Splitting Iraq: How Likely is an Independent Kurdistan?

This article was originally published by Niqash. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The disputes between Baghdad and Iraqi Kurdistan have led some local politicians to call for the semi-autonomous region to secede from Iraq and become its own country. But, as one Kurdish commentator argues, this is far from realistic. Because now it’s all about money and oil, not politics.

Recently there has been a lot of comment about an independent Iraqi Kurdistan. As tensions between Baghdad and the semi-autonomous, northern state of Iraqi Kurdistan continue, the Kurdish have been playing the “independence card”, with local politicians and commentators airing their views on the subject like never before.

It is no secret that the majority of Kurds, if not in fact, all of them, would love to see an independent Kurdistan. And the easiest way for a Kurdish politician to become popular is to call for an independent state.

Although the Kurdish president, Massoud Barzani, has recently given the impression that he wants to see an independent Iraqi Kurdistan, the political party to which he belongs, the Kurdish Democratic Party (KDP), and the other major political party in the area, the Patriotic Union of Kurdistan (PUK), have so far resisted similar temptations. In fact, most Kurdish politicians are still talking about a “united Iraq” despite Kurdish public opinion against this idea.

And they have a point. If you are a Kurdish politician and you need to maintain diplomatic relations with your neighbours, and if you’re aware of the economic and political realities for Iraqi Kurdistan, then it’s very hard to call for Kurdish independence and really mean it.

It is possible that Iraqi Kurdistan is politically mature enough to be independent – but the region is not ready for such a step in economic or military terms. And it is true that, over time, the political consequences of Kurdish independence have always been considered greater than the economic consequences. But that no longer applies.

A clear example is the Kurdish rebellion against former Iraqi leader Saddam Hussein’s regime in the early 1970s. When Hussein started to become friendly with the Soviet Union, then-US President Richard Nixon began to fund, and encourage, the Kurdish to fight for their independence against Hussein, as part of a strategy to weaken Hussein’s regime and general policy against the USSR. But just as the Kurdish revolutionaries seemed to be succeeding, it became clear that none of the parties supporting the Kurds actually wanted them to win their independence – the ploy was purely political – and support was withdrawn.

Additionally the question of Kurdish independence has always troubled the surrounding countries; none of them have ever wanted a Kurdish State.

But now, given Iraqi Kurdistan’s oil and gas potential and the benefits that could bring surrounding countries in terms of trade, those neighbours have softened their stand on Kurdish independence – and they’re likely to soften even further as trade ties develop.

There are also strong economic overtones to Baghdad’s policy toward Kurdish independence. Baghdad sees the various disputes over revenue sharing, oil contracts and oil exports currently going on between Baghdad and Iraqi Kurdistan as necessary to its centralist agenda. Partially, it is about deterring other Iraqi regions, some of which have suggested the idea, from asking for independence to become a region with autonomy similar to that enjoyed by Iraqi Kurdistan.

Although, given the advanced stage of the oil industry in the Kurdistan region, Baghdad realises that their disputes with Iraqi Kurdistan are unlikely to end in their favour, they still have to send out a clear, centralist-flavoured message. Imagine, for example, if a province like Basra – which currently has most of the Iraqi oil reserves and which has the only access to ocean-going transport – achieved the same kind of independence Iraqi Kurdistan had. Given its strategic position, it might eventually become as powerful as the central government.

Even for the Kurdish themselves, the main question about an independent Kurdistan comes down to economics.

Up until now the economics of independence have always been an afterthought; even the Kurds have subconsciously ignored them. However in modern times, if the petro-dollars from Baghdad stopped flowing and people started to feel the pinch in their pockets, the idea of independence might not look so romantic after all.

This is the reality: Iraqi Kurdistan is land locked; it is dependent upon selling its own natural resources and importing consumables in exchange. Having bad, or no, relations with neighbouring countries is simply not an option for Iraqi Kurdistan.

And Iraqi Kurdistan has been operating like a state within a state, but without the duties of a state.

The Iraqis have continued to send 17 percent of the Iraqi federal budget to the Kurdish (although it was delayed this year). Most of the Iraqi federal budget is generated by oil revenues and currently, most of Iraq’s oil is produced in southern Iraq, in places like Basra. Any northern oil tends to come from the disputed Kirkuk region.

