In Iraq, the end of every parliamentary term brings with it an electoral campaign filled with populist posturing that undermines public policy, the national economy and any semblance of unity in the country. Iraq’s next parliamentary election is due to take place in November, and predictably, the federal government in Baghdad and the Kurdistan Regional Government in Erbil have already started their ritual indictment of one another.
Over the past few weeks, a two-year effort to settle an ongoing dispute on the management of oil and gas resources has fallen apart, with both sides rushing to rile up what is left of their respective bases. Last month, the KRG announced that it had entered into new contracts with international providers to increase the production of natural gas. Baghdad immediately rejected the arrangements and retaliated in part by cutting off financial transfers to the KRG, which effectively means that the latter will be unable to pay basic salaries for public sector employees. This is the third time that Baghdad has cut off the KRG over the past 20 years, which will have a lasting impact that will be difficult to overcome.
The dispute over natural resources dates back to the drafting of the 2005 constitution. Despite the text being adopted in a referendum that was supported by 80 per cent of the population, its federal structure of government and the provisions on natural resources do not represent a real bargain between the country’s main political forces, many of whom immediately denounced the federal system as soon as it entered into force in 2006. There are several arguments on how those provisions should be interpreted, but the reality is that the crushing majority of Baghdad’s politicians do not agree with Kurdistan’s way of reading the provisions and never have.
Since then, the KRG has sought to build its own independent oil sector, despite Baghdad’s insistence that all international contracts be signed by the federal ministry of oil. In 2013, the KRG even entered into an illegal agreement with the Turkish government by virtue of which it would use a pipeline that was jointly owned by Ankara and Baghdad to export its oil internationally (without Baghdad’s approval). The federal government was enraged and brought a claim before an international tribunal, which ruled in its favour and ordered Turkey to co-ordinate all future exports with the oil ministry in Baghdad and to pay billions of dollars in reparations to Iraq.
Since then, Ankara has insisted that the pipeline remain closed until Baghdad and the KRG agree on a joint oil policy, something that the two sides have been unable to do for the past two years.
The dispute involves a number of complex issues that need to be resolved, including what should be done about outstanding debt that was incurred by the KRG. The reality, however, is that these are technical problems to which solutions are available if there is sufficient political will to resolve them. And that is what has been most lacking in this sorry saga.
When the dispute first began back in 2005, the balance of forces was lopsided in favour of the KRG mainly as a result of civil conflict and dysfunction in Baghdad. The KRG had a golden opportunity to lock in a favourable agreement that would also have been acceptable to Baghdad. Instead, it overreached and pushed for an arrangement that Baghdad was never likely to accept in the long run.
Two decades later, Baghdad is now economically and militarily far more powerful than the KRG. Many young Iraqi Kurds are now moving to Baghdad to seek economic opportunity, something that would have been unthinkable just a few years ago. The federal government now has the opportunity to use its newfound clout to negotiate a new arrangement that would be more in line with both sides’ interests. Instead, the two sides are now moving further apart.
Baghdad’s longstanding policy is that it needs foreign investment to assist in the overall effort to rebuild fundamental infrastructure. Whether Baghdad likes it or not, the KRG remains influential internationally, to the extent that a successful resolution on the management of natural resources will go a long way to satisfying the federal government’s economic aims, even on issues that are not directly connected to the KRG.
US policy towards Iraq on this issue has been consistent across time and various administrations. Recently, Secretary of State Marco Rubio put the matter succinctly when he said that Kurdish autonomy is the “lynchpin of our approach to Iraq”, part of which involves giving the Iraqi Kurds “the economic lifeline that allows them to prosper and succeed”.
It would be wrong to underestimate how difficult it will be to reach a satisfactory resolution. For any agreement to be sustainable, it would have to be based on a new overarching political agreement on what federalism is for, and what its fundamental principles are. Federalism in Iraq for now remains undefined. There is no common agreement of what it is for, or how it should function. If there is one thing that Baghdad should do, it is to enter into a meaningful and sustained dialogue with the KRG to define federalism and its fundamental principles. That would require accepting that federalism must be based on a sense of solidarity between its peoples and regions and not on distrust and populism.
If that simple principle is accepted, then the immediate corollary is that the federal government can never under any circumstance cut off federal transfers to the KRG or to any other part of the country. To do so is to punish the local population in the KRG for a political dispute over which they have no control, which causes immediate pain and suffering to citizens who should be entitled to equal rights to a decent life.
Baghdad may have legitimate concerns in its dispute with the KRG, but it must find other means to apply pressure. And to be fair to Baghdad, it has been reluctant to invest heavily in its relationship with the KRG considering lingering suspicions that it will make another attempt to break away from the union at the next opportunity. That concern would also have to be addressed if a durable agreement is to be possible.
Given the context, it would be unreasonable to expect any progress on this matter until after the next parliamentary election. But if we hope to have it resolved, all interested parties should proceed with an open mind, in good faith and on the right basis. If not, readers of this article can expect to encounter similar laments and pleas in these pages again in 2029, just before the next parliamentary election.
