Foreign Reports Bulletin
Iraqi Prime Minister Nouri al-Maliki visited Irbil, the capital of Iraq’s semi-autonomous Kurdistan region, on June 9. The high-profile trip fulfilled one element of a seven-point agreement reached in Baghdad on April 29 with KRG Prime Minister Nechirvan Barzani. The Kurds and Maliki’s government fiercely disagree on how the constitution defines oil exploration rights and revenues. At times, tensions have nearly spilled over into violence, although neither side is spoiling for a fight.
For Maliki, the June 9 trip was an opportunity to stall the collapse of relations between Baghdad and Irbil, which have deteriorated steadily over the past two years. It also gave him a chance to appear statesmanlike when his authority is challenged by mass Sunni protests, rising violence, and the destabilizing effects of the Syrian crisis next door.
Maliki’s meeting appears to have achieved very little. According to Iraq’s Deputy Prime Minister for Energy, Hussein Shahristani, the two sides did not discuss some very pressing issues like oil exports and payments due to foreign companies operating in the KRG. “No deal has been reached. We have not discussed this issue during our visit to the region,” Shahristani told reporters on June 12. The April 29 agreement made these concerns a top priority.
For two months beginning in March, the Kurds boycotted Parliament and the Cabinet after Maliki rammed through a long-stalled budget that included only $650 million for the operating companies in the KRG. The Kurds insist those companies are owed $3.5 billion. After the April 29 agreement, the PUK (a major Kurdish party to which Iraqi president Jalal Talabani belongs) published a statement saying Iraq’s controversial 2013 budget would be amended. A new version would include payment for oil companies in Kurdistan.
In recent years, the federal budget has been amended in June when oil revenues proved to be higher than expected at the time the original budget was drawn up eight months earlier. Although Maliki did have a one-on-one meeting with KRG President Massoud Barzani when he was in Irbil, Shahristani’s comments suggest that a supplemental budget was not addressed. Follow-up reports have not contradicted official statements.
On June 3, Massoud Barzani warned that the Irbil meeting would be a “last chance” to close the gap between Baghdad and Irbil. “The current round of talks, which started last month, is the last chance to end the dispute that resulted in tensions with Federal Iraq,” Barzani told the press. “We either reach an agreement or we have to think of a new form of relations with Baghdad.” The fluidity of the Irbil-Baghdad relationship is highlighted by two developments.
The first development is—predictably—oil related. The Kurds are readying an East-West pipeline that they say is now being connected to the Fishkabur pumping station on the border with Turkey. This 300,000 b/d converted natural gas pipeline will presumably be tied into the Turkish portion of the Kirkuk-Ceyhan pipeline in the near future. Doing so would allow oil to flow to the Mediterranean port without the KRG’s seeking permission from the federal government.
Turkey, which KRG officials acknowledge is the only viable route for Kurdish oil, seems ready to make it happen, regardless of Iraqi and American opposition. Ankara recently awarded a contract for the cleaning and maintenance of the twin pipelines to Ceyhan, which are both underutilized. One of these lines could be reserved for the transport of Kurdish oil. KRG Minister of Natural Resources Ashti Hawrami says that regional production could reach 250,000 b/d by the end of 2013 and one million b/d by 2015. Irbil plans to sell the oil, pay companies in the KRG, and then adhere to a long-standing agreement that would send 83% of revenues to the central government in Baghdad. The KRG would keep the remaining 17%.
A second development highlights the mistrust that still prevails in some parts of the Iraqi military. The headquarters of the 16th Motorized Brigade of the Iraqi Army and at least two or three of its Kurdish battalions recently defected to Kurdistan’s independent military force, the Peshmerga. Their base is located in contested territory in Salaheddin Province. Arab soldiers serving in the Brigade appear to have melted away. Thanks to its deployment against Sunni protestors to the south and west, Maliki’s Tigris Operations Command has forfeited numerous checkpoints and positions in Kirkuk and Salaheddin Provinces to the Peshmerga.
