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iraqi kurdistan vs baghdad
oil crisis not about money, its about independence

Ahmad al-Rubaie
The announcement by Iraqi Kurdistan that they had started exporting oil to Turkey, despite numerous warnings from Baghdad, has sparked yet another crisis. But as various experts suggest, the crisis is not about…
6.02.2014  |  Baghdad
An oil refinery in Basra - Baghdad says it is the only body that can sell oil.
An oil refinery in Basra - Baghdad says it is the only body that can sell oil.

A few days ago the Ministry of Natural Resources in the semi-autonomous region of Iraqi Kurdistan announced that it had resumed sending oil to Turkey. The oil was going through a dedicated, newly completed pipeline straight to Turkey’s Mediterranean port of Ceyhan. Iraqi Kurdistan had already exported 2 million barrels of crude oil to Turkey in January and now says it’s aiming to export between 10 and 12 million barrels per month by the end of the year.

The Iraqi Kurdish move comes despite plenty of pressure from Baghdad, where the Iraqi federal government has been trying to prevent the Iraqi Kurdish from going it alone with oil exports.

“The federal government has made every possible effort to persuade the region to stop any oil exports that have not been approved of by the central government,” a leading MP from the State of Law bloc and adviser to the Prime Minister , Sami al-Askari, told NIQASH. “We’re waiting for a reaction to our last attempt to dissuade them. We’re hoping the region will respond positively to Baghdad’s terms and conditions.”

If Iraqi Kurdistan doesn’t respond the way Baghdad wants them to, al-Askari says that the federal government will take legal action and it will also see to it that the semi-autonomous region doesn’t get its share of the national budget; most of Iraq’s income is from the sale of oil and that share is based on how much oil revenue the region itself brings in, among other factors.

Iraqi Kurdistan shouldn’t be twisting the central government’s arm, argued Khalid al-Asadi, another senior member of the ruling State of Law coalition. “There are negotiations taking place to resolve this issue through diplomatic means and with dialogue,” he said.

The latest reports indicate that negotiations are making some progress. The central government had been insisting that the SOMO oil marketing company, the only company legally able to conclude crude oil sales in Iraq, be involved in the Iraqi Kurdish crude sales. However on the weekend, one Iraqi Kurdish MP was quoted as saying that Baghdad’s attitude toward this had been relaxed.

“The export of natural gas and oil is our legitimate right,” the Minister of Natural Resources in Iraqi Kurdistan, Ashti Hawrami, told NIQASH. “We don’t need permission from any party or any authority to export our oil. New oil fields have been discovered in Iraqi Kurdistan and soon we’ll be exporting 1 million barrels a day,” he noted.

“The region will not yield to the pressure put upon it by the central government,” agreed Mohammed Khalil, a senior member of Iraqi Kurdistan’s ruling Kurdish Democratic Party, or KDP.

Still not all of the Iraqi Kurdish politicians agree on the region’s stand – the opposition Change movement, or Gorran, was uncertain that it made sense to intimidate the central government like this.

Local legal expert, Ali al-Tamimi told NIQASH that the penalties that the central government was talking about imposing on Iraqi Kurdistan had a sound basis in local legislation.

“In all central parliamentary systems, natural resources are always managed by the federal government,” al-Tamimi said. “Which makes the export of oil without the government’s permission illegal.”

Due to the lack of new legislation on oil in Iraq, the old laws dating back to 1967 still stand, al-Tamimi added. “That means that exporting oil or investing in it without the central government’s approval is actually illegal.”

In fact, Iraqi Kurdistan, which has its own military, court system, parliament and legislation, came up with their own version of an oil and gas law some time ago. Baghdad however cannot agree on a national version of this law. Which is why the older law still stands.

“The spat is nothing new,” Shwan Zulal, a London-based expert on the Iraqi Kurdish oil industry, told Abu Dhabi-based newspaper, The National. “But the difference this time is the amount of oil that can be exported by the [Iraqi Kurdish], which could turn the tables on Baghdad in terms of economic dependence. Baghdad will have little or no leverage left if the KRG can sell oil independently.”

“This crisis is not an oil crisis – nor is it even an economic crisis,” former Iraqi oil minister, Ibrahim Bahr al-Ulum, told NIQASH. “It is a political crisis. And there will be a solution as soon as the Iraqi Kurdish region achieves its political ambitions.”