Thursday, December 01, 2005

This Is The Way Iraq Ends, Not With A Bang But A Driller

Back when the draft of the Iraqi Constitution was released in September 2005, and again when it was approved about a month later, I warned that the document contained provisions that would work to splinter the country. The main concerns had to do with the devolvement of power away from the central government and to the semi-autonomous regions. In this context, there were indications that the oil industry would be governed by these regions at the expense of the central government and those areas not awash in oil. This would disparately impact the Sunnis (located in oil-poor regions) to the benefit of the Shiites and Kurds (owners of the prime real estate). Here is part of what I said back then:

Within the text of the draft of the constitution is written the means by which the Kurds and Shiites will maintain control of, and reap the windfall from, Iraq's rich deposits of oil. The text provides for uneven distribution of profits based on regional contributions of resources and population concentrations, as well as ostensibly "temporary" quotas on the disbursement of funds from oil proceeds to pay for past wrongs (read: the Shiites and Kurds get more money from oil because they control the productive regions and suffered grievously under Saddam). In addition, there are apparent mechanisms for creating near-autonomous regions - most likely delineated along ethnic or sectarian lines with the Kurds in the north and the Shiites in the South (the two oil rich areas).
It didn't take long for the tinderbox to find a spark. The LA Times is reporting today (via Juan Cole):

A controversial oil exploration deal between Iraq's autonomy-minded Kurds and a Norwegian company got underway this week without the approval of the central government here, raising a potentially explosive issue at a time of heightened ethnic and sectarian tensions.[...]

Drilling began after a ceremony Tuesday, during which Nechirvan Barzani, prime minister of the Kurdish northern region, vowed "there is no way Kurdistan would accept that the central government will control our resources," according to news agency reports.
The Iraqi central government reacted with alarm, as did the Sunni representatives, and there is likely concern amongst some of Iraq's neighbors.

The start of drilling, called "spudding" in the oil business, is sure to be worrisome to Iraq's Sunni Arab minority. They fear a disintegration of Iraq into separate ethnic and religious cantons if regions begin to cut energy deals with foreign companies and governments. Sunnis are concentrated in Iraq's most oil-poor region.

Iraq's neighbors also fear the possibility of Iraqi Kurds using revenue generated by oil wells to fund an independent state that might lead the roughly 20 million Kurds living in Turkey, Iran and Syria to revolt.
Then again, the Turks seem to be gearing up to take advantage of the Kurds' independent pursuit of business partners.

The eastern administrative half of the Kurdish region also is rushing to sign energy deals with foreign companies without Baghdad's approval. The government of the Patriotic Union of Kurdistan, based in the city of Sulaymaniya, has signed an electricity agreement with a Turkish company and explored a possible oil deal with a foreign partnership near the city of Chamchamal, the site of several dormant oil wells.
As predicted, the ambiguity and structural flaws in the constitution are being exploited. There is little, unfortunately, that the central government can do. Or at least the Kurds will have enough room to argue their case and create a de facto realization of their intentions.

Iraq's draft constitution, approved in an Oct. 15 national referendum, stipulates that "the federal government with the producing regional and governorate governments shall together formulate" energy policy. However, it also makes ambiguous reference to providing compensation for "damaged regions that were unjustly deprived by the former regime."

Iraq's Kurds have argued that the country's existing oil fields and infrastructure, such as those in the largely Kurdish cities of Kirkuk and Khanaqin, should be divvied up by the central government but that future oil discoveries should be controlled by each oil-producing region.

In his speech Tuesday, Barzani, the nephew of Kurdish politician and former guerrilla leader Massoud Barzani, eschewed the language of the law and couched the deal in political terms. He invoked the Kurds' years of deprivation at the hands of the Sunni Arab-dominated government of Saddam Hussein.[...]

The language in the constitution regarding the power of regions to pen such contracts was a major reason that the vast majority of Sunnis voted against the charter in October.[...]

...Helge Eide, managing director of Oslo-based DNO, said he believed Iraq's new constitution gave the Kurdish north jurisdiction over certain drilling and oil exploration activities.

"That was clearly pointed out by Mr. [Nechirvan] Barzani," said Eide, who attended the Zakho ceremony.
With the Kurds busy tending to their own garden of petroleum, I don't expect the Shiite regions in the south to sit idly by and let all decisions run through the central government (unless their control is solidified therein). If the Kurds begin to consolidate economic interests on their own, and the Shiites respond in kind, where will that leave the Sunnis - stuck in the middle with no oil to speak of? This is a recipe for fragmentation and ongoing violence. It is one of the main reasons that I argued that a vote against the constitutional draft on October 15 would have been the better of two bad options. Unfortunately, the Bush administration was so overly concerned with "non-artificial" timetables that the passage of the draft (at all costs) took precedence over the document's utility as an enabler of a national accord. The result was predictable, if tragic. This does not bode well.

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