Revenge of the Kurds

The mood in Erbil, Sulaymaniyah, and Dohuk -- the three largest cities in Iraqi Kurdistan -- is newly buoyant these days, and with good reason. Iraq's Kurds, who occupy the semiautonomous region run by the Kurdistan Regional Government (KRG), have much to celebrate. They enjoy relative peace and stability compared with the rest of the country, boast a moderately open society, and, over the past year, have received a whopping vote of confidence in their nascent economy from some of the world's largest oil companies, including ExxonMobil, Chevron, Total, and Gazprom, all of which have signed exploration contracts with the KRG. Not only is Iraqi Kurdistan undergoing an unprecedented building boom, but its people are now articulating a once-unthinkable notion: that the day they will break free from the rest of Iraq is nigh.

As the Kurds press forward, they are growing increasingly estranged from the government of Iraqi Prime Minister Nouri al-Maliki; personal relations between Maliki and the Kurdish regional president, Massoud Barzani, have reached an all-time low, keeping them from resolving critical disputes over power, territory, and resources. This past June, Barzani and other opponents of Maliki tried to oust the prime minister through a vote of no confidence, and although they failed to do so, their ambition remains very much alive. 

The Kurds are victims of history, geo-graphy, and, on the occasions they overreach, their own ambitions. For almost a century, they have struggled to free themselves from central control and to overcome their landlocked location. Today, a rapidly changing region is presenting them with new allies and fresh opportunities. Yet there is good reason to think that the Kurds will have to defer their quest for statehood once again, at most trading Baghdad's suffocating embrace for a more amenable dependence on Turkey. 

DREAMS DEFERRED

The Kurds' troubles started almost a century ago. When the Ottoman Empire was carved up after World War I, the Kurds, who had constituted a major ethnic group within that empire, were divided among Turkey, Iran, Syria (under a French mandate), and Iraq (under a British one). The new rump Turkey determined that it could not afford to have an autonomous, much less independent, Kurdistan on its eastern flank, so it worked hard to keep most of the Kurdish homeland under its direct control. 

Great-power wrangling offered the Kurds a brief moment of hope in 1920, when the Allied powers sealed the Ottoman Empire's fate with the Treaty of Sèvres. That pact provided for the possibility of full Kurdish independence following a period of autonomy. But the treaty was never ratified, and three years later it was replaced by the Treaty of Lausanne, which made no mention of the Kurds. The new Turkish republic was forced to cede most of what is now northern Iraq to the United Kingdom's new Iraqi state in 1926. To this day, the Kurds feel deeply betrayed by the victorious powers that abandoned them during the postwar free-for-all.

In the decades that followed World War I, the Kurdish quest for statehood was suppressed, often violently. Whenever Iraq's central government was weak as a result of internal turmoil -- for example, during the 1958 overthrow of the monarchy, the 1968 Baathist coup, or the 1980-88 Iran-Iraq War -- the Kurds pressed forward. And whenever they forged deals with Baghdad, they were quickly put back in their place by counterinsurgency offensives that killed thousands and left their villages in ruins. The worst came in the waning days of Iraq's conflict with Iran, when Saddam Hussein's regime employed poison gas against Kurdish fighters and civilians and unleashed a genocidal campaign, known as the Anfal, in which tens of thousands were systematically murdered.

The Kurds caught a break in 1991, in the aftermath of the Gulf War. U.S. President George H. W. Bush had encouraged the Kurds and the Shiites to take up arms against Saddam but never lent U.S. military support to their cause. When Saddam brutally suppressed the resulting uprising, the Gulf War allies imposed a no-fly zone and established a safe haven in northern Iraq, giving the Kurds international protection for the first time. 

It proved to be their first real window of opportunity, and they quickly took advantage of it. In 1992, with international help, the Kurds organized parliamentary elections, reviving the autonomous legislature that the Baathist regime had authorized in its early days, and set up a modicum of self-government. The project was an uphill battle: the Kurds suffered an internecine conflict between their two major political parties, they controlled a landlocked territory, and the neighbor they depended on most as an outlet to the world, Turkey, feared that the Iraqi Kurds' experiment with self-rule would inspire its own Kurdish minority. The Turkish government placed a de facto embargo on the region, permitting only humanitarian aid to pass through its border, not the resources the Kurds needed to rebuild their devastated society.

When the United States invaded Iraq in 2003, another window opened for the Kurds. With Saddam's regime gone, the Iraqi Kurds, along with returning Iraqi exiles, had the rare chance to forge a new Iraq: democratic, pluralistic, and decentralized. The experiment worked for a brief while, but the United States' inexperience in state building, cultural ignorance, heavy-handed management, and high turnover in personnel got in the way. These factors produced a profoundly dysfunctional political and constitutional transition, which eventually drove the Kurds away from the central government, even as their newfound influence enabled them to occupy some of its most senior positions: since 2006, Iraq's president, one of its deputy prime ministers, its foreign minister, and its army chief of staff have all been Kurds. 

