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Iraq Report: November 30, 2007

Baghdad, Kurds At Odds Over Oil Deals

By Sumedha Senanayake
November 30, 2007 (RFE/RL) -- The last few weeks have witnessed bitter exchanges between the Baghdad government and the Kurdistan regional government (KRG) over oil deals signed between the Kurdish administration and several foreign firms. Since the Iraqi Kurds passed their own oil law in August, they have signed 15 exploration contracts with 20 foreign firms.

These deals have enraged Iraqi Oil Minister Husayn al-Shahristani, who has repeatedly referred to them "illegal" and insisted that the Oil Ministry was the only institution with the authority to sign oil contracts. He issued a warning on November 15 that any foreign firm that signed deals with the KRG will be barred from doing business with the federal government in the future -- a threat that carries significant weight, since the majority of Iraq's oil reserves lie in its massive southern oil fields.

On November 24, he ratcheted up the pressure on the Kurds and called the deals "null and void." To counter the KRG's own oil law and lacking a national law, al-Shahristani insisted that he would use legislation from the Saddam Hussein era to strike deals with foreign firms.

In response to the criticism, Kurdish officials described the deals as legally sound and in line with the Iraqi Constitution. In fact, CNN reported on November 27 that KRG Natural Resources Minister Ashti Hawrami, ahead of a U.S. tour, said that the KRG is expecting to sign exploration-and-production contracts with 20 foreign companies by the first half of 2008.

Kurds Reliant On Baghdad

While the rhetoric between the Baghdad government and the KRG has reached a fever pitch, in the end, the Kurds are heavily dependent on the central government to export its oil. The Kurds may able to sign contracts with foreign firms, but they need a reliable and secure access route to export their oil. Essentially landlocked and with Baghdad in control of the Umm Qasr port in the southern city of Al-Basrah, the Kurds have to look north.

The most obvious choice would be the existing oil pipeline from northern Iraq to the Turkish port of Ceyhan. However, only the Baghdad government has an export deal with Ankara and al-Shahristani announced in an interview with Monte Carlo Radio on November 23 that Iraq's neighbors would prevent the Kurds from exporting their oil.

Cutting off export routes for the Kurds could force them to resort to smuggling oil through overland routes, which would be illegal, risky, and ultimately expensive, if the shipments were to be lost or confiscated. Moreover, firms would probably be put off from signing any contract if a clear, and more importantly, legal export route was unavailable.

In addition, Turkey is wary of the KRG's motives and their quest for greater autonomy. Ankara only wants to deal with Baghdad directly and avoid any contact with the KRG, for fear of encouraging greater Kurdish independence, which it fears could encourage Turkey's own sizable Kurdish population to seek greater autonomy.

Iran and Syria also have significant Kurdish population and they too may choose to only deal directly with the central government in Baghdad.

Political Pressure May Bring Compromise

Political pressure may be the force that ultimately pushes the Kurds to relent and compromise with the Baghdad government over the deals. A group of 60 Iraqi oil professionals sent a letter to the parliament on November 26 in support of Oil Minister al-Shahristani's stance against the KRG deals, referring to them as a "deliberate and dangerous action" by the KRG that lacked any "legal or political standing whatsoever." They also accused the Kurds of disregarding the "opinions and reservations of the other political blocs" as they unilaterally signed the deals.

However, the KRG deals and the animosity that they have so far generated could also complicate Iraq's ability to pass a comprehensive national oil law. The law has been mired in the Iraqi parliament for over a year amid bitter divisions between political factions, and the Kurds' deals will only make those discussions more difficult.

After the KRG signed a production-sharing contract with the U.S.-based Hunt Oil Corporation in September, U.S. State Department spokesman Thomas Casey described it as a hindrance to a national oil law. "It's in the interest of everyone in Iraq to see a national set of laws governing the oil and gas industry...we don't think that these kinds of deals are helpful."

Indeed, the United States may be pressed to prod the Kurds into softening their position, since many observers believe that the passage of a national oil law is one of the key issues that will help foster national reconciliation.

Tensions Increase Over Kirkuk Referendum Delay

By Sumedha Senanayake

Both Kurds and non-Kurds have threatened to take violent action in Kirkuk (file photo)

November 30, 2007 (RFE/RL) -- November 15 was supposed to be an important date in Iraqi history. It was the initial date planned for a referendum to decide whether the oil-rich region of Kirkuk will be incorporated into the semi-autonomous Kurdish region.

Although that date was scrapped and replaced with the directive that the referendum be held before the end of 2007, the passing of that date without any sign of a vote was indicative of how this process, outlined in Article 140 of the Iraqi Constitution, is proceeding.

Article 140 calls for a three-step process of "normalization," which seeks to reverse the Arabization policies of the former regime, when thousands of Kurds and non-Arabs were forcibly evicted from Kirkuk and replaced with Arabs from central and southern Iraq. This is to be followed by a census and then a referendum.

