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The Making of Iraqi Kurdistan: Oil, Investment and a Turkish
Gamble |
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The Making of Iraqi Kurdistan: Oil,
Investment and a Turkish Gamble
15.6.2012
By Jen Alic - Oil Price |
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Kurdistan region president Massoud Barzani (R)
welcomes Turkish PM Recep Tayyib Erdogan in Erbil,
the capital of Kurdistan, March 2011. Photo: KRG
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June 15, 2012
As tensions rise among Iraqi Kurds in the
country’s north, Sunnis in the south and the Shi’ite-led
government in Baghdad over the distribution of
natural resources, Turkey is setting its sights on
an unconventional alliance with the Kurdistan
Regional Government (KRG).
This is a gamble Ankara is willing to take, despite
the potential implications it could have for Kurds
on its own territory. Indeed, as recently as 2009,
Ankara had a very different view on the KRG, going
as far as to label its leader, Massoud Barzani, a
“bandit” who was turning a blind eye (at best) to
Kurdish militants using Northern Iraq as a base to
launch cross-border attacks on Turkey. The Kurdistan
Workers Party (PKK) has been fighting the Turkish
government for more rights for decades.
So when Ankara began announcing a series of
bilateral deals with the KRG (deals that went above
Baghdad’s head), everyone’s first question was why
would Turkey want to align itself with an Iraqi
Kurdish leadership that is clearly making a play to
create a sovereign Kurdish state?
According to intelligence analysts at Jellyfish,
this is not such an unexpected or even illogical
development from Turkey’s standpoint. “It is
important to understand that Northern Iraq is a
major market for Turkish exports and that oil and
gas from coming Iraqi Kurdish territory is moved on
to worldwide markets through Turkey,” Jellyfish
President Michael Bagley told Oilprice.com.
“From a financial and logistical standpoint, an
Ankara-Erbil marriage is one of exceptional
convenience. From our standpoint, Northern Iraq
stands to be one of the next great investment areas
in the Middle East, and so far, the KRG has managed
to out-play Baghdad in the natural resources and
investment game.”
Last October, the KRG signed a highly controversial
deal with ExxonMobil to explore for hydrocarbons in
Northern Iraq. The deal was signed without Baghdad’s
consent, and without even consulting Baghdad, which
perceives the deal as illegal. In May, Baghdad
attempted to auction off another set of exploration
blocks, but none of the big international players
bid, balking at (among other things) clauses
forbidding anyone to deal exclusively with the KRG.
Also in May, as reported on Oilprice.com, the KRG
and Turkey announced plans to build a pipeline
connecting Ceyhan, Turkey, with northern Iraq and
that this pipeline could carry one million barrels
of oil per day and could be completed as early as
August 2013. A second addition to the pipeline would
connect it directly to the existing Kirkuk-Ceyhan
pipeline by 2014. The KRG plans to export crude oil
to Turkey, which will be refined in Turkey and
re-exported to Northern Iraq.
A highly significant but oddly underreported
development that will boost the KRG’s power play for
autonomy in Northern Iraq was the expression of
support, in early June, by the governor of Ninewa (Ninevah)
province for the KRG’s deal with ExxonMobil.
Ninewa province Governor Atheel Nujaifi--from his
seat in the provincial capital of Mosul--officially
aligned himself with the KRG’s oil rights moves
against Baghdad, tipping the balance of power in the
KRG’s favour over the issue. The Ninewa seal of
approval also bodes well for Exxon as it signifies
that there will be less violent opposition from
local leaders over its move to court the KRG.
Here again, Baghdad loses out. Ninewa today is one
of the last bastions of al-Qaeda in Iraq, and its
blessing of the KRG-ExxonMobil deal is significant
in terms of security.
Iraq’s oil is Iraq’s oil, as far as Baghdad is
concerned, and the KRG does not have the authority
to sign any export deals on its own, even if it
plans to divert revenues from sales to the Iraqi
central authority.
The KRG, however, has a number of major power
players behind it--from Ankara to Brussels and
Washington, all of whom would very much like to see
Iraqi oil and gas find an easy way to Western
markets.
In the end, Turkey’s stance on Northern Iraq may
seem like a paradox, but it is a logical move on
many levels. With Syria in a state of violent
upheaval, militant Kurds that threaten Turkey from
across that border are no longer a focal point or
indeed even a threat by comparison. And Ankara’s
burgeoning relationship with the KRG has noticeably
softened Kurdish militancy aimed at Turkey in the
last couple of years.
Economics has played the greatest role in forging
these new relations and Northern Iraq has become a
new staging ground for Turkey companies and
investment, with Turks owning an estimated 50% of
all major businesses operating under the
KRG-controlled territory.
Furthermore, the pipeline deal announced between
Ankara and the KRG in late May was in part a
reaction to pressure to reduce imports from Iran,
but it also follows a logical path in the
Turkey-Northern Iraq relationship.
Turkey knows that the pipeline deal and other energy
deals forged with the KRG will set the stage for the
creation of an independent Kurdish state. But in the
meantime, Turkey has made such a heavy footprint in
Northern Iraq that its level of influence there is
and will continue to be immense. As such, Ankara
will wield much control over any potential sovereign
Kurdish state.
As for the KRG, it shows no signs of backing down in
the face of threats from Baghdad, and is hedging its
bets that the combination of its natural resource
wealth and Western power brokers on its side will
give it the advantage. On 11 June,www.ekurd.net
the KRG told a gathering of potential investors at a
business convention in the northern capital Erbil
that it expected to quadruple oil production in the
next three years, and that today’s 250,000 bpd would
be up to 300,000 bpd by the end of this year. The
KRG is already translating this into a boom for
other sectors beyond energy.
Jen Alic is a geopolitical analyst, co-founder of
ISA Intel in Sarajevo and Tel Aviv, and the former
editor-in-chief of ISN Security Watch in Zurich.
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author or news agency,
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