Article 3, paragraph 3 of the Oil and Gas
Law of the Kurdistan Region seems straightforward
enough: "The regional government shall, together
with the federal government, jointly manage
petroleum operations ... according to the
provisions of the federal constitution" [1].
The law seems clear until one discovers
that no comparable federal (meaning national) oil
law has been passed and that the provisions within
the federal constitution are still hotly contested
by many quarters within the Iraqi government. The
confusion has
not
only stalled oil exploration and production
efforts, it carries a palpable security threat as
well.
Despite opposition from the national
government in Baghdad and its neighbors, the
Kurdistan Regional Government (KRG) has refused to
be held back by the indecision and infighting that
characterizes the central government. They have
charged ahead, passing their own Oil and Gas Law
and forming four regional oil-related companies -
the Kurdistan Exploration and Production Company,
Kurdistan National Oil Company, Kurdistan Oil
Marketing Organization and Kurdistan Organization
for Downstream Operations - and signed seven new
exploration deals with both Kurdish and
international petroleum firms. Kurdish officials
claim they are well within their legal right to go
forward with the exploration deals and that fears
of the KRG monopolizing subsequent oil revenues
are unfounded.
Iraqi president and Kurdish
leader Jalal Talabani explained, "Regarding the
Kurdistan region's contracts, they do not deal
with oil production and exploitation, but with the
initial stage of oil exploration. When we reach
the stage of production and exploitation, we need
to go back to Baghdad in accordance with Article
12 of the Iraqi constitution. Hence the Kurdish
position is misrepresented ... The Kurds have not
made any demand to monopolize the oil and its
revenues. We implement the relevant constitutional
provisions and believe that oil and its revenues
should be shared and distributed equally and
fairly to all Iraqi regions without exception."
Using oil to ensure
autonomy Despite Kurdish protestations and
assurances, the oil contracts are an obvious
attempt to raise the KRG's strategic and
international profile, as well as a means of
consolidating its current level of autonomy and
relative prosperity. The Kurds have clearly stated
that they will not allow indecision in Baghdad to
hinder their hard-won progress nor slow down any
momentum towards economic development and regional
autonomy.
But what Kurdish officials often
fail to mention is that there are a host of other
issues that impact Iraqi and regional opinion of
the Kurdish oil contracts. Turkey, Iran and Iraq's
Sunni Arabs all cast a wary eye over the slightest
movements towards Kurdish autonomy. Given this
ultra sensitive environment, the new oil contracts
are as much of a security risk to the KRG as they
are a potential boon to its economy and strategic
profile.
The central Iraqi government has
already called the exploration contracts illegal
and threatened to impose sanctions on any of the
foreign companies involved in the deal, preventing
them from any future work with the Iraqi state.
Not only that, Iraqi Oil Minister Hussein
Shahristani recently declared that any oil
contracts signed with KRG officials are null and
void. "The Iraqi government had warned these
companies of the consequences of entering into
these contracts, and the consequence is that Iraq
will not allow these companies to extract the
oil."
It is not entirely clear how the
central government plans to enforce this, short of
stationing Iraqi military forces in Kurdistan,
since KRG officials remain defiant and refuse to
bow to Baghdad pressure. In a sharply worded
official rebuttal, the KRG pledged to move forward
with the oil exploration projects. "We are not
deterred by Dr Shahristani's views. Experience
shows that most international oil companies (IOCs)
now ignore his unhelpful interventions. We know
that the KRG is doing the right thing by
encouraging the IOCs to invest in Kurdistan ... We
would like to remind Dr Shahristani that we
neither expect nor accept threats, sanctions and
punishments from partners in our coalition
government in Baghdad. The Kurdistan Alliance List
[a parliamentary alliance of the PUK and KDP] is a
partner in Iraq, not a rogue region to be
threatened or punished ... Empty threats and talk
of blackmail will not last. We are sure that
eventually common sense will prevail in dealing
with these matters."
Accusing Shahristani
of relying on Ba'athist and Saddamist frameworks,
Kurdish leaders blasted Shahristani's record and
reminded Iraqis that oil found in northern Iraq
will benefit all Iraqis because of the obligations
drafted under the Revenue Sharing Law. The
response of foreign companies involved in the oil
exploration deals will likely resolve the
rhetorical battle, but the disagreement between
the national government and the KRG has greater
consequences for regional security.