During the transition, the Kurds made it clear that they would stay committed to the new Iraq only if it was federal and democratic and only if it treated them as full partners, not as a minority to be kept pacified in a semiautonomous region. What they got instead was a regime in Baghdad that in some respects looked much like Saddam's. The new government had all the nepotism of the old one, mutual distrust and fear continued to contaminate politics, the state remained profoundly centralized, and many ordinary citizens seemed to accept a measure of authoritarian rule as the price of stability. The region the Kurds controlled may have suffered from many of the same flaws, but this was not the kind of Iraq they wanted to be a part of.

Instead, their real aspiration remained to build an independent Kurdistan. And so even as the Kurds assumed an active role in the new Iraqi enterprise, they began quietly laying the foundations for a future state of their own, including helping draft Iraq's new, permanent constitution, which gave them significant autonomy. Then, in 2005, the Sunni-Shiite street war erupted, which further diminished the appeal of involvement in Baghdad. So did the subsequent rise of Maliki, who became more and more autocratic and locked horns with the Kurds over a range of issues. Momentum for an independent Kurdistan accelerated.

From the Kurdish perspective, things took another turn for the worse in 2007, with the "surge" of U.S. troops. As part of its renewed commitment to making things work in Iraq, the United States began empowering Sunni Arabs to stand up to the insurgents and pressed the Kurds into power-sharing deals with the very people they had accused of ethnic cleansing during the Saddam era. Washington's position was that the Kurds should help preserve Iraqi unity by learning to work with the government in Baghdad. The Kurds went through the motions but continued working toward independence. They supported legislation, both in Baghdad and in the Kurdish region, that threatened to further weaken central control, especially with respect to federal arrangements for other provinces and, most importantly, oil.

PETRO-POLITICS

As they progressively gave up on the idea of a unified Iraq, the Kurds began exploiting their most promising asset: the vast reserves of crude oil and natural gas that lie beneath their territory. In 2007, after negotiations with Baghdad over a federal oil and gas law broke down, Iraqi Kurdistan started developing its own hydrocarbon sector in defiance of the federal government. Some small wildcatters had already begun exploring there, but now the region was starting to attract medium-sized companies from around the world, including U.S. ones, such as Hunt Oil, HKN, Marathon Oil, Murphy Oil, and Hess. Baghdad challenged the KRG's right to sign independent contracts with oil companies that wanted to start prospecting in Kurdistan and took issue with the KRG's quest to incorporate disputed oil- and gas-rich territories into the Kurdish region, especially the province of Kirkuk. Although the two sides agreed on the principle of revenue sharing, the Kurds insisted on the right to sign contracts, seeking an independent income stream to get around an unreliable and sometimes even hostile Baghdad. Moreover, the presence of major oil fields could provide the region with the sort of economic leverage that would enable statehood down the road.

Even as their relationship with Baghdad frayed, the Kurds remained thoroughly dependent on the central government, receiving a 17 percent share of the federal budget annually, the bulk of which they spent on public-sector salaries. Moreover, as some oil fields reached the point of production, the Kurds faced the reality that, for now at least, the only way to get their product to market was to send it through an existing pipeline that ran outside the Kurdish region's boundaries, from the city of Kirkuk to the Turkish Mediterranean port of Ceyhan. In other words, they would need Baghdad's consent to sell their most valuable export. But even though the income from the oil would accrue to the national treasury, the Maliki government rejected not only the KRG's right to sign contracts but also the nature of the contracts, which gave the signing companies a share of the oil. 

In 2009, with both needing revenues as global oil prices plummeted, the two sides reached an interim agreement, and the Kurds started pumping oil through the Iraqi pipeline. So began a period of stop-and-go progress on the oil issue. The first deal lasted for only a few months, unraveling as the Kurds faced financial pressure from the producing companies seeking to recover their costs, which Baghdad said the KRG should pay from its own annual federal budget allocation. A year later, as Kurdistan's production potential increased, Baghdad and the KRG struck a new deal under which the Kurds would produce 100,000 barrels a day in 2011 (and 175,000 a day in 2012) and the federal government would compensate the producing companies for their investments. But this arrangement also proved short-lived, breaking down over a dispute concerning the oil companies' expense receipts.

