Robin Mills: Few clean lines in drawing Iraq’s future

We have seen this problem in the patchwork of post-Soviet states in Central Asia, in the troubled divorce of Sudan and South Sudan, and now it may be repeated in Iraq.
Tidy lines on a map are comforting. But they conceal the reality of communities separated, of towns, families and people who don’t fit into neat sectarian or ethnic identities. And they raise the messy problem of vital economic assets – pipelines, rivers, oilfields – cut in two.

We have seen this problem in the patchwork of post-Soviet states in Central Asia, in the troubled divorce of Sudan and South Sudan, and now it may be repeated in Iraq. From the infinity of possibilities, what do three broad scenarios mean for the future of the country’s oil industry?

The scenario of revival would involve a unity government in Baghdad, under some acceptable candidate – needing domestic support as well as nods from both the US and Iran. This government would expel the Islamic State of Iraq and the Levant (ISIL) and regain shaky control of northern Iraq. But unless this is combined with a resolution to the Syrian civil war, the north is likely to remain a violent and chaotic place.

The Kurdish region could remain within the federal structure, but will want recognition of its control over disputed territories, and of its right to independent oil exports. A revenue-sharing agreement with the central government over the giant Kirkuk oilfield should be possible.

A “three-state solution” would result in the Kurdish region and northern Iraq becoming independent states. Or, as suggested by the Kurdish prime minister, Nechirvan Barzani, the north might emulate the Kurdish region in becoming an autonomous area within a loose federation – retaining the legal fiction of a united Iraq to comfort Turkey and the US.

Given the Kurdish gains, the north would surely demand similar rights on oilfields and exports. Depending on its exact borders – a very contentious problem – the north would not control much oil. It would also depend on its neighbours – whether Turkey, a post-war Syria or the other parts of Iraq – for export routes. But we can imagine daring independent companies flying to Mosul to offer to repeat the Kurdish region’s success, and find large new oil and gasfields.

The Kurdish authorities, having gained more population, have already staked a claim to a quarter of national oil revenues, up from the region’s notional 16 per cent share (in reality less, and not paid at all by Baghdad in recent months). They could export from the Kirkuk field through Kurdish territory to avoid the much-sabotaged route via Baiji.

Meanwhile the south, with most of Iraq’s oil and only part of the population, could be better off – if it were to inherit a more capable government, able to improve its shambolic services.

Or in the grimmest scenario, Iraq may descend into the abyss, as Syria has. This would mean fighting in Baghdad, sabotage in the southern oil facilities, sectarian militias running riot, Iran intervening, the nationalists in the north turning on their erstwhile ISIL allies and the Kurds’ newly controlled territories coming under attack.

In this case, southern fields would lose production as occasional terrorist attacks combined with an exodus of foreign workers and government paralysis on major projects. The contending forces in the north would extract dribbles of oil to fund themselves, as already happens in Syria. The Kurdish oil industry might continue to develop, although operations in the frontier territories would be vulnerable.

So less important than where the lines are drawn is how. Rarely do borders emerge from the grand deliberations of politicians in distant conference chambers. Treaties usually recognise the reality of divisions already drawn by people on the ground.

The successor states – whether a loosely united Iraq or two or three independent countries – will depend on oil to provide for their people for years, if not decades, to come. The immediate conflict will not be solved by neat lines on a map following supposedly historic and immutable sectarian and ethnic lines. A durable political settlement needs to acknowledge the realities of geography and economics.

Robin Mills is the head of consulting at Manaar Energy, and author of The Myth of the Oil Crisis

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Published: June 22, 2014 04:00 AM

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