In Iraq oil deal with Kurds, a ray of light for compromise

The agreement between Baghdad and the Kurdish Regional Government is the first major sign of compromise since the self-described Islamic State began its major advance in Iraq in June.

Stringer/Reuters
Displaced Iraqi children play in camp on the outskirts of the Kurdish city of Arbil on Monday. The unfinished buildings in Iraq's Kurdish north, once symbols of the region's oil boom, are now crammed with people fleeing violence in the rest of the country.

Iraq's central government appears to have settled a long-running dispute over sharing oil revenue with the country's autonomous Kurdish region, a rare and long-awaited sign of compromise as the country continues to struggle to retake territory lost to the Islamic State over the summer.

The Shiite Arab-led government in Baghdad has for months withheld salary and other transfers from the Kurdish Regional Government (KRG), even as Iraqi Kurdish soldiers have been in the lead in the fight against IS in the north of the country, coordinating efforts to save the country's beleaguered Yazidi minority with a US-led air campaign and even dispatching troops to help fellow Kurds fight against IS in the Syrian-Kurdish town of Kobane.

The inability of Baghdad and Iraq's Kurds to reach an agreement as IS forces rampaged across much of the north of the country this summer was a worrying piece of evidence that ethnic and sectarian interests would continue to trump national ones. A deal finally being struck yields hope – albeit tentative – that the government of new Prime Minister Haider al-Abadi will make more decisions that build a national Iraqi focus on defeating the insurgency, even when they prove unpopular with his own sectarian constituency.

Prime Minister Abadi's office also promised a faster process to speed up the release of detainees held without charge. The vast number of Sunni Arabs held in Iraqi prisons – many of whom community leaders insist were detained for political reasons or merely because they were in the wrong place at the wrong time – has been a running sore in Sunni and Shiite Arab relations for years. Torture, maltreatment, and extortion have been rampant in detention centers for years, feeding the general Sunni Arab distrust of Baghdad that has seen many Sunnis take up arms in common cause with IS.

Reuters reports on the agreement:

Under the deal, 300,000 barrels per day of oil from Kirkuk will be exported via a pipeline running through Kurdish territory to Turkey, in addition to 250,000 bpd from the region’s own fields. The crude will be sold by Iraq’s state oil marketing organization, representing a compromise by the Kurds, who have long insisted the constitution entitles them to sell oil on their own terms.

In return, Baghdad will resume budget payments to the Kurds, who have suffered a financial crisis since the federal government cut funding to the region early this year as punishment for their moves to export oil independently.

... A source in the Kurdistan Regional Government said the region will sell 250,000 bpd of oil produced in areas under its control to [the central government's oil marketing arm] at Ceyhan but would be free to sell anything produced over and above that amount.

Kirkuk is technically outside of autonomous Iraqi Kurdistan. But Kurdish forces took control of the city in June, after the Iraqi army collapsed in Mosul, ceding the country's second largest city to IS. The Kurds, which have long demanded that the oil-rich Kirkuk area be incorporated into their territory, seized it both to make that dream a reality and to keep it out of IS hands.

Kurdish officials expect about $1 billion in federal funding to begin flowing towards their peshmerga forces soon.

Ambassador Brett McGurk, President Obama's special envoy to the US-led coalition opposing IS, was practically giddy about today's development on his Twitter feed. He called the oil deal an "important breakthrough" and a "win win" for Baghdad and the Kurds. He also pointed out that direct payments have been promised to be made from the federal military budget to the independent peshmerga forces, militias loyal to the various Kurdish political parties. 

Will this good news be built on? The history of Iraq since 2003 is far from filled with examples of sectarian and ethnic compromise, and Mr. Abadi's government still appears loathe to arm the Sunni tribes of Anbar province just west of Baghdad, an area where IS units have held considerable sway. For over a year, IS has carried out an assassination and intimidation campaign against tribal leaders who chose to fight against its previous incarnation, Al Qaeda in Iraq, alongside US and Iraqi forces towards the end of the US-led war.

Sunni Arab leaders in the province have been demanding weapons and money to defend themselves – something the Obama administration supports – but Baghdad has been reluctant to arm another autonomous militia whose members are also ultimately hostile to Shiite Arab domination of the country's political life.

The oil deal with the Kurds is being described as a temporary one, and there are significant hurdles to making the current arrangement permanent. Since 2003, the country hasn't had a permanent oil and gas law, in part because of minority desires for oil and gas revenue to be decentralized, while the country's Shiite Arab majority have, largely, supported a dominant centralized handling of the revenue along the lines of Saddam Hussein's old order.

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