Kurdistan: Messy Oil Politics

In the summer of 2006, as a wave of sectarian killings spread through central and southern Iraq, leaders in Iraqi Kurdistan were promoting a less violent enterprise: tourism. Dubbed the "Other Iraq" campaign, the Kurdistan Regional Government turned to print ads and television spots to draw visitors and cash to a region it claimed was "already sowing the seeds of a brighter future." Two years later, violence remains unusual, unless one includes Turkish forays like the recent air strikes in the northern Avashin and Hakurk districts. But moves by the regional government to secure the future of Iraqi Kurdistan have stirred new fears among Iraq's other factions.

Disagreements over oil policy, security, and regional governance are threatening to splinter the shaky alliance between Kurdish and Shiite parties in Baghdad. Kurdish officials accuse Prime Minister Nouri al-Maliki's government of stalling a referendum to resolve the status of the disputed city of Kirkuk, and of withholding funding for the region's military. Sunni and Shiite politicians, meanwhile, are furious over oil-exploration deals inked between the Kurdish government and international companies. Washington Post columnist David Ignatius notes the sparring has reached such a frenzied state some Kurdish leaders are pushing for Maliki to be replaced.

Politically speaking, the rift could have a dramatic impact on Iraq's long-term stability. Kurdish parties, which make up the second-largest political bloc in the country, have been stalwart allies of both the United States and Maliki. The Kurds operated a semiautonomous government in Iraq for years before the U.S.-led invasion in 2003, earning a political aptitude that brought significant regional autonomy and a seat at the table in drafting Iraq's constitution. But in recent months Arab politicians have fired back, rallying to check Kurdish ambitions. On January 13 a coalition of 145 Shiite and Sunni lawmakers united in defiance of what they consider Kurdish "overreaching"; unilateral oil deals and control of Kirkuk topped the list of grievances. The Iraqi parliament has also failed to ratify Iraq's $48 billion budget for 2008, with some political blocs claiming Kurdish demands for revenue sharing are excessive.

Whether the Kurdish regional government will suffer lasting political or economic damage at the hands of its adversaries is debatable. "There's a strong feeling that the Kurds have overreached," says Joost Hiltermann, a Middle East analyst with the International Crisis Group. "They now face real restrictions." Mohammad Uthman, a Kurdish parliamentarian, takes a different view. He says Kurdish leaders will challenge the Sunni-Shiite coalition that was formed in January, though he offers few specifics. Equally unclear is how far Baghdad is willing to take its oil embargo. The Oil Ministry views Kurdish government dealings with foreign companies as illegal, and has cutoff exports to some international firms doing business with the Kurds. But Stratfor, an intelligence analysis website, says the central government would be "shooting itself in the foot" if it went too far in blacklisting countries from buying Iraqi crude. Oil production makes up roughly 90 percent of Iraq's revenues.

Economics aside, the political infighting may turn out to be a positive development for Maliki, who could emerge the victor of any effort that unites Sunnis and Shiites against the Kurds. But observers also see a potential win for Kurdish ambitions. "Kurdish aspirations and nationalism appear to be strengthening," notes a December 2007 analysis of Kurdish policy by UK-based think tank Chatham House, "and are likely to affect the future development of [Iraq and its neighbors] in significant ways." Jeffrey Goldberg, writing in the Atlantic Monthly, goes further. "Much blood may be spilled as Kurdistan unhitches itself from Iraq," he writes, "but independence for Iraq's Kurds seems, if not immediate, then in due course inevitable."