By beginning to sell its oil unilaterally Iraqi Kurdistan is taking a step towards breaking away from the rest of Iraq, writes Salah Nasrawi

The news that the self-ruled Kurdish region of northern Iraq started sending cargoes of its oil to the international crude market last week wasn’t surprising. The Iraqi Kurds have been smuggling oil discreetly to neighbouring Iran and Turkey for years, and recently credible reports suggested that the region had sold oil to Israel and the United States.

However, this new development may turn out to be the last straw in the status quo reached between Iraq’s Arab majority and the minority Kurds after the overthrow of the regime led by former Iraqi president Saddam Hussein by the US-led invasion of the country in 2003. 

On Friday, the Kurdistan Regional Government announced that more than one million barrels of crude, the first cargo of oil piped out of Iraqi Kurdistan, had been sold on European markets. The announcement came a day after Turkey disclosed that the shipment had started from the Ceyhan Port in southern Turkey where Iraqi oil is usually stored for export.

Reports last week suggested that at least four cargoes laden with Kurdish crude had gone to Israel since January, while the United States had imported its first crude cargo from the Kurdish region in May. Kurdish natural gas condensate has also been sold to Italy, France, Germany, the Netherlands and Latin America.

The key collaborator in the galaxy of foreign countries that have facilitated Kurdish oil sales is Turkey, which has provided political and logistical support to the Kurdistan Government’s efforts to export its oil independently. The Turkish state-owned pipeline operator BOTAS was the key to Kurdistan’s efforts to export its oil and the shipments were arranged through Turkish brokers.

With Iraq gripped in seemingly endless sectarian bloodshed and entangled in a governmental crisis following another inconclusive election last month, it was perfect timing for the autonomous Kurdish enclave to begin selling its oil on the international markets in defiance of the central government.

The aim behind the well-calculated move seems to have been to send a clear message to the Iraqis, Iraq’s neighbours and the rest of the world that the path to the long-awaited Kurdish independence from Iraq is now shorter than it has ever been before.

Even before the announcement of the oil sales, Kurdish leaders were repeatedly threatening to call for a referendum on Kurdish self-determination if a host of disputes over territories and the distribution of power and wealth were not resolved.

The Kurds have long accused Shia Prime Minister Nuri Al-Maliki of authoritarianism and the exclusion of their leaders from power-sharing in Iraq. Their leaders have vowed to thwart any attempt by the central government to undermine the powers they have gained since Saddam’s ouster in 2003.

The Kurdistan Region is now all but an independent entity, though it stops short of internationally recognised sovereignty. It has its own president, prime minister, parliament and national flag. It also runs its own army, security forces and intelligence services, and it operates its own airports and border points.

The Region issues visas for foreigners and entry and residency permits for Iraqis travelling from other provinces in the country.

Tensions over power and resource-sharing reached a new pitch after the 30 April elections, which showed Al-Maliki in the lead to form a new government. His re-election by a Shia alliance will guarantee more problems with the Kurds, and Kurdish president Massoud Barzani has warned that the Kurds will not join any government headed by Al-Maliki.

The oil sales have raised the stakes again, as Baghdad had warned international companies against buying Kurdish crude and has threatened legal action against any company involved in “smuggling” Iraqi oil. Baghdad has also filed a request with the Paris-based International Chamber of Commerce for arbitration against Ankara to stop the exports of oil from Kurdistan.

Yet, Irbil has remained defiant and has dismissed the Iraqi move as a “hollow threat,” vowing that exports from the Turkish port of Ceyhan would continue despite opposition from the federal government in Baghdad.

It has said the oil revenues will be deposited in a Turkish bank after taking the region’s 17 per cent share from the Iraqi national budget, which the parliament failed to endorse after Kurdish and Sunni lawmakers boycotted the outgoing assembly. It also promised to comply with UN obligations by setting aside five per cent of the revenue in a separate account for reparations for Iraq’s invasion of Kuwait in 1990.

Beyond the rhetoric, Kurdistan, which has been slowly and carefully charting a path towards full independence, sees Iraq’s present chaos as bringing new opportunities to the table. By selling its crude unilaterally, Kurdistan is escalating its brinkmanship with Baghdad and is trying to gain more concessions on other disputes, mainly the future of the oil-rich-province of Kirkuk and other territories claimed by the Kurds.

With billons of dollars received from Iraq’s annual budget and a largely stable region in comparison with the violence-ravaged rest of Iraq, the Kurdish region has flourished in recent years. And with estimates of oil reserves of 43.7 billion barrels and up to six trillion cubic metres of gas, Kurdistan has a promising economic future ahead of it as an independent state. 

There is no guarantee this time round that the old way of giving the Kurds a dollop of state largesse as a way of keeping them on side can be successfully applied to keep them in a union that is increasingly becoming undesirable to them. The Kurd’s confidence has been mirrored in their defiance of the Baghdad government, and they are now looking more upbeat in their quest for national independence.

In their oil shipments and elsewhere in their relationship with Baghdad, the Kurds now feel they have the upper hand.

Over the last few weeks, Al-Maliki has made some overtures to the Kurds that have shown his willingness to negotiate a deal over the new government he wants to form following last month’s elections.

On 20 May, his government abolished measures taken by the Saddam regime to resettle thousands of Arabs from the south in Kirkuk after driving the Kurdish inhabitants out. Under the new decree some 400,000 hectares of land will be given back to the Kurds and Turkomans in Kirkuk.

Another decree last month spelled out the return of all the Arabs who had settled in Kirkuk during the Saddam regime to their areas of origin in central and southern Iraq. The government has also said that it will give billions of dollars in compensation and provide jobs for some of the 200,000 Arabs who will leave Kirkuk.

Though the two moves were pre-conditions set by the Kurds for a settlement of the Kirkuk dispute, the Kurdistan Government has not yet reacted to the two decisions which should be ratified by the parliament. Its ambivalence probably indicates that it intends to drive a hard bargain, knowing that Al-Maliki is desperate to win a third term in office.

It is for this reason that the Iraqi Kurds, who feel that they have achieved a remarkable transformation in their struggle for autonomy by benefiting from the political turmoil in Iraq and the Middle East more than they did in their decades-long guerrilla war, are now carefully crafting their strategy for full independence.

One key element in this strategy is to learn from the opportunities arising from the mistakes committed by successive Iraqi governments.    

Thanks to Saddam’s defeat in the 1991 war with the United States over Kuwait, the Kurds enjoyed autonomy in their northern enclave that was declared a safe haven protected by US and British warplanes.

The US and British governments established a no-fly zone over northern Iraq, forcing Saddam to pull out from the area. The move ushered in a new era of liberation for the Kurds and allowed them to have their own national government for the first time in their history.

By his arrogant and irrational ending of the dispute with the Kurdistan Government over the 2014 national budget, eventually leading to the freezing of salaries and other public spending in Kurdistan, Al-Maliki also sparked another serious crisis, forcing the Kurds to press ahead with their unilateral oil sales.

They will now be able to convince the world that by trying to thwart their exports of oil while cutting their allotments in the budget, Al-Maliki has effectively declared economic warfare against the Kurds.

The Kurds seem to have learned enormously from Al-Maliki’s outlandish policy mistakes, and they are now prepared to exploit the mayhem in order to embark on the last phase of their historic undertaking to make their dream of statehood a reality.

If the trajectory of Kurdistan’s independence has taken off of late, it is because the Kurds’ bitterness against Al-Maliki has accumulated and the chance of brokering a compromise with him has been lost.