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Oil and Contradictions Between Irbil and Baghdad
Published in AL HAYAT on 03 - 10 - 2012

The statements by Iraqi Foreign Minister Hoshyar Zebari about his country's preventing overflights by Iranian aircraft carrying weapons to Syria, reflect a profound contradiction with the acts by his prime minister, Nuri al-Maliki, and his support for the Syrian regime and its close alliance with Iran. This contradiction between the minster and the head of the government appears elsewhere, in terms of oil and the economy, due to the conflict between the Kurdish Regional Government and the management of its capital Irbil, and the performance of the Maliki government and its deputy head, who is responsible for energy affairs, Hussein Shahristani. The latter is the closest individual to Iran in the Baghdad government. While Irbil has begun to attract international oil giants to explore in Kurdish areas, from Exxon Mobil to Chevron and France's Total, the fourth round of tendering for oil and gas in Iraq showed that it did not obtain leading producers, because the offers were not encouraging. Irbil is on its way to becoming the business capital, attracting many investors. A person who frequently visits Baghdad and Irbil says there is a big difference between the two cities; in Irbil, you arrive at the airport and quickly get your passport stamped, then go to the hotel, with no security complications or obstacles to slow you down. Arriving in Baghdad, however, is more difficult, because of the various formalities and the security situation.
Certainly, there are reasons for these conditions; American troops entered Iraq and dismantled the Iraqi military, while Kurdistan did not experience this destruction. The Peshmerga and Kurdish police remained intact, which kept the Kurdish region secure compared to Baghdad and other Iraqi cities. But in addition to these reasons, a type of agreement was concluded between Maliki and the Kurds who entered the government, but Maliki did not adhere to it. Only yesterday did the Maliki Cabinet decide to pay debts to the Kurds, as part of the sale, amounts of oil that had been produced from Kurdish areas by SOMO, the marketing firm for Iraqi oil. The KRG territory produces around 150,000 barrels a day, which is a small amount if compared to production in the south of the country, but the exploration that has been started by these giant companies in Irbil could turn the region into an oil-producing area worthy of interest by investors.
The Baghdad government's decision to pay the debts owed to the Kurds was due to American pressure; it was also the result of the moves by international oil giants, which took no notice of the Iraqi government's threats, and began moves to explore for oil in the Kurdish region. The central government's debt to the Kurds amounted to $840 million and because Maliki's government was not paying, Irbil ceased to produce oil; this led to US intervention for the return of production, provided that Baghdad pay. A meeting that led to the agreement between Iraq's oil minister, Abdel-Karim Laibi, and the KRG's oil minister, while Deputy Prime Minister Shahristani stayed away; he supported a hard-line stance on the Kurds, with no concessions. Baghdad's policy on the Kurds on the oil and economy front was a weak one, because Maliki did not adhere to the agreement between the two sides. Irbil's oil production was sold via SOMO, which was not paid the money. Baghdad claimed that Irbil was selling oil through smuggling, while in fact the KRG's oil production was halted and only small amounts were smuggled, because the primary production areas in Kurdistan were inactive. Kurdistan is currently a promising region and there is intensive activity by Turkish investors in Irbil thanks to Masoud Barzani, who traded peace with Turkey for Turkish investments and Turkish economic interest in Kurdistan. Meanwhile, Maliki and his ally Iran, and the Syrian regime, have done nothing good for the Iraq of tomorrow; they have instead delayed its recovery, increased its Arab isolation, and threatened its unity over the long term.


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