, quasi-state entity lacking external sovereignty.
This condition means that the degree and nature of Kurdish autonomy,
including any potential for independence, is not determined by unilateral
decisions made by Kurdish elites but rather by the demands, deals, and
incentive structures brokered by powerful regional states and non-state actors.
These influences have not only checked Kurdish leverage and kept Kurds within
the Iraqi state, at least nominally, they have also created necessary political
ambiguity that benefits KRG officials. Maintaining the status quo has allowed
the KRG to realize rights, revenues, and recognition as part of aweak
federal Iraqi state while also pursuing a nationalist agenda
based on victimization, struggle, territorial expansion, and opaque, oil-based
economic development, supported by external networks.
Post-Saddam stalemate
As a quasi-state, the Kurdistan Region thrives off of a weak central
government, nationalist sentiment, and external patronage. It may have
substantial internal sovereignty, but it lacks external sovereignty, which it
seeks to replace with international support and recognition. The KRG has done so by developing external networks – lobbies,
international oil companies (IOCs), foreign governments, and international
universities, organizations, and think tanks – which help advance KRG interests
at home and abroad.
These features have influenced KRG behavior and produced important
benefits for Kurds in post-Saddam Iraq. They have enabled the KRG to operate as
a free-rider, accessing revenues from Baghdad based on the new Iraqi
constitution, while pursuing its own nationalist agenda. For nearly a decade,
the KRG gained 17 percent of Iraqi oil sales derived from southern exports –
which increased its annual income from aboutUS$2.5
billion to $13 billion – without having to pay taxes, declare
revenues, or contribute to the Iraqi national budget.
Baghdad-sourced revenues have been critical to developing and
stabilizing the Kurdistan Region. They have not only paid the salaries of over
70 percent of the Kurdish population (at a cost of about US$720 million
monthly) but have also sourced the KRG’s “trade relations” with Ankara, valued
at US$10 billion in 2013, which
are almost wholly based on imported Turkish goods. Additionally, by remaining tied to a less than fully functional Iraqi
state, the KRG has been able to brand itself as the “Other Iraq” with a minimal
metric of success: simply being more stable and economically viable than
Baghdad.
Kurdish officials have also benefitted from political limbo by leaving
contentious issues unsettled, such as territorial disputes, resource claims,
and revenue allocation. For instance, although Masoud Barzani, the leader of
the Kurdistan Democratic Party (KDP), publicly insists that Kirkuk is the
“bleeding heart of Kurdistan,” he will avoid officially incorporating Kirkuk
into an independent Kurdistan Region because it would render the KDP a
political minority (the rival Patriotic Union of Kurdistan (PUK) and Gorran
movement control parts of Erbil, Kirkuk, and Suleymaniya).
Determining Kirkuk’s status – whether it is under the legal jurisdiction
of the Iraqi government, the KRG, or a local administration as a special status
province – is
contentious given its oil-rich territories,
multi-ethnic and multi-religious character, and historical legacies of
Arabization. While Arabs and most Turcoman regard Kirkuk as an essential part
of Iraq, Kurds consider Kirkuk as a national territory and source of oil
revenue that can help the KRG realize economic independence. Claims to Kirkuk
are also part of internal Kurdish balance of power politics that reflect
geographical divisions between KDP, PUK, and Gorran party factions. These
dynamics influence KRG behavior over Kirkuk and other disputed areas.
By leaving territorial borders
politically ambiguous, KRG officials can promote myths of victimization that
authenticate their nationalist credentials, deflect internal political tensions
and needed reforms, and resonate among local populations as a “struggle against
Baghdad.”
By leaving territorial borders politically ambiguous, KRG officials can
promote myths of victimization that authenticate their nationalist credentials,
deflect internal political tensions and needed reforms, and resonate among
local populations as a “struggle against Baghdad.” Unilateral Kurdish claims to
disputed territories have been justified as a battle “drawn in Kurdish blood.”
