ANALYSIS – Kurdistan independence: Sooner rather than later?

By Greg Ohannessian, NEGMA – Eurasia Review – February 13, 2014

Iraqi Kurds have achieved incredible growth as a semi-autonomous region in post-war Iraq. But their ultimate goal of independence has just been given a five-year plan. How can this fledgling region become a state in just a few short years? A recent article published on the Kurdish news network Rudaw’s English website expanded on the claims of a senior energy advisor in the Kurdish Regional Government (KRG) that the semi-autonomous Kurdish region of Iraq will declare independence as a Kurdish state in five years’ time.

Ali Balu, formerly in charge of the Iraqi parliament’s oil and gas committee was quoted as saying that “Kurdistan is going to be [sic] rid of its status as a region within Iraq. A plan is underway for Kurdistan to be an independent state in the near future”.

Balu’s statements may not have received much international attention but they are indicative of the sentiment felt in Iraqi Kurdistan today. Unprecedented growth on the back of the region’s tremendous oil reserves has thrust the Iraqi Kurdish region onto the world stage. The stateless Kurds have long been a footnote in Middle Eastern history, and the new found attention casts the Kurds in a new light. International media, policy makers and investors no longer see the Kurds as the forgotten minority but as the upstart story of the decade, carving out a peaceful and prosperous region in a neighborhood rife with conflict.The question left unanswered is what challenges the Kurdish region must overcome in the coming years to have a chance at creating a viable state.

The Devil You Know

Currently, the KRG is focused on realizing the full potential of its oil reserves. The estimated 45 billion barrels of oil proved so lucrative that the threat of being kicked out of southern Iraq was not enough to dissuade oil companies from signing contracts directly with the KRG, in direct violation of Iraqi law. When the world’s largest oil company signed a contract with the KRG, and still managed to continue operating in southern Iraq no less, the Kurdish leaders knew they had emerged as major players.

In January 2014, a new pipeline between the KRG and Turkey began shuttling crude across the border, creating a sorely needed outlet for their reserves but also compounding the ongoing crisis with Baghdad. Constitutionally, KRG oil sales must go through Baghdad coffers (and pipelines), and, in return, the KRG is allotted a significant portion of the federal budget. Today, that tranche of the budget sits at seventeen percent (although KRG officials assert they have never received more than 10%) and the KRG is required to produce a minimum amount of oil that injects capital into the Iraqi economy. According to the Iraqi ministry of oil, the Kurds failed to meet their minimum oil output in 2013 and are threatening to withhold the region’s share of the budget. The January announcement that crude had begun to flow into Turkey could not have come at a more politically sensitive moment. The beginning of the year is always the scene of renewed tension between Erbil and Baghdad on budgetary issues, and the Turkish pipeline gave more than enough ammunition to Baghdad for being reticent in budgetary talks.

The biggest sticking point for the Kurds today is that they are entitled to a rather good deal from Baghdad. Seventeen percent of the overall federal budget (as stated in the constitution) contributes far more to the region than its current oil output. As upstream and transport capacity grows, that balance will certainly shift, but the Kurds will simply be trading reliance on Baghdad for reliance on Ankara. Until oil output, after profit sharing and sweetheart deals for domestic Turkish sales are taken into account, can outstrip the federal entitlement, it would seem that the old adage, better the devil you know than the devil you don’t, may hold water.

However, with independence in mind, Kurdistan must be able to throw off the shackles of any devil. The only way to do so is to focus growth efforts on diversifying the economy, leveraging the manifold capabilities of their people and the fruits of the land on the surface, rather than exclusively the fruits found underground.

The Kurds have opened their cityscape to one of the largest Emirati developers, Emaar, which is led by the overarching strategy set forth by the Ruler of Dubai, Sheikh Mohammed bin Rashid al Maktoum. Diversification of the economy and creating a space for tourism could be even more successful in a Kurdistan full of idyllic scenery, ski resorts, and mountainscapes screaming for eco-tourism.

