Iraqi Government and Kurds Reach Deal to Share Oil Revenues

By Tim Arango. NYT

BAGHDAD — The Iraqi government agreed Tuesday to a long-term accord with the autonomous Kurdish region to share the country’s oil wealth and military resources in a far-reaching deal that helps reunite the country in the face of a bitter war with Islamic extremists.

The deal settles a long dispute between Baghdad and Erbil, the Kurdish capital in the north, over oil revenue and budget payments. It is also likely to halt a drive — at least in the short term — by the Kurds for an independent state, which appeared imminent this summer after a violent territory grab by the Islamic State, also known as ISIS or ISIL.

As the jihadists marched toward Baghdad in June, routing Iraqi Army forces, the Kurds took control of Kirkuk and its rich oil fields. And they intensified efforts to market Kurdish oil independently, arguing that the government had withheld payments to Kurdistan that were badly needed to keep up the fight against the Islamic State in the army’s absence.

In reaching a deal, Mr. Abadi, who has been prime minister for less than three months, has further distanced his government from a legacy of bitter sectarian and ethnic division under his predecessor, Nuri Kamal al-Maliki. As the prime minister, Mr. Maliki deeply alienated the Kurds and enraged Iraq’s Sunni Arab minority with his confrontational personality and policies that were seen as exclusive and abusive.

“The new team, under Abadi, is a cooperative team, a positive team,” said Mr. Zebari, a Kurdish politician who was Iraq’s foreign minister in the Maliki government.

With relations with Kurds now nominally mended, Mr. Abadi’s Shiite-led government faces a tougher task, but a critical one, in reaching an accommodation with the Sunnis. Relations had grown so hostile in recent years that many Iraqi Sunnis welcomed Islamic State jihadists as their defenders against the government and the Iranian-backed Shiite militias allied with it.

Reconciling Sunnis with the central government is widely seen as an essential step to retaking land from the Islamic State. Mr. Abadi has backed a plan, supported by the United States, to set up local National Guard forces that would fight alongside the Iraqi Army. But that plan has stalled, as have intermediate steps to arm Sunni tribes in the face of opposition by some Shiite factions. Those factions worry that the government would be raising a Sunni army that could then turn on the Shiites.

The oil deal, which put a final imprimatur on a temporary pact that was agreed to three weeks ago, also represented a significant victory for the United States, which has made a priority of pushing the Kurds and the central government to settle their political and economic differences.

American officials had expressed fear that if the two parties did not reach an arrangement, the country would break up, with the Kurds pushing forward on longstanding ambitions for independence.

On Tuesday, Secretary of State John Kerry, who was attending a NATO conference in Brussels along with Mr. Abadi, praised the agreement. “This has been a long time in coming, and it is a very significant step forward,” Mr. Kerry said.

The deal also appeared to be a blow to the ambitions of Turkey, which had positioned itself as the savior of the Kurds by reaching deals during the impasse of the Maliki years in which the Kurds would export their oil and gas unilaterally through Turkey. Those agreements were considered illegal by Baghdad and the United States, and in recent months, tankers filled with Kurdish oil loaded at a Turkish port were sailing the seas, unable to dock anywhere because potential buyers worried about lawsuits.


Under the deal between the central government and the Kurds, the Kirkuk region will provide 300,000 barrels of oil a day, with proceeds to be divided equally.CreditAndrea Bruce for The New York Times

The rapprochement between Baghdad and the autonomous Kurdish region also appeared to validate one element of President Obama’s strategy in confronting the Islamic State: the push for a more inclusive leader of Iraq. When the extremists swept into Mosul, Mr. Obama decided that Mr. Maliki had to go before the United States would ramp up its military efforts against the Islamic State.

After protracted negotiations and high political drama over the summer, with the United States and Iran playing major roles, Mr. Maliki was replaced by Mr. Abadi.

So far, Mr. Abadi has proved to be a more inclusive figure than Mr. Maliki, in style and substance. He has removed corrupt officials and military officers who were seen as loyalists to Mr. Maliki, and has reached out to Sunni Arab countries like Saudi Arabia that have historically been hostile to the Shiite-led government here. He has even reduced his salary and those of his ministers, in a bow to public anger over the compensation for lawmakers.

But by far, his biggest victory to date is the deal with the Kurds, which establishes what Kurdish officials see as a more equitable split of oil revenue and officially brings Kurdish oil operations back under the auspices of the central government.

  1. Mr. Abadi’s office released a statement Tuesday underscoring a simple philosophy at the heart of the complicated negotiations: “that Iraqi oil belongs to all Iraqis.”

Under the deal, the Kurdistan region will provide 550,000 barrels of oil a day that will be sold through government channels, with the proceeds divided between Baghdad and Erbil. This includes 300,000 barrels a day from the disputed region of Kirkuk, which the Kurds took control over in June after the onslaught by the Islamic State forced the retreat of Iraq’s Army.

At a time when oil revenue is so critical to Iraq, the unlocking of those oil shipments may actually have a temporarily negative effect for the country as a whole: With prices recently hitting a five-year low, adding more Iraqi oil to a glutted market may drive them down even further, industry experts say.

The deal signed Tuesday also stipulates that Baghdad will permanently resume payments to the region — which had been halted under Mr. Maliki — that amount to 17 percent of the national budget, and another $1 billion to pay for salaries and weapons for the pesh merga, who are on the front lines fighting ISIS, sometimes with Iraqi security forces and Shiite militias.

In a news conference here Tuesday, Nechirvan Barzani, the Kurdish region’s prime minister, alluded to the tensions of the Maliki era and praised Mr. Abadi.

“Abadi’s desire to reach an agreement was motivational,” he said. “We hope to turn this into a new chapter in the relations between Baghdad and Erbil, and we never accepted the threatening tone which was commonly used before.”

December 3, 2014 | 1 Comment »

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