Tensions Mount with Uneven Iraqi Development

Stephen DeAngelis

October 1, 2007

Iraq presents an interesting case study in development. U.S. foreign policy, for many good reasons, is trying to preserve Iraq as a unified country.  In doing so, it has yoked together two very different economic regions (the Kurdish north and the Arab south). Because the Arab south is embroiled in civil strife between Sunni and Shi’a Muslims, its economic develop has been stifled. In the more secure north, economic development has raced ahead. Since a train’s engine can go no faster than its caboose, the north is naturally frustrated to be held back in some areas because of its ties to the south. Oil is one of those areas. This frustration finally reached a tipping point and the Kurdish Regional Government signed an independent oil agreement that raised more than eyebrows [“Official Calls Kurd Oil Deal at Odds with Baghdad,” by Alissa J. Rubin and Andrew E. Kramer, New York Times, 28 September 2007]. The new agreement has raised concerns in both Washington and Baghdad.

“A senior State Department official in Baghdad acknowledged Thursday that the first American oil contract in Iraq, that of the Hunt Oil Company of Dallas with the Kurdistan Regional Government, was at cross purposes with the stated United States foreign policy of strengthening the country’s central government. ‘We believe these contracts have needlessly elevated tensions between the K.R.G. and the national government of Iraq,’ the official said, referring to the Kurdistan Regional Government. The official was not authorized to speak for attribution on the oil contract.”

This is not a good guys versus bad guys situation — just two sides with different perspectives. For their part, the Kurds feel little obligation to help the Arab south, having been subjected to brutal treatment by Arab regimes in the past. Having established a safe zone and booming economy, they want to get on with making their region as successful as possible as quickly as possible. On the other side, the U.S. and central Iraqi governments are struggling to preserve Iraq as a sovereign nation that can serve as a counter to Iranian, Syrian, and Saudi influence in the region. While one would think that most people would cheer for a vigorous, growing, and successful economic region in the Middle East, such is not the case. Iraq, Iran, and Turkey fear that a successful Kurdish region will foment further unrest within their borders from separatists calling for a greater, independent Kurdistan that takes territory from all three countries. That’s the backdrop against which the oil deal was signed.

“The tensions between Kurdistan and the central government go well beyond the oil law. Already a semiautonomous region for more than 15 years, Kurdistan in many respects functions as independent state and wants as much latitude as possible to run its region. Recently, the Kurdistan government has pushed to extend its borders to include nearby areas that have sizable Kurdish populations. Hunt Oil, a closely held company, signed a production-sharing agreement with the Kurdistan Regional Government this month. The company’s chief executive and president, Ray L. Hunt, is a close political ally of President Bush and serves on the Foreign Intelligence Advisory Board. Hunt Oil and the Kurds signed the contract after the Kurdish government passed a regional oil law in August. But it is unclear how the regional law will interact with a national oil law under discussion in the Iraqi Parliament. Under draft versions of the national law, the central government would have a say in whether individual oil contracts are legal. The Iraqi national oil law is one of the 18 benchmarks established by the Bush administration to evaluate the Iraqi government’s progress. The senior official said the State Department had advised Hunt Oil, before the signing, that contracts with the Kurdistan Regional Government might contravene Iraqi law once national oil legislation was passed by the Iraqi Parliament.”

The Kurdish Regional Government understands that it is walking on a tightrope. It cannot maintain its booming economy without good relationships with its neighbors (which means keeping talk about and activity concerning separatists movements in check). Although it didn’t a reminder of this reality, the KRG is currently facing a border closure crisis with Iran [“Iran Closes Border with Northern Iraq,” by Yahya Barzanji, Associated Press, 24 September 2007]. Sometimes, as may be the case here, it was not even KRG actions that caused the problems.

“Iran closed major border crossings with northern Iraq on [24 September] to protest the U.S. detention of an Iranian official the military accused of weapons smuggling, a Kurdish official said. At least four border gates have been closed and one remains open, the governor of the Kurdish province of Sulaimaniyah, Dana Ahmed Majeed, told The Associated Press. The move threatens the economy of Iraq’s northern region — one of the country’s few success stories. In Tehran, the public relations department in Iran’s Interior Ministry said no decision had been taken to shut the border. But Kurdish authorities said the Iranians began shutting down the crossing points late Sunday [23 September] near the border towns of Banjiwin, Haj Omran, Halabja and Khanaqin. The closings came four days after U.S. troops arrested an Iranian official during a raid on a hotel in Sulaimaniyah, 160 miles northeast of Baghdad. U.S. officials said he was a member of the elite Quds force of the Iranian Revolutionary Guards that smuggles weapons into Iraq. But Iraqi and Iranian leaders said he was in the country on official business and with the full knowledge of the government.”

Rubin and Kramer reported that the KRG’s trouble continued later in the week as well:

“Kurdish officials said that Iran shelled two areas along the region’s eastern border on Wednesday evening. Ten Iranian artillery shells struck Rayan, a small village about 15 miles from the Iranian border, destroying four houses and killing villagers’ animals. Twelve Iranian shells also hit the Qandil Mountains close to the border, said Jaza Hussein Ahmed, the mayor of nearby Qalat. There were no casualties reported. Iraqi Kurdish officials bristled Thursday [27 September] at word that the Iraqi central government would sign an agreement with Turkey on Friday that Kurds fear might pave the way for Turkish soldiers to cross into Iraq to pursue Turkish Kurdish separatists who take refuge in Iraqi Kurdistan. Turkey has long been in an armed conflict with the PKK (Kurdistan Workers’ Party), which launches hit-and-run attacks on Turkey from camps in the northern Iraqi mountains. They are fighting for autonomy for Turkey’s predominantly Kurdish southeast.”

The KRG has done remarkably well avoiding political minefields to date. Economic development remains its principal pursuit and in order to achieve that end its leaders will have to continue to tread lightly. Their frustration is almost palpable when they feel tied to the stagnant economy in the south. The Kurds enthusiasm for the future is one of their best assets. If they can harness and direct that energy and avoid political pitfalls, they should continue to enjoy the prosperity they have worked hard to achieve.