ANALYSIS : Does Kurdish Crude Mean Kurdish Statehood?

By Denise Natali – 8.8.2012 – Al Monitor – Recent developments in Iraq and the region have renewed speculation about Kurdish statehood. Some argue that the increasing presence of major oil companies in the Kurdish north provides the economic leverage needed for independence. Others see the political vacuum in Syria as an impetus for a Syrian Kurdish state or autonomous region, one that could potentially merge into a greater Kurdistan with access to the sea.

Yet, while stirring nationalist rhetoric and investor confidence, these claims ignore regional geopolitics, security issues and political trends that make statehood highly unlikely. Rising Iraqi nationalism, conflicting aims in Syria and a strengthening PKK problem have intensified divisions not only between Baghdad and Erbil, but also between Kurdish groups inside and across the Kurdistan Region. The real concern is not a potential Iraqi Kurdish state, but the extent to which Iraq Kurdish autonomy can be sustained and the compromises needed to advance energy-sector development.

The entrance of oil majors in the Kurdish north is a feat for the Kurdistan Regional Government (KRG), but not a surprising one. It reflects an expected trend of mergers and acquisitions that has required smaller and medium-sized companies to sell their fields or seek larger partners to help defray costs, particularly since most have not yet been paid for their operations. These financial demands, as well as potential profits from generous Kurdish production-sharing contracts (PSCs) and the current disincentives for working in Baghdad’s oil sector, have turned many larger international oil companies (IOCs) to the Kurdistan Region.

Still, there is no positive causal relationship between IOC presence and Kurdish statehood. Just as modernization theory neglected the path dependencies embedded in each country’s character and traditions, the idea that market logic (and investor hopes) can override the deep-rooted politics that drive Iraq’s energy sector is another form of misguided economic determinism. Nor do IOCs have the same role in developing countries’ economies and asserting political leverage as they did in the 1980s. In the Middle East in particular, resource nationalism and commitment to state sovereignty have given national oil companies a greater role in energy-sector management, assuring that oil-generated revenues are controlled by the state and not by foreign or private companies.

Regional states will likely determine whether the landlocked Kurdistan Region attains statehood, not IOCs. Turkey’s interests are essential. Alongside positive commercial and political relations between Ankara and Erbil is an ongoing PKK problem, invigorated by the Syrian crisis that has reinforced Turkey’s concerns about border security and the emergence of three geographically contiguous Kurdish autonomous regions. Other regional states with Kurdish populations of their own, including Iran and a post-Asad Syria, also would oppose any form of expansive Kurdish autonomy, let alone an independent Kurdistan.

Recent trends in Iraq pose additional problems. One of the unintended consequences of the KRG’s zealous energy-sector development and maximalist territorial ambitions has been a strengthening of Iraqi nationalism. Instead of forming a regional Sunni Muslim alliance — as Ankara may have hoped — Iraqi Sunni Arab groups have reacted against Kurdish overreach by turning toward Iraqi Prime Minister Nouri Maliki in an anti-Kurdish bloc. The recent reconciliation between Maliki and key Sunni Arab leaders such as Salih al-Mutlak and Qutayba al-Jaburi, as well as Sunni Arab tribes in Kirkuk and Mosul, reflects this reactionary trend and the constraints it poses to increased Kurdish autonomy.

Growing political polarizations within the Kurdistan Region further complicate the issue. The centralization of Barzani-Kurdistan Democratic Party (KDP) power, fueled by its control of most oil contracts and revenues at the Iraqi-Turkish border (Habur), have led to a reshuffling of alliances that challenge Kurdish unity. In a pattern similar to that of Iraqi Kurdistan in the 1990s, the Patriotic Union of Kurdistan (PUK), led by Iraqi President Jelal Talabani and its breakaway Change movement are attempting to counteract the profits and power of the Barzani-Ankara alliance by reinforcing their ties with Iran. Both oppose Barzani’s inflammatory approach toward Baghdad, the attempted vote of no-confidence against Maliki and KDP interventions in Syrian Kurdistan, having been instructed by Iran to “stay out of the affair.” Internal Kurdish party tensions also are playing out in the Iraqi parliament on oil issues, causing further bottlenecks in negotiating a payment plan for Erbil.

Instead of a forward-moving process leading to an independent Kurdish state, what is more likely is ongoing political limbo. Different Iraqi and regional party leaders will take advantage of the uncertain legal and political environment to secure maximum leverage and oil-generated profits before attempting to negotiate a side deal among themselves. Even then, in light of re-emergent Iraqi nationalism, growing regional fears of cross-border Kurdish nationalism and the potential profits for the KRG, this deal will likely check Iraqi Kurdish autonomy and not expand it. It also will require more compromises from the KRG on its approach toward Syrian Kurds and greater vigor against the PKK, which could create new forms of instability by disenchanted Kurdish populations in a post-Asad state and the region.

Denise Natali holds the Minerva Chair at the Institute for National Strategic Studies (INSS), National Defense University and is the author of The Kurdish-Quasi-State: Development and Dependency in Post-Gulf War Iraq. The views expressed are her own and do not reflect the official policy or position of the National Defense University, the Department of Defense or the US government.