The Kurdish government and Baghdad have reached a deal on the national budget and oil exports, an issue that has been the center of contention between the two for the last several years.
Through this agreement Erbil would give Baghdad 550,000 barrels of oil in return for 17 percent of Iraq’s national budget and the funding of the Kurdish Peshmerga forces.
Kurdish leaders say that apart from the 250,000 barrels they give to Iraq from their oilfields, they will still be able to sell extra oil to the world market and Baghdad has so far not objected to this. But this point might become the subject of serious contention for a centralist government like Baghdad in the future.
Such details appear to have been deliberately left out as they could prevent the agreement. So unless Erbil and Baghdad put all details on paper and on strong legal grounds, the agreement will risk collapse at any time.
Kurdish prime minister and his deputy have made it clear that they will continue their independent oil exports in the same manner they have done before which means the KRG isn’t quite handing over the key to its pipeline to Iraq’s SOMO.
By mid October, Kurdish oil exports to Turkey had doubled from 120,000 bpd to 240,000, according to Turkish Energy Minister Taner Yildiz. By the first week of November, the exports reached 320,000 bpd. Kurdish officials expect an increase to half a million barrels per day by March 2015.
Kurdistan has built a good oil and gas infrastructure that will ensure its economic viability in the future. However, economic gains remain fragile without political independence. Kurdish economics will always be under threat from Baghdad where the mentality of former regimes still persists when it comes to dealing with Kurdistan.
This latest agreement appears to extend the life of Iraq as a state, at least for now, but it will not guarantee its survival in the long-run unless Baghdad changes its behavior and acts more strategically. The economic blockade it imposed on Erbil for almost a year has antagonized the Kurds with such wounds that may take years to heal.
The threat of the Islamic State (ISIS) may have pushed Baghdad to show this conciliatory gesture towards the Kurds, but once the ISIS threat is gone, the KRG might face the threat of Shiite militias.
Government-backed militia groups have already caused tensions in Kurdish areas of Kirkuk and northern Diyala.
The resurgence of Iraqi diplomacy under Prime Minister Haider al-Abadi on a regional and international level also poses its own threat to the KRG’s. Iraq mending ties with its neighbors will unavoidably be at the expense of Erbil’s foreign relations.
Kurdish leaders were not invited to attend the conference of coalition leaders in Brussels this week while Kurdish troops have been the most reliable and effective force in the war against ISIS. For this Kurdish public relations is partly to blame.
For now, the Kurds may come out the winner in this deal, but given Kurdistan's unhappy history with Baghdad, temporary financial gains should not divert them from the road to independence.
