KRG’s Talking Points on Display in DC

From the Facebook page of the KRG’s Representative in the US.

A high-profile delegation from the Kurdistan Regional Government visited Washington, DC last week. Speaking on behalf of the KRG were: Fuad Hussein, chief of staff to KRG President Massoud Barzani; Natural Resource Minister Ashti Hawrami; Falah Bakir, Director of the KRG’s Foreign Relations Department; and former KRG envoy Qubad Talabani, now Director of the KRG’s Coordination and Follow-Up Department.

The timing of the mission’s visit is telling: it arrived in Washington just weeks before Turkish premiere Recep Tayyip Erdogan is set to visit the White House. The main topic discussed by the delegation—during joint panels and speeches—was Iraqi Kurdistan’s relationship with Turkey. Over the past five years, this relationship has grown rapidly. It constitutes a majority of Iraq-Turkey trade.

Normally, the U.S. would champion prosperity and peace between neighbors who, just years before, were totally at odds over the question of Kurdish independence. But today, U.S. officials worry that Turkey and the KRG are ready to forfeit Iraq’s unity in favor of a comprehensive energy deal. That deal—if signed—would presumably connect Kurdish oil fields to Turkey and world markets. Conventional wisdom dictates that this move would grant the KRG independent oil revenues and enable it to withdraw from Baghdad’s orbit. In the worst-case scenario, the KRG would go its own way; Iraq would become a less diverse rump state with a weaker political opposition.

The KRG came to D.C. to relieve these fears and change minds before Prime Minister Erdogan arrives. Their talking points were sharp and polished. I say this as someone who saw the mission in person at George Washington University and the Atlantic Council on April 8.

Over the course of last week, the delegation met with Deputy National Security Adviser Tony Blinken and Acting Assistant Secretary of State for Near Eastern Affairs Beth Jones. According to an April 16 press release: “The delegation met with Congressional leaders and other key members of Congress, both Democrats and Republicans including the House Majority Leader, Rep. Eric Cantor (R-VA); Rep. Christopher Van Hollen (D-MD); Foreign Affairs Committee chairman, Rep. Ed Royce (R-CA); Intelligence Committee chairman, Mike Rogers (R-MI); Senator John McCain (R-AZ); Senator Roger Wicker (R-MS), as well as members of the Kurdish American Congressional Caucus including its new Democratic co-chair, Rep. Jarred Polis (D-CO).” (For pictures see last week’s entries on the KRG’s Facebook page.)

With this post I want to give readers a sense of how officials are framing the issues and what they’re seeking from the U.S. Much of this blog post is paraphrased unless quotation marks are used. The two events I attended were on-the-record and covered by media outlets so nothing confidential is contained herein. You can find audio and a copy of Hawrami’s prepared remarks on the Council’s website. Also be sure to read his April 14 op-ed for Real Clear World.

The delegation focused on the constitutionality of any future arrangement with Turkey. The KRG believes Iraq’s constitution allows the region to sign a bilateral trade deal with a foreign government without Baghdad’s input. Officials maintain that revenues from oil sales will be divided according to long-standing oil revenue-sharing agreements. Kurdish officials frequently cite a legal finding provided by a British law firm that upholds their claims—and they referenced it in D.C. more than once. Until it is tested in court, however, there is no telling how the argument will hold up if challenged by Baghdad, which has threatened to sue companies that export Kurdish oil.

Iraqi Prime Minister Nouri al-Maliki gives the KRG no choice but to sign these deals and pursue new infrastructure. Maliki represents the greatest threat to Iraqi unity because of his sectarian approach and refusal to apply the constitution. In his remarks at the Atlantic Council, Hawrami, the energy minister, said that the concentration of power for Iraq’s oil sector is unfair: “It’s what it was under Saddam Hussein.” He argued that oil and revenues are key sources of power in Iraq. As such, the U.S. cannot insist that Baghdad has final say on oil deals or export agreements. Maliki has no interest in developing Kurdish oil fields.

The sense of frustration and urgency felt by the Kurds was very real. They want to act now. In order to improve ties between Baghdad and Erbil, the only choice is to change the situation on the ground, and pursue reconciliation after the KRG’s success makes the central government reconsider its hard-line position. This argument makes sense given the long time horizons associated with the oil and gas industry (pipelines take months to build; commercial oil production levels are only achieved after years of surveys and drilling; etc.).

The Kurds want to initiate deals now because other options are no good. They could wait years more for an Iraqi oil law. Or they could wait for Maliki to change his mind or leave office.