The Iraqi Army has 55 other brigades in all, while the Tigris Operations Command is in charge of three divisions, each with four brigades and other operational regiments. But a defection of this size is still extremely significant; advances made by Kurdish forces in the absence of Iraqi units are also important because they should prompt an official response.
Tensions Build in 2012
The saga of the 16th Brigade has been ongoing since late April, as reported continuously on Kurdish television and later in Western media. But the issues which led its commanders to switch their allegiance to the Peshmerga probably first arose on November 16 when an incident occurred in Tuz Khurmatu—the dusty town next to the brigade’s base at an old Saddam-era airfield.
U.S. forces converted the airfield to a forward operating base in 2003. The Americans handed over the base to an Iraqi Army commander who happened to be Kurdish in July 2009, pleased that the unit was a mixed one, with both Kurdish and Arab battalions. Tactical cooperation among the Kurdish and Arab battalions was deemed good. But the Americans still had to mediate disputes that arose between the Iraqi Army and the Peshmerga along a fluid line of control.
Accounts vary, but the November 16 incident in Tuz Khurmatu quickly ratcheted up tensions, when a Turkoman bystander was killed and a number of others wounded. Both the Tigris Operations Command and the Peshmerga reinforced their positions along the disputed line of control. The face-off was defused in high-level meetings in Baghdad, attended by the most senior American military official from the U.S. embassy.
Budget Dispute Begins
At about the same time that the stand-off was defused, Deputy PM Shahristani announced that Baghdad would renege on its promise to pay foreign oil companies operating in the KRG. Shahristani said that the KRG had failed to deliver as much oil as it had promised under an agreement reached in September, so the money would be withheld. The Kurds blamed Iraq’s North Oil Company for being unable to take all the oil offered.
Shortly thereafter, the cabinet in Baghdad put forward its proposed budget for 2013, which designated only $650 million for companies operating in the KRG. Those companies were left with no choice but to halt supplies of oil to the federal pipeline because there was no guarantee of payment.
First Sign of Defection
In late April, the commander of the 16th Brigade reportedly refused orders from the Tigris Command Headquarters to intervene against Sunni protestors in a nearby town, Sulaiman Bek. At that point, the commander told Kurdish television that the Brigade wished to be absorbed by the Peshmerga.
Baghdad responded by ordering the Brigade to relocate to a different part of Iraq and eventually announced that it would cut off pay and supplies. The Peshmerga Ministry in Irbil says it stepped in to supply the unit. However, officers in the brigade have since complained to the Kurdish press that the Peshmerga Ministry has yet to pay salaries, which were due at the end of May.
On June 5 the Tigris Operation’s commander, Gen. Abdul Amir Zaidi, sent some units to confront the 16th Brigade, but ultimately withdrew them. The Kurds have long accused Zaidi of playing a role in Saddam’s brutal Anfal campaign that killed thousands of Kurds in the late 1980s. He denies the charge but admits he was an officer in the division that carried out the campaign.
Iraqi Army Distracted Elsewhere
In their Washington Post report dated June 10, Ben Van Heuvelen and Patrick Osgood quoted an anonymous official in the Peshmerga Ministry speaking about how Iraqi Army had shifted forces and abandoned checkpoints in disputed territories because tensions in Sunni areas forced them to move further south. “If we had to fight for that much ground, we would have lost a thousand soldiers,” the senior official said. “But because the Iraqi army ran away, we just drove there.”
The Kurds insist that the only way they can get Maliki to negotiate in good faith is by having an independent export route. Maliki has shown no signs of budging so far.
Foreign Reports is a Washington, D.C.-based consulting firm that writes and distributes timely intelligence reports on political developments in the Middle East relevant to oil markets. Oil companies, governments, and financial institutions rely on Foreign Reports for their insight and analysis on key issues affecting the world generally and the Middle East specifically. The firm was founded in 1956 and the current President is Nathaniel Kern.