And with this, the federal budget is also swelling – so is Iraqi Kurdistan’s 17 percent share. However due to disagreements over oil policy, revenue sharing and Baghdad’s refusal to pay oil company costs, Iraqi Kurdistan is pursuing its own oil production agenda.

However in Iraqi Kurdistan, this sector is still largely underdeveloped. And, due to this and aforementioned disputes, the state is not contributing as much as it can to Iraq’s oil exports. Which is why many Iraqi politicians have already argued that the Kurdish are getting an unfairly large share of the country’s income even while they’re not contributing as much.

The most obvious move for the Kurdish would be to annex the disputed area of Kirkuk, where much of the northern oil is currently being produced, and get full use of the Kirkuk-Ceyhan pipeline to Turkey’s Mediterranean coast.

The northern Iraqi city of Kirkuk has actually been one of the flash points of the struggle between the Iraqis and the Kurdish over the past few decades. During former Iraqi leader Saddam Hussein’s regime, the Kurdish population was driven out of Kirkuk so that Arab Iraqis could control the oil rich area. Today Kirkuk remains largely Kurdish and the government of Iraqi Kurdistan claims it belongs to them. Although legally it belongs to Baghdad, currently the city is, in fact, under the de-facto control of the Kurdish government.

Even in the unlikely scenario that such an annexation happens, in the short term Iraqi Kurdistan would still struggle to generate as much income as Baghdad sends them. Putting the required infrastructure into place would take time and would need the consent of neighbouring countries, like Turkey.

The economic consequences of losing the over US$11 billion that the Kurdish receive from Iraq would be devastating for the region; the whole economy could implode, which in turn would lead to many political and social problems.

Iraqi Kurdistan has other income streams and income opportunities and the promise of a hydrocarbon pipeline to Turkey offers a life line but in the short term, this income will not be enough to pay salaries in the bloated public sector or to invest in rebuilding the infrastructure, that would eventually lead to growth and an increase in oil and gas production.

In fact it’s disputable whether Kurdish oil production could ever match Baghdad’s current contribution. If Kirkuk and other disputed territories are taken out of the equation, then the amount of oil Iraqi Kurdistan could export may never match up to the 17 percent of the budget that they’re currently getting.

So although many Kurds yearn for independence, when the state’s finances dry up and there are budget cuts, unemployment and a reduction in living standards, those views may well change – and, whatever other faults they may have, almost all Kurdish politicians can see this how this would be extremely unpopular.

An independent Iraqi Kurdistan would not just lose its Baghdad budget, the state would also go from holding some part of the balance of power in the Iraqi parliament – the Kurdish bloc has been referred to as “kingmakers” because the two major opposition blocs have fairly equal numbers in Parliament – to being a small state, surrounded by far larger, far less friendly states in the area.

Should Iraqi Kurdistan secede, it is not even clear whether the international community would recognise the would-be country as a fully fledged nation-state.

In international terms, Kurdish independence would rely heavily on the Iraqi Kurdish relationship with Turkey. In fact, contrary to popular opinion in both Turkey and Iraqi Kurdistan, an independent Kurdistan could benefit Turkey immensely.

Despite historical antipathies (Turkey is still fighting a battle against the Kurdish population within its own borders), Turkey is the most likely nation to support the idea simply because then they would have greater influence over Iraqi Kurdistan – and Iraqi Kurdistan has the potential to become a future, cheap energy source fuelling the booming Turkish economy.

In conclusion, if it comes to a referendum on independence – something that President Barzani has suggested during ongoing disputes with Baghdad – Kurdish politicians would be caught between a rock and a hard place.

On one hand, if they advocate independence, they face not only economic hardship but also regional isolation, a loss of influence in Iraq and increased dependence on the goodwill of both Turkey and Iran.

On the other hand, if they stay part of Iraq, then they must help to build the nation for real and find solutions to outstanding, contentious issues – such as the oil exports and the disputed territories like Kirkuk and Mosul.

Should they decide upon the latter for the time being– and this seems most likely and most sensible option– then Kurdistan can become more of an assertive regional player. Eventually this would give the region a better bargaining power when the statehood, that so many Kurdish long for has more potential to become a reality.