EWD Publications IRAQ

December 2007 News East-West Debt

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From the December 2007 publication:

IRAQ and a new Kurdish resilience.
The new and improved federal Iraq is still lacking controllability. Rebuilding the political and economical stability in Iraq remains a mind boggling task. So far the US has not been able to pull out and has send in more troops to help strengthen political stability. Will Iraq be able to survive as a federal state or is it doomed to fall apart as we have seen for instance in the former Yugoslav Republic? With Iran sharpening its claws in the regent ,hungry for a piece of its neighbour and internal social religious hate and jealousy amongst the different populations in Iraq. Can a divided people stay together within one nation without the tyranny of a leader such as Saddam Hussein clearly was, or will their forced coexistence come to a halt all together? Only time will tell.
What however is rapidly becoming very clear is that the Kurdish population is coming together in the strongest of ways and creating a future for them selves with or without the rest of Iraq. Five million Kurds are making sure that they will never suffer the terror of a suppressed people again, they are very rapidly positioning themselves as the main gateway to Iraq.
The Kurdistan regional government, KRG, is making the most of its now formalised legislative and political power within the new federal Iraq. This is of course very good news for the Kurdish people but at the same time deeply unsettling for its neighbours whom are, maybe rightly so, concerned that the Kurds are building the fundaments for an independent Kurdistan. The newly appointed regional prime minister Nechirvan Barzani has vowed to "use our constitutional rights for the good of our people in Iraq".
Apart from the rivalling fractions within Iraq this also makes the Turks uneasy whom have never been able to fix their own Kurdish problem, an issue which is also closely watched by the European community. When Saddam was still in power his extremely severe treatment of the Kurds ensured that they could not escape from their position of second hand citizens. With their own government now in power and their resolve to make the best of their newly found freedom, the Kurds are in a winning mood. Draft investment and oil laws are now close to approval. Air traffic to the cities of Irbil and Sulaimaniyah is booming and foreign companies are flying in,in search of business.
The KRG realises that its first priority must be the economy of Iraqi Kurdistan, because in spite of their oil and gas reserves the situation in the Kurdish region for the average citizen is still deplorable.
There is a shortage of almost everything including: fuel, water, electricity and medicine. The Kurds feel a lack of funds from Baghdad is the prime source of their dismal living standards as they are constitutionally entitled to 15% of the capitals budget but claim to only receive approximately 8%. One of the problems the Kurds have faced of lately, is the fact that the new Iraqi constitution still does not provide answers about who controls the countries oil reserves and how they will be distributed.
In the impasse created by the indecisiveness of Baghdad the KRG has very baldly created its own ministry of Natural Resources, which within a few months drafted a regional hydrocarbons law. The first draft led to bitter disputes with the federal government because it included a text stating that the Kurdish hydrocarbon resources were solely for the Kurdish people.
Subsequently however a new draft has been issued, in which the reserves were deemed to belong to all of the people of Iraq. The new draft calls for the control of the oil regionally but the distribution of the revenues will be a task that remains on the federal level.
This seems a dear compromise for the Iraqi Kurdish government but in fact gives them complete control over the oil reserves in their territory. So if you want to drill or refine in Kurdistan you can completely bypass Baghdad from now on. This gives the KRG a lot of leverage with the federal government and will help to boost the regions economy greatly. Influx of foreign investments, structural improvement of logistics and a huge rise in local employment being just a few of the benefits to be harvested for the region.
The battle however is still ongoing over how the system for oil revenue distribution from Baghdad should be organised. Kurdish fears are that the region will be robbed of its fair share of such revenues. Many systems have been discussed but most have been found not transparent enough. The fear of corruption of Baghdad circles is great and rightly so.
History tells us that the Kurds have always been handed the worse deals so now the opportunity arises they are not likely to complete the negotiations without a solid system in place. "The issue of oil must be resolved with Baghdad. It is impossible for us to be at the mercy of Baghdad. We will not except this.
We want all Iraqi oil revenues to go into one account and the mechanisms set up for revenue sharing and then our share goes to the KRG account. We want maximum transparency" says prime minister Barzani.
The system that seems to be preferred by the Kurds is that the oil revenue is divided up according to demographic break-up and distributed through an independently regulated trust account. Ashti Hamrani, the minister of natural recourses of the KRG says "We do not want more, we just want to be certain we get our money".
By stepping up the pace, with their very clever and bold move of starting regional legislation before Baghdad has any federal legislation in place, the Kurds could take a big head start on Baghdad, thus insuring economical growth and stability in the Kurdish region while the rest of the federation is still bickering over the multitude of national and international issues crippling the rebuilding of the federal state of Iraq.