The oil dispute between the Iraqi government and that of the Kurdistan Regional Government escalated after the last week official announcement by Erbil and Ankara of their intention to build a pipeline to export crude oil directly from Kurdistan to Turkey. The announcement was made at a conference held in Erbil, which was attended by the Turkish Energy Minister Taner Yildiz, the KRG Prime Minister Necirvan Barzani, as well as the Minister of Natural Resources in the KRG Ashti Hawrami, who said during the conference, “In August 2013 we will be able to directly export crude from the Kurdish region's fields. We will be responsible for exporting oil. It will still be Iraqi oil". Hawrami reaffirmed that the Kurdish administration in Northern Iraq would take the 17 percent of revenues the region is allowed from Iraq's national budget and pass the rest to the Iraqi government. However, it turns out that despite the announcement made with regard to this scheme, an agreement between the two sides to build the pipeline is yet to be signed. Initial reports indicate that the capacity of the pipeline will be around one million barrels per day of crude oil. Turkey will receive this volume then re-export petroleum products refined in Turkey back to the KRG. According to industry sources, the pipeline will not be completed and exports will not begin until January, 2014. There is also a plan in place to build another pipeline within three to four years to export gas from the fields of Iraqi Kurdistan to Turkey. But what is the aim of such direct export agreements? Politically, the move can be seen as a new attempt to reaffirm the independence of the KRG from the policies of the federal government. The announcement in fact came weeks after the KRG had halted its exports of about 100 thousand barrels per day through the Iraqi-Turkish pipeline. And at the level of the oil industry, the announcement bolsters the interests of oil companies operating in Kurdistan, as they have been demanding such an export route in order to enhance their profitability, rather than being limited to the local market. The accord over this pipeline represents a major shift in Turkish policy toward Iraq. To be sure, Ankara had hitherto pursued a clear policy of not accepting for oil to be exported from Iraqi Kurdistan to Turkey without Baghdad's approval. The announcement then came at a time when disputes between Baghdad and Ankara reached a critical level, with the Turkish Prime Minister Recep Tayyip Erdogan accusing his Iraqi counterpart Nuri al-Maliki of being an “autocrat", while al-Maliki accuses his Turkish counterpart of “meddling in the internal affairs of Iraq". The initial reaction by Baghdad to this agreement then came in the form of a decision to stop the export of transportation fuel to the KRG for one month. This leaves many questions unanswered, such as: Will the Turkish investments in and exports to Iraq – worth $12 billion – be affected, especially as the supporters of Al-Da'wa party in the South protested recently to demand the government to cut back on them? In truth, the Iraqi government's policy in this regard is based on the principle that natural resources in the country are the property of the entire Iraqi people, and none other than the state are therefore entitled to act with these resources, especially segments of the Iraqi people, in an exclusive manner, be they supporters or opponents of al-Maliki's government. This policy is supported by the cadres in the oil sector, because it is a continuation of a unified Iraqi oil policy. The announcement regarding direct exports represents the second challenge for the Iraqi oil policy, since exports as such are by law the exclusive prerogative of the Iraqi State Oil Marketing Organization (SOMO). As is known, the first challenge is the fact that the KRG had signed production-sharing agreements with international oil companies, most recently with the U.S. giant ExxonMobil, which signed six agreements with the KRG – bringing the total number of agreements between the KRG and international oil companies to about 50. Now, care must be taken concerning a possible third challenge, if the Kurdish authorities allow drilling in ‘disputed' areas inside Iraq, i.e. the areas the sovereignty over which is yet to be assigned, whether to the federal government or the Kurdistan region. There are many such areas, and naturally, the province of Kirkuk, with its enormous oil reserves and multiethnic population (Arabs, Kurds, Turkmen and Christians), can be considered one of the most challenging of such areas, and it is very possible that any incident there may deteriorate to internal military conflicts with dire consequences. The main reason behind these disputes between Baghdad on the one hand, and the provinces and autonomous regions on the other, lies in the ambiguous and contradictory clauses of the 2005 Constitution regarding the jurisdictions and responsibilities of each party in implementing the policies pertaining to the oil sector. This ambiguity in the Constitution has provided some with the means to pursue private agendas while also exacerbating the problem of corruption. It has also allowed the Prime Minister's office to continue to enforce authoritarian policies without paying heed to their consequences vis-a-vis the unity of the country – as the odds for the partitioning of Iraq will be significant should this approach be continued. Why then did these oil disputes arise particularly after 2003? The answer is that the new post-invasion Iraqi state was established along sectarian and ethnic lines, and therefore, the interests of all sects were supposed to be taken into account. Yet this is not what has happened. Instead, the largest sect sought to monopolize power and resources, without taking into account the interests of the other sects and ethnicities that share power with it under the federal system. The Prime Minister thus exercised dictatorial powers with a sectarian character, causing a crisis in the process. The other partnering forces in power, meanwhile, tried to seize the opportunity to make ‘gains', even at the expense of the state. The best example of the disequilibrium in the internal balance of power is the ongoing dispute over passing the oil law since 2007, which is very much responsible for the oil mess the country has been undergoing for years now. *. Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
