ERBIL, Kurdistan Region—The Baghdad-Erbil oil tussle may be the biggest deterrent to Iraq remaining unified, as the autonomous northern Kurds strengthens its hold over its own oil resources, and the Shiite central government struggles to dictate policy.
For years now the autonomous Kurdistan Regional Government (KRG) and Iraq’s Shiite-led central government in Baghdad, have been continually butting heads over control of the vast northern oil resources, which experts rank as the world’s fifth-largest.
And as with anything involving oil – Iraq’s black gold –the continued issue of money is creating palpable tension between the two governments. Despite supposed progress and visits between the two governments to resolve the major oil disputes, each still stands at opposite ends of a “black divide.”
Much of the conflict over the oil issue is from different interpretations of the Iraqi Constitution, which was drawn up on May 2005, following the toppling of Saddam Hussein in the 2003 US-led military invasion.
The goal of the constitution was to create a delicate and legitimate legal balance among the Shiites, Sunnis, Kurds and the Iraqi government in the newly democratic Iraq. Oil revenues were loosely laid out in a series of articles within the 33-page constitution.
“Oil and gas are owned by the people of Iraq in all regions and governorates,” according to Article 111 of the Iraqi Constitution.
“All powers not stipulated in the exclusive powers of the federal government belong to the authorities of the regions governorates,” according to Article 115.
Kurds believe this gives them the constitutional right to manage their own oil contracts and exports through the Taq Taq-Khurmala-Fish Khabur gas pipeline into Turkey, set to be complete this year.
The pipeline will open the door to Europe and the world, without having to pass through the central government.
But Baghdad opposes the “reading of the legal framework,” and believes it has authority to sell Iraqi resources abroad, according to a report by The Oil and Gas Year on the Kurdistan region for 2013.
It is important to note that there is no legal law distinguishing exclusive power to the central government for oil and gas.
“We want our fair share of the wealth of Iraq, and that is why we are fighting for the unity of Iraq,” Asthi Hawrami, Kurdistan Regional Government’s minister of natural resources, said in an interview in the report.
But the KRG has shown conflicting points of view to its supposed urge for a unified country.
For the first time in nearly five years, the KRG took the step to ship about 30,000 tons of crude oil to ports on Turkey’s Mediterranean coast in July 2012, showing a continued defiance to Baghdad’s claims.
But many in the Kurdish region feel it is necessary for Kurdistan to begin to defy Baghdad because of its constant failures to follow the Iraqi Constitution.
Baghdad refused to pay $3.5 billion to the KRG for exports that passed through Baghdad-controlled pipelines since 2011, despite an agreement between the central government and the KRG in 2012.
Baghdad also cut the KRG’s federal budget and expanded its own in order to pay for other needs “such as the military, which is deducted from the federal budget before the Kurdistan Region is paid its constitutionally mandated 17 percent, effectively shrinking the amount KRG, receives,” the report said.
Much of the reduction was cited by Kurdish officials as a way to hit back by the central government for the continued defiance of the KRG in granting oil contracts outside of Baghdad’s control.
Kurdistan was only given $537 million to pass onto contractors for the export of oil, despite Kurdistan asking for $3.5 billion, according to the report.
Further complicating the divide between Baghdad and Kurdistan, is a recently passed law by the Kurdish Parliament titled Law No. 5, The Law of Identifying and Obtaining Financial Dues to the Kurdistan Region of Iraq from Federal Revenue.
The KRG hopes to gather billions owed to the Kurdish region by retaining profits made from the exportation of oil. But it will only do so if Baghdad continues to default on the payments Kurdish officials claim the region has been owed since 2003.
The KRG states the central government owes at least $20 billion to Kurdistan: $6 billion would go to the Peshmarga, $4 billion would go to oil contractors and the rest would go to victims of Saddam’s genocide against the Kurds.
“The law sets out a pathway to implement Iraq’s Constitution.” Ashti Hawrami, KRG’s minister of natural resources, said at an oil conference in June in London.
“We would prefer to work with the federal government in Baghdad, but we must also recognize that if one part of the country is dysfunctional it should not be a drag on the successful areas of the country,” Hawrami said in the report.
Kurdistan also has ignored Baghdad’s warnings against the completion of the Taq Taq-Khurmala-Fish Khabur pipeline, slated for completion by September of this year.
The pipeline will allow Kurdistan to ship crude oil from the region into Turkey and could completely change the game of energy power in Iraq, according to an article from Reuters.
An official report from the KRG Ministry of Natural Resources said the enclave hopes to produce at least one million barrels of oil per day by 2015.
The oil rich province of Kirkuk is also playing a major role in the “black divide”.
In Article 140 of the Iraqi Constitution Kirkuk and other territories Arabized by Saddam’s Baathist regime, are supposed to be returned to Kurds.
It comprises of three parts, and was supposed to be fully implemented by 2007. Only one part of the article has been completed, and recently Maliki expressed his intent to move onto the second cycle of de-Arabization of disputed territories, making the mandate delayed by five years.
Kirkuk produces about 260,000 bpd, according to the Middle East Economic Survey.
It is one of the major oil producers for Iraq, which may be behind Baghdad’s reluctance to relinquish the territory to Kurdistan, as the northern enclave continues to grow in power and defy the central government.
The pipeline near the city also connects to pipelines that run into Basra, Baghdad and other major cities in Iraq. It also connects to the city of Bayji, which is the central point to run to Fish Khabur and into Ceyhan in Turkey.
In 2012 the KRG sent Peshmarga forces to the city to fill security vacuums after a string of explosions and attacks, which Baghdad labeled as a tactic by the KRG to seize the land and resources of the area.
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