Similarly, high-risk oil exports are now framed as a “Kurdish nationalist
right.”
Breaking the stalemate
The KRG has attempted to break its political stalemate by realizing
economic independence. Most important is the aim to develop an autonomous
revenue source that can sustain the Kurdistan Region apart from Baghdad. Since
2005, the KRG has aggressively developed its own energy sector by attracting
IOCs to the Kurdistan Region, building pipeline infrastructure, unilaterally
connecting its pipeline to the Iraqi state-owned Iraqi-Turkish Pipeline (ITP), negotiating
a 50-year energy deal with Turkey and gaining
de facto control over parts of Kirkuk and related oil assets.
These new facts on the ground have made the KRG increasingly risk averse
and willing to export oil sans Baghdad. They coincide with failed
attempts to negotiate with the Iraqi government and sell Kurdish crude through
the Iraqi State Oil Marketing Organization (SOMO), including the most recent
“oil-for-revenue” deal in December 2014. Baghdad insists on state sovereignty
over Iraqi oil resources, sales, and revenues, and a fully transparent KRG oil
sector that contributes to the Iraqi national budget. Erbil, however, demands
control of its own crude oil exports and revenues, which remain opaque, and to
receive regular and full payments from Baghdad for its crude. The near-halving
of world oil prices, Iraq’s financial crisis, and coalition support to the KRG
to fight the Islamic State have added disincentives to negotiate. Instead, by
September 2015, the KRG pressed ahead without Baghdad, exporting
about 620,000 barrels of oil per day (bpd) through the ITP, 460,000 bdp of which were from fields operated by the Kurdistan
Region, with the remaining from Kirkuk fields operated by Iraq’s North Oil
Company.
Still, the KRG has not become economically autonomous. Because the
Kurdistan Region is not a sovereign entity and continues to rely on Iraqi
pipeline infrastructure, its exports are not fully independent. Baghdad retains
international legal rights over oil flows and revenues from the ITP based on
the 2010 pipeline Tariff Agreement negotiated with Turkey – and has already
filed litigation against Ankara at the International Chamber of Commerce in
Paris. It has also threatened to penalize IOCs and shipping companies that
purchase Kurdish crude apart from SOMO, reinforcing the legal risks and opaque
nature of KRG oil exports and sales. Moreover, Baghdad has cut the KRG budget
(except for monthly food allocations), which represents 95 percent of the KRG’s
operating expenses.
The KRG’s financial break from Baghdad has had direct consequences on
the Kurdistan Region’s internal stability and economic viability. In the
absence of a financial buffer to replace Baghdad (by June 2014 the KRG had no
savings in its central bank) the KRG’s oil gamble with Turkey has devastated
and destabilized local populations and the economy. Civil
servant salaries have gone unpaid for months,
thousands of local businesses have closed, IOC payments remain in arrears, new
investment has halted, and nearly 25,000 Kurds, mainly educated youth, have
fled the Kurdistan Region over the past eight months. The KRG has also borrowed
billions from Ankara and local businesses while front-loading its oil sales to
2016 in the attempt to meet operating costs and a US$22 billion debt
accumulated over the past year. These economic pressures coincide with the Kurdistan Region’s presidency crisis in
which reformers, political party officials, and opposition groups are
challenging the legitimacy of Masoud Barzani’s position, which expired on
August 19, 2015, and calling for sweeping political reforms.
With Baghdad no longer its paymaster, at least at present, the KRG’s
institutional deficits have also surfaced, namely its lack of transparent
pricing mechanisms, undisclosed revenue flows, and endemic corruption. These issues
have become a leading source of criticism inside the Kurdish government as well
as society. Officials on the oil and gas committee in the Iraqi Kurdistan
Parliament (IKP), for instance, are unaware of how much revenues are derived
from KRG oil sales and where the funds are allocated. Of the 16 international
bank accounts in which revenues from KRG oil sales are supposedly deposited,
the KRG minister of finance - recently expelled by the KDP from the parliament
- has access to only one Turkish Halkbank account, which has only US$14 million
in deposits. The minister of natural resources and Prime Minister Nechirvan
Barzani control
all other bank accounts.