Mosul and Kirkuk

Regional security is also a point that cannot go without mention. Iraqi Kurdistan is in a rough neighborhood and has been successful in minimizing disturbances within its controlled territories. One high-profile attack on security forces in Erbil stands in stark contrast to the daily bombings in other parts of Iraq and the brutal civil war raging in Syria to the west. However, Kurdish irredentist claims on Kirkuk, Nineveh and Diyala are likely to be the toughest issue to tackle with Baghdad.

The city of Kirkuk has tremendous historic significance for Iraqi Kurds, as it was once the capital of a Kurdish principality that enjoyed significant autonomy in exchange for providing a front line of defense for the Ottoman empire along the Persian border. Today, Kirkuk is home to nearly half of Iraq’s total oil reserves as well as significant unrest. Al Qaeda affiliates regularly carry out bombings in public spaces and well over a hundred attacks have been carried out on the Kirkuk-Ceyhan pipeline alone. The Kurds hold a slight majority within Kirkuk, unlike the majority Arab Sunni population of Mosul, but those numbers are mixed with significant Assyrian, Arab and Turkmen populations. In both cities, tensions are very high between the Kurds and the federal government. Through 2011 and 2012, clashes in Kirkuk between Kurdish Peshmerga forces and the Iraqi army brought the Kurdish-Iraqi relationship to the precipice. More recently, the Iraqi military established the Tigris Operations Command in Kirkuk as a direct response to Peshmerga forces in the area. The battle lines have been drawn, but solving the seemingly intractable issue of Kurdish expansion will leave the broader and more elusive security threat of terrorism squarely on the Kurdish government’s plate.

Unequal Gains

Looking within the current Kurdish borders, there is the looming threat of unequal growth between provinces. This issue is magnified as the provinces in question are split between the two major political parties.

The KRG is more than just Erbil. The province’s oil contracts, still wet with ink and dripping with zeros, its fashionable shopping centers and its glistening Emaar developments are the jewel in the Kurdish crown. But just a few hours’ drive to the second city of Sulaimaniyah paints a different picture altogether. Crumbling infrastructure, pervasive corruption and a year-long power vacuum threaten the unified growth of Kurdistan.

In short, the KRG was effectively carved up between the two primary parties, Barzani’s KDP and former Iraqi President Jalal Talabani’s PUK. This power sharing agreement allowed each party to realize their own vision of Kurdistan in their respective corners of the region. Nechirvan Barzani, the KRG Prime Minister, was able to propel Erbil by giving a wide berth to policy planners and highly qualified advisors that realized his strategy for growth with efficient and effective development that has allowed Erbil to become a strikingly modern city. This is not to say that Erbil has done away with corruption. Both cities, and thus both parties, are home to significant corruption; The KDP has simply found a way to keep citizens and the politically relevant elite equally happy.

However, the growth between these two cities, along with the rural areas, must be more closely aligned for a self-sustaining state to form. The threat of regional disparity along political lines will only be amplified over time and the two parties, along with the emerging Gorran party, must work together to generate equality for all Iraqi Kurds.

Independence in 2019?

If Kurdish leaders truly hope to achieve independence in five years, the three issues described above must be tackled first. Kurdistan is pushing, and often breaking, the boundaries of what a semi-autonomous Iraqi region can do. The Kurds now have the world’s attention, their influence is on the rise and the reality of a state seems to have outpaced recognition of one. Kurdish leadership must take the coming years to realign their strategy with the realities of a fledgling state and re-gear their relationships, both domestically and regionally, in order to achieve durable and lasting statehood.

Greg Ohannessian, Analyst and Project Manager, INEGMA

INEGMA is a Free Zone Limited Liability Company based in Dubai Media City, in the United Arab Emirates. Established in 2001, INEGMA was set up to provide media organizations, think tanks, non-governmental organizations, militaries and governments of the Middle East, and international private companies with various services related to military and strategic affairs.