That latest fight proved the final straw for the KRG. This past April, at the same time as opposition to Maliki's autocratic style was growing, the KRG suspended oil exports through the Iraqi pipeline. (Private Kurdish traders continued to truck fuel oil into Iran, however, providing some revenue to the KRG.) Shortly afterward, Barzani hosted a meeting of Maliki's opponents, all nominal partners in the coalition government. Their intent was to unseat the prime minister through a vote of no confidence if he continued to renege on the power-sharing promises he had made when he formed his government at the end of 2010, after being elected to a second term.

Barzani apparently believed he had the upper hand. ExxonMobil had signed an exploration contract with the KRG in October 2011 -- the first major oil company to do so -- in a move that infuriated the Maliki government, which threatened the company with sanctions. Although the Kurds have yet to find an easy way to export their oil, ExxonMobil's arrival gave them renewed confidence and bolstered their argument that billions of barrels of marketable oil cannot be kept bottled up; their sheer value would force Baghdad to agree to an export deal. Moreover, Turkey was increasingly presenting itself as a potential buyer of Kurdish crude, even suggesting that it would be prepared to bypass Baghdad once the requisite pipelines existed. Relations between Maliki and Turkish Prime Minister Recep Tayyip Erdogan, already frayed over Iraq's support for the Syrian regime against the ongoing uprising, took another hit.

The Kurds had overreached, however. They failed to dethrone Maliki, who enjoyed the tacit support of both Iran and the United States. And they discovered that the federal government, which was producing more barrels of oil per day by July 2012 than at any time in the previous ten years, would not budge on the question of payments to the oil companies. As punishment, Maliki threatened to reduce the KRG's budget allocation by the amount of money the central government was losing to the Kurds' oil export boycott and private trading of fuel oil to Iran. By early August, the Obama administration, concerned that reduced oil exports from Iraq could push up gasoline prices, was pressuring the Kurds to end their stand. Without winning any concessions on payments to the oil companies from Baghdad, the KRG caved and reopened the valves. By mid-September, the two sides had reaffirmed their original deal, but this hardly extracted the KRG from the situation it had been hoping to escape by exploiting the region's hydrocarbon wealth: it remains financially dependent on a federal government that, for now, holds the better cards.

TURKEY'S TURN

Relations between Barzani and Maliki are unlikely to improve, and the Kurdish leader is increasingly looking to Turkey for salvation, despite that country's own dismal record on Kurdish rights. Although Turkey has long supported Iraq's territorial unity as a barrier against Iranian influence and as a check against secessionist impulses among its own Kurdish population, the Erdogan government has recently begun to shift strategies. Since 2008, it has forged a close economic bond with the KRG by opening its border and encouraging Turkish investments in the Kurdish region, and its relations with Baghdad have deteriorated due to Maliki's authoritarian turn and the growing perception in Ankara that Maliki is serving as a proxy for Iran.

The question is how far Turkish leaders will go -- whether they will be prepared to abandon their Plan A, reinforcing a unified Iraq, for Plan B, linking up with entities estranged from Baghdad, such as the Kurds and the largely Sunni provinces in northern Iraq, at the risk of breaking up Iraq. Already, the rhetoric in Ankara has changed. Officials no longer refer to Iraq's unity as a sine qua non; now, it is a "preference." And Erdogan is said to have promised Barzani that Turkish forces will protect the Kurdish region in the event of a military assault from Baghdad. Even if the unannounced visit that Turkish Foreign Minister Ahmet Davutoglu made to the contested city of Kirkuk in August wasn't meant to signal support for the Kurds' territorial claims in Iraq, Baghdad's furious reaction showed that it was received that way. Maliki has announced plans to establish a new military headquarters in Kirkuk, and there are other unsettling signs of the city's growing militarization. Barzani, for his part, is offering Turkey powerful incentives to turn away from Baghdad: a regular flow of more than one million barrels of oil a day through a set of direct pipelines now under construction, a stable Sunni Kurdish buffer on Turkey's southeastern border against Maliki's Shiite-dominated government, and the KRG's help in blocking Kurdish rebels from expanding into Kurdish areas of Syria. 

For Turkey, however, the risks of throwing its support behind Iraq's Kurds would be enormous. A disintegrating Iraq would strengthen Iran's quest for regional dominance, and an independent Iraqi Kurdistan would further empower Turkey's own Kurdish minority. Turkish leaders face a serious dilemma. They cannot predict the outcome of the crisis in Syria or to what extent Kurds throughout the four countries they inhabit will be empowered by it. Turkey urgently needs access to Iraq's energy resources, and as long as its relations with Baghdad remain in the doldrums, Ankara appears ready to buy oil directly from the Kurds without a green light from the Maliki government. Such a move would help the Kurdish region gain more autonomy from Baghdad and give it leverage over Ankara, but it will not produce a state. In the end, the Kurds will remain stuck in Iraq, but more and more on their own terms. Given their troubled history, this is serious progress, and it offers a foundation on which to build something even better.