By choosing to bypass Baghdad without
the necessary legal, financial, and political institutions in place, KRG
officials have left the region prone to political opposition and economic
collapse. Instead of blaming Baghdad for the KRG’s financial and political
crises, local populations are now harshly criticizing the KRG.
Given Baghdad and Erbil’s financial crises and unresolved claims over
control of oil exports and payments, it is not surprising that Kurdish
officials have pursued alternative means of income generation. They need a
reliable revenue source that can develop the region and sustain its
populations. Yet by choosing to bypass Baghdad without the necessary legal,
financial, and political institutions in place, KRG officials have left the
region prone to political opposition and economic collapse. Instead of blaming
Baghdad for the KRG’s financial and political crises, local populations are now
harshly criticizing the KRG. This growing opposition movement inside the
Kurdistan Region has recently manifested in violent
and deadly uprisings in Suleymaniya province,
further deepening political fragmentation and instability.
Nor has the KRG resolved disputed claims to territories and hydrocarbons
inside Iraq. In many ways it has aggravated its own situation. Having gained de
facto control over expansive lands, the KRG is now responsible for
administering and stabilizing a 1,000-kilometer border with the Islamic State
and Sunni Arab nationalist groups. The KRG may currently benefit from coalition
military support to secure these borders, but it has no guarantee as to how
long this assistance will last. Alongside Baghdad, different local stakeholders
continue to claim ownership of these territories and resources, to include
Kirkuki populations, Sunni Arabs, and minority groups. Some of these groups may
agree to become part of the Kurdistan Region, while others are seeking to
create their own region or special status inside the Iraqi state.
Shifting dependencies
These trends have also enhanced the KRG’s regional dependencies,
particularly on Turkey and Iran. By becoming fully reliant on a single transit
route and a legally contentious pipeline running through Turkey and a war zone, the
landlocked Kurdistan Region has become more financially vulnerable than ever
before.
KRG’s oil exports and revenues are now tied to Turkey’s domestic
politics and its 30-year conflict with the Kurdistan Workers’ Party, or PKK,
whose forces are based in the Kurdistan Region, eastern Syria, and southeastern
Turkey and have already attacked the ITP and other energy assets in Turkey. PKK
challenges also extend to Barzani and the KDP, with whom the PKK competes for
leadership of Kurdish communities and which the PKK regards as a “sellout
to Turkey.” These vulnerabilities are further
enhanced by the
opaque and personal nature of KRG-Ankara energy ties, which are largely a private deal between Barzani and Turkish President
Recep Tayyip Erdogan and not an institutionalized arrangement. Any change in
the positions and influence of these personalities or in Turkey’s domestic
politics risks affecting the terms and nature of the agreement, and more
directly KRG exports.
Iran also continues to influence the KRG’s economic, political, and
security arenas. Sharing an expansive border with Suleymaniya and Erbil
provinces, Iran provides another outlet for cheap, trucked Kurdish crude and
diesel products that benefits Iraqi Kurdish political parties, particularly the
PUK, and associated businesses. These exchanges are much smaller than the
trucking operations at the Turkish-Iraqi Kurdish border, but they
coexist with investment, commerce, and security pacts between Tehran and the
KRG that affirm Iranian interests in the region. Since the Islamic State onslaught, Iranian influence has increased,
particularly in Suleymaniya and Kirkuk provinces, where Tehran has provided
military and security assistance alongside the PUK peshmerga, Shi’a militias,
Iraqi security forces, and Syrian Kurdish fighters (PYG).
Deepening regional ties have not
translated into political support for a Kurdish nationalist project. Despite
the financial benefits of doing business with the KRG, neither Turkey nor Iran
back Kurdish independence, or even an overly autonomous Kurdistan Region.