More
pressing for the Iraqi Kurds, the oil deals
threaten to exacerbate their fragile and
historically hostile relationship with Turkey.
Turkey has stationed thousands of troops along the
border it shares with the KRG and has conducted
limited incursions to flush out Kurdistan Workers'
Party (PKK) fighters hiding out in the Kurdish
mountains. Turkey claims that PKK units operating
out of Iraqi Kurdish territory have perpetrated
attacks inside Turkey and accuse KRG officials of
neglect or even collusion.
While the PKK
presence in Iraqi Kurdistan is a pressing security
concern, the long-term regional, particularly
Turkish, worry is the growing autonomy of the KRG
and the prospect of eventual Kurdish secession
from Iraqi territory. In the current environment,
the two issues are easily conflated.
Dispute over Kirkuk The recent
oil exploration contracts also bring to mind
Kurdish strategy in Kirkuk. In the minds of many
within the region, and inside Iraq, the key to
Kurdish independence lies with Kirkuk, where most
of the oil in northern Iraq is located.
Kirkuk is not under KRG administration
yet, but the Kurdish leadership is doing
everything within its power to ensure that it will
be. The Kurds and the Turkomen both have historic
claims to Kirkuk and want to rectify the injustice
of the Arabization policy imposed on the oil-rich
province by Saddam Hussein. No one denies,
however, that Kirkuk's oil resources are the main
prize.
The current territory under Kurdish
regional administration contains only about 0.5%
of Iraq's proven oil reserves, while Kirkuk has 11
billion barrels of proven reserves. Iraq has a
total of 115 billion barrels of proven oil
reserves, though much of the country remains
unexplored.
Therefore any Kurdish moves on
Kirkuk are viewed with extreme suspicion. The
referendum to decide whether Kirkuk province
should be administered under the KRG, scheduled to
take place this month, has been postponed. If
Kirkuk does eventually decide to ally itself with
the KRG administration, Turkey will surely not sit
idly by and let this happen.
The Turks and
Iraqi Arabs are already compiling evidence of
aggressive Kurdish action in Kirkuk, such as
Kurdish party officials paying Arab families to
leave ahead of decisions by the Property Claims
Commission and the resettling of supporters of
Talabani's Patriotic Union of Kurdistan (PUK) and
Massoud Barzani's Kurdistan Democratic Party (KDP)
in Kirkuk in advance of the referendum.
If
Kurdish officials are demonstrating their defiance
now in pursuing the oil exploration contracts
despite Iraqi and regional opposition, Turkey,
Iran and their Iraqi brothers will not be inclined
to give the Kurdish leadership the benefit of the
doubt when they claim they harbor no intentions to
secede by claiming Kirkuk. But Turkey and other
regional powers are not the only security threats
to the KRG. Iraqi insurgents have also set their
sights on Kirkuk.
In the latest attack, a
suicide bomber targeted a top Kirkuki security
official, killing five and wounding 20. As
al-Qaeda and their supporters have been flushed
out of Iraq's al-Anbar province and many parts of
Baghdad, they are traveling out, upwards and along
the borders. Their presence is being increasingly
felt at points north. The November 15 suicide
attack in Kirkuk was just one of dozens, if not
hundreds, of attacks on Kirkuk this year.
The new exploration fields are a promising
target to incoming insurgents and an increasingly
violent indigenous Kurdish opposition to the
PUK-KDP power monopoly in the KRG. A recent
explosion at one exploration field, though it was
deemed an engineering failure, was immediately
thought to be the work of saboteurs.
Conclusion Though the Kurds
insist the law is on their side with regard to the
recent oil exploration deals, most of their
neighbors and fellow Iraqis disagree. Kurds have
achieved much since 1991 - a certain degree of
autonomy, influence within the Baghdad government,
strong economic ties with Turkey and the support
of the United States.
But the continuation
and progress of these achievements should not be
taken for granted. They threaten to unravel if
Turkish suspicion morphs into Turkish aggression
or if future conflicts over oil devolve into civil
conflict, erasing security gains in the KRG. But
the achievements in Kurdistan did not come about
without the Kurdish leadership taking risky
decisions. Going forward with the oil exploration
deals is a gamble they are apparently willing to
take, but one not without dangers.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