The original deadline for the census was to be the end of July, but Kurdish officials acknowledged that due to "technical problems," the normalization process was still far from complete, thereby pushing back the census and it seems the referendum as well.

While the Kurds have steadfastly held to the belief that the referendum will go forward, as constitutionally mandated, by the end of 2007, it is extremely unlikely that this will happen. In fact, Qadir Aziz, the spokesman for Kurdistan regional President Mas'ud Barzani, told the Kurdish newspaper "Awena" on November 13 that the deadline for conducting the referendum needed to be extended because the normalization and census were not carried out in time.

However, some Kurdish officials have accused the government in Baghdad of deliberately trying to delay the referendum.

Kurds Cry Foul

On November 17, the leader of the Kirkuk city council accused the Baghdad government of intentionally stalling the implementation of Article 140, AFP reported. There have also been rumblings among Kurdish officials that foot-dragging by Baghdad has been mostly responsible for delaying the normalization process.

Indeed, Babakir Sdiq, the director of the Kirkuk office for the High Committee for Implementing Article 140, told on November 20 that he was informed by the Iraqi Interior Ministry that the delivery of important internal migration forms would be delayed by up to 15 days.

These forms are needed for Arabs who want to voluntary leave Kirkuk and return to their original districts in exchange for a compensation package of approximately $15,000 and a plot of land. The delay has created a backlog in the normalization process, complicating any attempt to carry out a census, and by extension a referendum.

In response to the accusations, the Baghdad government immediately ordered an investigation into why the referendum has been delayed. The swift response was clearly meant to placate simmering Kurdish anger and frustration on an issue many Kurds describe as "the red line."

This frustration was summed up by Kurdish lawmaker Mahmud Uthman: "Four years have passed, and the referendum should have been held by now, but successive governments have done nothing. Yet, we do understand that there were obstacles, such as security challenges and bureaucracy."

Fierce Opposition Among Arabs, Turkomans

There has also been near-universal opposition among Iraq's non-Kurdish leaders to holding the referendum, with many warning of widespread violence if it is held. The governorate has sizable Arab and Turkoman populations, and both groups have voiced concern that if the Kurds end up controlling Kirkuk, they may be forced out.

The Turkomans have said that they prefer being under the authority of the Baghdad government, but warned that they would seek regional autonomy if Kirkuk were incorporated into the Kurdistan region. Abas al-Bayati, an Islamic Turkoman Union leader, told "Al-Hayat" on November 18 that Kirkuk should be declared an independent region, run jointly by Arabs, Kurds and Turkomans -- a proposal that the Kurds have rejected.

Muhammad al-Dayini, a deputy for the Sunni-led Iraqi Front for National Dialogue, told the "Al-Ahram Weekly" on November 22 that his group wants to see Kirkuk run by a strong central government. "The issue of Kirkuk is very major. We cannot allow one political group to integrate Kirkuk into its region," al-Dayini said. He also accused the Kurds of actively changing the demographics of the governorate by moving an estimated 600,000 Kurds into the region since 2003.

Iraq's neighbors have also gotten into the fray, with Turkey repeatedly voicing its opposition to the referendum, expressing the fear that if Iraqi Kurds control Kirkuk and its oil resources, this could fuel Kurdish separatism in Iraq and then in Turkey. Iranian Foreign Minister Manuchehr Mottaki voiced similar concerns in a statement on November 3 calling for a two-year delay of the referendum.

Dangerous Spiral Of Violence

What Iraqi Kurds fear is that the delay of the referendum may become an open-ended postponement without any concrete resolution. That potential scenario could lead the Kurds to take a more aggressive route to acquire Kirkuk.

In a veiled threat after the November 17 parliamentary session, Kurdish lawmaker Fu'ad Massum warned that the Kurds may resort to other measures if Article 140 is not fully implemented. "If the concerned parties [non-Kurdish parties in government] act irresponsibly, the Kurdish parties will then have their own way."

Going even further, the Kurdish daily "Rozhnama" reported on November 21 that the Kirkuk Governorate Council approved a proposal stating that if Article 140 were not implemented on time, then it would advocate unilaterally merging Kirkuk with the Kurdistan region.

Such a move would undoubtedly lead to violence among the disparate factions within the governorate and quite possibly lead Turkey to intervene on behalf of the Turkomans, who are ethnic Turks. Hadi al-Amiri, a member of the Shi'ite Supreme Islamic Iraqi Council, told AFP on November 17 that any attempt by the Kurds to incorporate Kirkuk by force would "open the gates of hell" and quite possibly lead to civil war.

However, leaving the fate of Kirkuk unresolved also creates a dangerous predicament for the governorate and the rest of Iraq. There has been a marked increase in violence in the region, though it is unclear whether the tensions concerning Kirkuk were the cause. Regardless, without a comprehensive political solution, the situation in Kirkuk could quickly spiral into the kind of violence that has gripped the rest of Iraq.