However, these deepening regional ties have not translated into
political support for a Kurdish nationalist project. Despite the financial
benefits of doing business with the KRG, neither Turkey nor Iran back Kurdish
independence, or even an overly autonomous Kurdistan Region. Both remain
committed to a weak but sovereign Iraqi state that enables them to influence
Iraqi Kurds, as well as Sunni and Shi’a communities. Turkey and Iran also
continue to prioritize their own territorial integrity, which includes checking
Kurdish nationalist communities within and across their borders through
enhanced security, political and economic pacts with Iraqi Kurds.
Implications
All of these dynamics indicate a more fluid and interrupted Kurdish
trajectory and not a forward moving process toward independence. Any change in
Ankara-Baghdad relations, Iranian-Turkish capabilities, access to pipeline
infrastructure, PKK-Turkey tensions, Erdogan’s political status, Iraqi
government stabilization, intra-Kurdish tensions, bridging of Sunni-Shi’a ties,
or a strengthened Sunni Arab region could affect the KRG’s leverage and ability
to export oil and access revenues apart from Baghdad.
The dependent nature of the KRG, its nationalist agenda, and internal Kurdish
divisions also challenge U.S. efforts against the Islamic State. Although the
Iraqi Kurdish peshmerga are important local partners and the KRG is a key
regional ally, their strategic priorities are to extend and consolidate
territorial control, while also fighting the Islamic State. In many ways, the
KRG needs to keep the campaign against the Islamic State alive because external
military support enhances its international recognition and strategic
significance, legitimates Barzani family power, and helps displace pressing
domestic political issues.
These local dynamics coincide with deepening Kurdish fragmentation that
prevents a unified command structure to fight the Islamic State. They indicate
the second- and third-order consequences of counting on the Kurds to fight the
Islamic State beyond their juridical borders and demonstrate how unchecked and
unconditional military support can fuel intra-communal and intra-Kurdish
conflicts. The United States should therefore continue to act as a neutral broker
and provide weapons to the KRG through the Iraqi government (and not directly
to the KRG), more closely monitor the distribution of weapons to Erbil and
within the Kurdistan Region, and help stabilize Islamic State-free territories
so that displaced communities can return without fear of retaliation.
The KRG’s attempts to gain economic independence have also had
significant consequences on the Kurdistan Region’s development and internal
stability. Although Kurdish officials can access much needed revenues from
direct oil sales, they lack the institutional mechanisms that can shield the
region from the ill effects of rentierism. These institutions will be
increasingly important as KRG officials operate their own energy sector,
particularly since the KRG and not Baghdad will be held directly accountable
for revenue generation, resource distribution, and service provision. These
changes will demand financial transparency, tackling corruption, coherent oil
and revenue policies, and real political reforms. The vulnerabilities created
by the KRG’s growing dependence on Turkey also underline the need for renewed
negotiations between Erbil and Baghdad, particularly in securing a sustained
budget based on the 2005 constitution. The United States can play an instrumental
role in brokering these negotiations as well as in helping the KRG develop more
transparent institutions that can effectively administer and govern the region.
Finally, in assessing the strategic end state of the Kurdistan Region,
geopolitics remains tantamount. No matter how disinterested Kurds are in being
Iraqis, they live in a landlocked territory that remains dependent on Baghdad,
and increasingly Turkey and Iran. These dependencies have resulted in alliances
that not only keep borders open and intact, but provide different Kurdish
parties with external patronage to balance power inside the Kurdistan Region.
It is not the KRG that will unilaterally declare independence, sending ripple
effects throughout the region; rather, it is strong and assertive regional
states, namely Turkey and Iran, that will influence the trajectory of the
Kurdistan Region. Unless these conditions fundamentally change, the Kurdistan
Region will continue to exist in political limbo while seeking to leverage its
interests in a weak Iraqi state.
***
The views expressed here are those of
the author and do not reflect the official policy or position of the National
Defense University, the Department of Defense, or the U.S. government.
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