Iraqi oil holds key to unity

The management of Iraq’s oil resources will determine the future integrity of the country

Men work at a makeshift oil refinery site in the Kurdish town of al-Qahtaniya. Rodi Said / Reuters

According to Iraq’s deputy prime minister in charge of energy, the country is close to completing a comprehensive deal over how Iraq’s oil resources are managed. Before the deal is sealed, there are several political challenges with Iraqi Kurdistan that remain. If the deal is signed, it will constitute a major step forward in the effort to keep Iraq a sovereign and whole state under the central authority of Baghdad. If it fails, however, Kurdish aspirations for independence will again be reinforced.

The reason this deal is so critical is that it will keep the Kurdistan Regional Government (KRG) within Baghdad’s oil fold. Since the American-led invasion that removed Saddam Hussein, the KRG has been openly stating its desire for independence from Baghdad. Given their vast oilfields, the KRG could use oil revenue to fund independence and bolster its peshmerga fighting forces, which have proven their abilities in the continuing fight against ISIL while winning friends in Washington.

To make matters more complicated for Iraqi integrity, Masoud Barzani, the president of the KRG, was in Washington last month to ask for direct weapon shipments for the fight against ISIL. Such weapons could easily be turned on Iraqi forces once the scourge of ISIL has been dealt with. Additionally, the KRG has been openly working with Turkey to create an oil pipeline that would give Erbil access to international markets through Turkey’s Mediterranean coast. Kurdish independence, therefore, is predicated on its oil resources. That is why this deal, which would see oil resources remain in Baghdad, is so important. As The National reported yesterday, the KRG would be entitled to a 17 per cent share of Iraq’s national budget. However, control over oilfields in Kirkuk, which peshmerga are occupying, remains a major sticking point.

This oil deal is a major test for the Iraqi central government. Given peshmerga battlefield victories and their continued occupation of Kirkuk, it doesn’t appear as if the KRG is tempted to negotiate with Baghdad. Iraq’s future rests on how its oil is managed.