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Analysis: Kurd oil feud is Iraq's future
29.9.2006 |
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WASHINGTON,
September 28 (UPI) ,-- The head of the Kurdistan
Regional Government has
threatened to break
away from Iraq in a dispute over control of oil
resources, revealing deeper fragmentation between
provincial and federal governance.
The prime minister of the KRG, Nechirvan Barzani,
said Wednesday the relatively stable Kurdistan
(northern region) -- autonomous since 1991 -- might
break from the fragile tripartite republic if oil
contracts it has signed aren't recognized by the
government in Baghdad.
Their rift represents more than a squabble over
federalism's reach, but a country occupied by
foreign troops, progress stalled by daily violence,
moving toward total fracture.
Key leaders in parliament reached a tentative deal
Sunday quelling attempts, for now, to amend the
constitution to allow more autonomy for the regions.
The Kurds as well as a faction of Shiites in the
oil-rich south are in favor of this, while it's
opposed by the minority Sunnis in the oil-barren
middle of the country and a Shiite bloc eyeing a
prominent role in a stronger, centralized
government.
Barzani, in a statement released by the KRG,
responded to Iraqi Oil Minister Hussein al-Shahristani's
comments that the central government doesn't have to
respect oil deals signed by the regional
authorities.
"I resent Dr. Shahristani's efforts to sabotage
foreign investment in Kurdistan's oil sector," he
said. "Dr. Shahristani would better spend his time
getting his ministry working rather than tearing
down our achievements."
The KRG has signed a handful of production-sharing
and drilling deals with small international oil
companies and conglomerates. Barzani said foreign
investment since 2003 has topped $100 million,
including newly found oil reserves, though the
infrastructure to transport the oil to market is
under constant attack.
Major oil companies have stayed away because of the
regional dispute, experts say.
The central Iraqi government has been struggling
with the ongoing violence that has hampered the oil
infrastructure -- still pumping below pre-war levels
-- and the parliament has been unable to pass a
federal oil law.
"Many of the disputes over oil reflect the tensions
over the political future of the country and the
degree to which various provinces will be able to
carve out autonomy from the central government,"
said James Phillips, a Middle East expert at The
Heritage Foundation.
Phillips said the oil-rights dispute will set the
tone for future battles over key issues like water
rights and future control over the northern city of
Kirkuk, a historically Kurdish city until Saddam
Hussein's displacement campaign, which the KRG wants
as its capital.
Kirkuk is also the oil depot to send KRG petroleum
to market, but attacks along the pipeline to Turkey
have seriously hampered capacity; a security upgrade
will be necessary if KRG oil prospects are going to
bring home profits.
A vaguely worded constitution governs Iraq's oil
resources, loosely interpreted to place all oil
under federal control and new finds for the regions.
The central government is debating -- behind closed
doors -- a federal oil law and hopes to pass it
before year's end.
Phillips said Barzani may be merely posturing for
his independence-minded constituents. Or he could be
serious, "that if the Kurds don't get what they
want, they could go their own way," a move opposed
within Iraq as well as by its neighbors, Iran and
Turkey, fearing their own Kurdish factions could
demand independence.
And so the Kurd/central government dispute over oil
control is intertwined with the debate over
federalism. Both will determine who gets control
over the oil resources and, in turn, to whom wealth
from resources is distributed.
"This is the heart of the struggle for Iraq," said
Saad Rahim, an oil risk analyst at PFC Energy.
Kurdistan's autonomy "sets the tone for the rest of
the country," he said.
PFC Energy estimates oil revenue makes up 96.3
percent of Iraq's budget, so regions with oil and
autonomy can choose to keep their money within their
borders, leaving little resources for essential
services to the center of the country.
Or, the central government will decide to handle the
receipts and redistributes the wealth.
Right now there's a huge unknown, which is why PFC
Energy is telling clients "you don't want to go in
and sign a contract -- no matter how attractive it
looks right now."
"When one talks about foreign investment in this
industry, this is an enormous mess," said Juan Cole,
professor of modern Middle East history at the
University of Michigan, since there's no rule on
investor property rights and no finalized deal on
the extent of federalism.
"If Iraqis can create a framework where foreign
companies feel comfortable investing" and security
of oil infrastructure is increased, there will be
some progress, Cole said.
"If they can't do that, then you have Somalia," said
Cole, referring to the potentially oil-rich nation
that hasn't had a stable government since 1991.
"Having petroleum really does you no good
whatsoever" unless there is a governing framework
supporting that, Cole said.
UPI
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