Kurdistan flag controversy raises tension
as KRG redirects oil export
By Shwan Zulal - ekurd.net
October 18, 2011
Tension between Baghdad and Kurdistan region has
reached its peak since the Iraqi PM, Nuri AL-Maliki
ordered the removal of Kurdish flags from government
buildings in Khanaqin in Diyala province, which is
in the disputed territories defined under Article
140 of the Iraqi constitution.
Since the directive was issues by the Iraqi PM, many
protests in Diyala province and elsewhere in
Kurdistan region have taken place. The
demonstrations were highly charged with
nationalistic slogans and even one protester is
reported to have set himself alight.
The head of Diyala
province also refused to comply with the order from
the PM to remove the Kurdish flag from government
The focal point of the incident was in Khanaqin, in
an area which has been the subject of ethnic
cleansing and arabization for decades by the former
regime. The Iraqi PM's latest decision to remove
Kurdish flags has evoked painful memories from the
past, and brought the simmering ethnic disputes and
mistrust to the surface.
Maliki's directive is seen as a symbolic move by
Baghdad to assert control over the areas, which is
still disputed and successive Iraqi government after
2003 failed to deal with it. Kurds does not see
areas like Khanaqin as a disputed territory but as
part of Kurdistan region, which is waiting to be
annexed back to the region if and when the
long-awaited article 140 of the Iraqi constitution
It is needless to say that areas like Khanaqin and
Kirkuk which falls under the "disputed territories"
are strategically very important for whoever
controls it, because it has abundant hydrocarbon
reserves and Kirkuk has one of the largest giant oil
filed in Iraq.
Resentments and tit for tat politics are on the
increase between the central government and the KRG
(Kurdistan Regional government). Oil output from
Kurdistan region is decreasing as payment issues is
still not being resolved.
Companies like DNO international ASA and others
operating in the region have been pumping oil to the
northern Iraqi pipelines and they have been
increasing their output in the last year after an
agreement was reached to be paid the cost by the
Iraqi government. However, after a couple of
payments, the central government reneged on its
undertaking and no further payments being made since
September and oil export from Kurdistan through Iraq
has slowly but surely fallen.
It has been reported that the fall in production is
due to technical glitches but it is odd that as soon
as payments stopped from the central government the
productions has withered away. Moreover, DNO
announced on Monday that it has reached a deal to
supply the domestic market in tune of 675000 barrel
of oil at the rate of 10.000 bopd at $50, and made
it clear that it will receive payments in advance.
Although DNO has said that it has had a go-ahead
from the authorities, it is not clear if this has
been cleared with the central government.
Furthermore, it remains to be seen if the revenue
generated by this deal would be taken into account
when Baghdad allocate KRG budget.
It is a known fact that Iraq and Kurdistan has a
deficit in refining capacity and Turkmenistan's
surplus refining capacity along with Turkey and
other neighbouring nations has been used to supply
the domestic market.
Many oil companies in Kurdistan region are reaching
the final stages of their initial exploration
programs and are in a position to start selling oil
to create a revenue stream in order to continue
their programs and balance their books. However,
limited access to the much-need funds and
obstruction by Baghdad will not make it easy for
them and compel them to find other ways to sell
DNO has been one of the early entrants to region and
has made an early move to switch to local market,
which means trucking the oil rather than sending it
through the central government's pipelines.
What is happening in Kurdistan oil market feels as
if the region is under a sanction imposed by Baghdad
that laves KRG no choice but to improvise and sell
the oil to alternative markets.
The indiscretion by the Iraqi government towards
Kurdistan region is alienating the Kurds further.
The battle over the control of the oil and revenue
sharing is one which will determine the shape of
Iraq and the level of Kurdish independence from
central government, but tactics deployed by Maliki's
government is pushing the parties further apart.
Unless the Iraqi government change its stance and
wake up to the fact that Kurdistan region is not
willing submit to central government's authority
the KRG would find other ways to sell
the oil and generate a revenue stream. Meanwhile,
KRG will continue demanding its 17 per cent of the
overall Iraqi budget, which is entitled to under the
Iraqi constitution. Iraq depends on oil for 95 per
cent of its income and as the disputes escalates and
KRG redirect its oil supplies, the rest of Iraq will
be the net loser as a direct consequences of Al-Maliki's
Shwan Zulal is a
political risk analyst, specialising in Kurdish PSCs
and Hydrocarbon Law and advising investors in the
Kurdistan Region and Iraq with legal background.
Zulal is a regular contributing writer for ekurd.net.
He also runs a blog on to the same subject
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