Kurdish independence is a “myth,” Hawrami said. For the foreseeable future, the KRG wants its fair share of Iraq’s wealth, as guaranteed by the constitution. Erbil wants a federal system. But a decentralized oil policy is essential to that arrangement, meaning that the Kurds must be allowed to exploit resources and sell oil. A bruising fight over the Iraqi budget earlier this year has only confirmed for the Kurds that they need control over a revenue stream of their own. They cannot trust Maliki and his allies in parliament to produce a fair budget.

Hawrami’s most memorable line was delivered with a smile: “Iraq is a rich country. We want a share of that wealth… If even we have any motive for independence, we will wait until the last drop of Iraqi oil [is pumped and sold]—and then we might do something” (25:00 minute mark). The Kurds don’t want to prematurely cut themselves off when Iraq’s production could double or triple in the coming decades. Kurdistan may contain 45 billion barrels of recoverable oil. Iraq now estimates that the country holds 150 billion barrels total, placing it fifth in the world for proven reserves.

There is another upside to a Turkey-KRG deal and it has to do with Kurdish independence beyond Iraq. Hawrami suggested that the KRG’s dealings with Turkey had actually buoyed Erdogan’s outreach to Kurdish insurgents in his own country. How so? Cooperation with the KRG proved that the Turkish government was reliable; these ties gave the PKK confidence in Ankara’s sincerity.

Washington must adopt a neutral policy instead of backing Baghdad. Supporting Maliki in the name of “Iraqi unity” is a mistake. Supporting the constitution (i.e. the Kurdish reading of it) will prevent the country from fracturing. The Kurds recognize that U.S. influence over Baghdad is limited today. Washington prioritizes Iraqi “stability” above all but it has no real vision or policy for achieving that end, they say. Instead, Washington insists on reconciliation with Maliki, which favors central authority by default. Hawrami said the KRG can’t wait another seven years and do nothing. (Note: Maliki became PM in 2006.) The US approach is “outdated.”

Publicly-traded oil companies operating in the KRG slashed production in December because they could not rely on prompt payment from the central government. The newest Iraqi budget, which Hawrami called a “punishment,” provides only $650 million for operator costs in Kurdish territory, whereas the KRG demanded $3.5 billion. Kurdish oil exports flirted with 200,000 b/d late last year; volumes have since fallen to roughly 50,000 b/d, all of which is trucked across the border into Turkey because the federal government can’t be trusted to ship oil and compensate the Kurds as they see fit.

Looking forward, Hawrami believes the KRG can produce 2 million b/d by the end of the decade, most of which would be exported. A new pipeline like the one being considered by Turkey and the KRG would allow Iraq to sell ~3 million b/d through a northern corridor if the Kurdish and federal pipelines all become fully operational. As a rule, supply diversity is the best guard against energy insecurity. Hawrami mentioned “market stability” as an incentive for a deal with the Turks, something the U.S. can get behind.

Finally, the U.S. should not deter companies from operating in the KRG, the delegation said. The region is no different from anywhere else in Iraq. This goes back to the central theme of neutrality.

Kurdish prosperity will serve Iraq’s interests even if it angers Maliki. Speaking at the Atlantic Council, Hawrami said, “The KRG is confident that once oil export revenues are generated by KRG, and shared constitutionally, then Baghdad will become more reasonable, accepting a constitutional settlement on power and revenue sharing, thus creating lasting stability and unity in Iraq.”*

This kind of success, reinforced by timely transactions, will convince the people of Iraq—not just politicians—that the KRG was right all along. It will change minds and encourage the adoption of the constitution in practice. Kurdistan’s reputation for development and better services may even trickle down to the rest of Iraq, as more and more people ask: what are the Kurds doing right?

Conclusion: It’s hard to tell how successful the KRG mission was. We know who they met with but it’s impossible to tell how receptive their American counterparts were. Jackson Diehl of the Washington Post wrote an approving editorial on April 14 after meeting with at least one member of the delegation. That article ended with Diehl, a critic of Obama’s foreign policy generally, arguing that the U.S. policy towards the KRG was “wrongheaded.” Instead, Washington should encourage what he called Kurdistan’s “renaissance.”

The Kurds made a strong case last week. The rest is up to Erdogan when he raises the issue with Obama next month.

* Note: Revenue sharing is a thornier issue than first glance might suggest. Right now, the two sides disagree on the number and cost of “sovereign expenses,” which have cut the Kurds’ budget share year-on-year from 17 percent to about 10 percent. Might the Kurds push back once they control revenues? Could they retake 17 percent in full or compromise closer to 15 percent? Hawrami told the Associated Press on April 12 that the KRG will return revenues to Baghdad “after it has taken its legal allocation and paid contractors.”)

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