MESOP MIDEAST WATCH: MICHAEL RUBIN OR THE CIA AGENT CONTRA BARZANIS – Iraq’s new oil deal with Barzanis is a big mistake
MESOP NEWS 17.4.23
Iraqi Prime Minister Mohamed Shia al-Sudani (R) and Kurdistan premier Masrour Barzani at a press conference after signing an oil deal in Baghdad, Iraq, April 4, 2023. Michael Rubin | Washington Examiner
Kurds are loyal not to the Barzanis but to the money they distribute. The minute the Barzanis cannot pay their supporters is the moment the Kurdish spring begins.
Iraqi Kurdish oil stopped flowing through Turkish pipelines last month after international arbitrators ruled that Turkey violated a 1973 treaty by exporting Kurdish oil without first securing Baghdad’s permission. The judges awarded Baghdad $1.5 billion-plus interest, just for the period between 2014 and 2018. The court will announce subsequent awards in the coming days.
The oil stoppage hit Kurdish revenues hard.
Already indebted due to corruption and mismanagement, the shutdown cost the Kurdish government $22 million per day. This escalated concerns about regional stability. Kurds are loyal not to the Barzanis but to the money they distribute. The minute the Barzanis cannot pay their supporters is the moment the Kurdish spring begins.
Rather than work for Iraq’s stability, the Barzani family has undercut it in the belief that they will then become indispensable to the West. It is a profitable extortion scheme. Today, the Pentagon pays Barzani a quarter billion dollars annually to subsidize the militia he uses to prey upon the public. Nor do ordinary Kurds benefit from the oil business: Barzani diverts much of the oil revenue he sells into private family accounts and businesses while public sector employees, perhaps 70% of the region, go unpaid.
Not surprisingly, Masrour Barzani sought a deal with Baghdad. Iraqi Prime Minister Muhammad Shia al Sudani obliged. Under terms of the deal signed on April 4, 2023, Iraq’s State Oil Marketing Organization would supervise sales. Barzani would appoint a SOMO deputy director, and Barzani’s Ministry of Natural Resources would supervise the account into which the proceeds of Kurdish oil sales would be deposited.
Both Sudani and the Biden administration that sought the deal erred. Every Iraqi prime minister enters office thinking they can fix the rift with the Barzanis. Never has an Iraqi prime minister had such leverage entering negotiations. Nor have the Barzanis ever kept their word. To give Barzani oversight of the account is to reinforce his corruption at the expense of rival Kurdish parties more invested in Iraq’s success. While former Prime Minister Mustafa Kadhimi’s team oversaw the “heist of the century,” a $2.5 billion theft of Iraq tax revenue, the Kurdish oil industry represents a greater theft because it has been siphoning off an amount at least an order of magnitude higher into the family’s private holdings.
The State Department errs by encouraging the resumption of oil exports through Turkey at the expense of genuine reform. Texas-based HKN lobbied for the resumption, saying to do otherwise would be to empower American enemies, but it omitted what Kurdish officials say are current efforts to sell some of their interests to companies unconcerned by such considerations. That the American consul-general in the Barzani-run city Erbil deleted a tweet highlighting the State Department human rights report after Barzani complained represents a weakness that Barzani interprets as a green light to dig in his heels rather than reform or reach a lasting deal on a long-delayed oil law.
Twenty years after the Iraq War, it is time to stop kicking the can down the road on anti-corruption efforts and prioritizing short-term Band-Aids over fundamental reform. To empower the Barzanis when they seek to marginalize every Kurdish opponent is to pave the way for a dictatorship.
Behind the sweet nothings Barzani whispers to American diplomats, he imprisons journalists for talking to American officials, helped arm the Islamic State in a miscalculated effort to use it as a lever against Baghdad, sold local sovereignty to Turkey, and has run the region into the ground. Kurds say they trust Baghdad or a broader array of Kurdish parties to control the account to pay their salaries more than the Barzani children.
All Iraqis will pay the price for Iraq’s latest oil bargain. There will be no stability in Iraq if the United States encourages corruption over good governance or partners with any party, family, or individual who believes their path to power is through Iraq’s failure rather than success.
Michael Rubin is a former Pentagon official whose major research areas are the Middle East, Turkey, Iran and diplomacy. He is author of “Dancing with the Devil: The Perils of Engaging Rogue Regimes” (Encounter, 2014). He is a resident scholar at the American Enterprise Institute AEI. His major research area is the Middle East, with special focus on Iran, Iraq, Turkey, and Kurdish society. Read more by Michael Rubin.
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