Ankara tightens relations with Erbil to the chagrin of Baghdad

Oil refinery

Kurdistan, the oil-rich semi-autonomous region in northern Iraq, will begin selling oil to Turkey despite vocal objections by the Iraqi government over the contracts’ legitimacy. Turkish-Iraqi relations have suffered as a result. 

Erbil, capital of Kurdish-controlled northern Iraq, is moving towards implementing concrete plans to export the region’s oil and gas reserves to Turkey, which will strengthen its relationship with Ankara and further antagonize Baghdad. The Turkish government is preparing to set up an escrow account at a state-owned Turkish bank to collect proceeds of Kurdish Regional Government (KRG) energy sales. Turkey and Iraqi Kurdistan signed a package of breakthrough contracts last week that will see the semi-autonomous region’s oil and gas shipped to international markets via pipelines through Turkey.

While Ankara-Erbil links are crystallizing, Iraq’s central government is mired in conflict over oil rights. The extent to which Erbil will share oil and gas proceeds with Baghdad is a major point of contention. Kurds believe the national charter gives them free reign, to a point. The Kurdish Regional Government takes 17 percent of the total national proceeds and Baghdad, they contend, gets the rest. Baghdad however believes the central government alone has the authority to govern Iraqi energy contracts.

The Iraqi parliament has yet to adopt an oil-and-gas law that would settle the matter. According to Adnan al-Janabi, chairman of the Iraqi parliament’s oil-and-gas committee, “I don’t think [parliament has] the ability to bring about a consensus for promulgating an oil-and-gas law, and a revenue-sharing agreement, two things that are essential to keeping Iraq together.” An energy deal between Turkey and Kurdistan, says Baghdad, would be “an encroachment on the sovereignty of Iraq.”

Iraq’s central government wants Turkey to support Kurdish exports being made through Iraq’s central State Oil Marketing Organization. On November 27th, Iraq warned Turkey that the impending deal would “seriously harm relations.” Baghdad’s December 1st decision to ban Turkish private planes from flying to Iraq’s autonomous Kurdish region demonstrates that Baghdad is prepared to push back against Turkey’s political maneuverings.

Ankara-Baghdad relations turned frosty in the wake of Iraq’s contentious 2010 election. Ankara supported the secular/Sunni Allawi block which lost out to Nouri al-Maliki’s Shiite party.  As Soner Çağaptay contends, Turkey is uneasy about the potential for a “Shiite axis” along Turkey’s southern border. Fear of Iranian/Shiite influence could, in part, explain Turkey’s efforts to tighten political and economic ties with the predominantly Sunni Kurds of northern Iraq despite the political imbroglio they confront with their own Kurdish population.

Turkey believes Iraq provides the biggest challenge and opportunity in terms of competing with Russia and Ukraine to become a major European energy transit hub. According to International Energy Agency estimates, Iraq is capable of accounting for half of the growth in the world oil market. Oil and gas pumped through Turkey from both Azerbaijan and Iraq would allow Ankara to compete, and would bring Ankara a step closer to the energy security, economic opportunity, and enhanced political clout it so desires.

The agreement between Ankara and Erbil is driving a larger wedge in the already frosty relations between Ankara and Baghdad. Geography and regional circumstances make Ankara’s relationship with Erbil more important than its relationship with Baghdad. Ankara must tread softly, however. An empowered Kurdish region may jeopardize Iraqi stability, introducing greater tensions between an Erbil supported by Turkey and a Baghdad susceptible to Iranian influence.

More on Turkish resource relations from GRI:

Turkey’s EU membership inches forward

Why Kurdish Peace Process Matters for Turkey’s Energy Security

Turkey Key to Future European Energy Security

Advertisements

Tags: , , , , , , ,

Categories: Middle East/North Africa, Natural resources

Author:Eli Lovely

Eli Lovely is an Analyst at Kroll Associates. In 2010, he graduated Phi Beta Kappa from Wheaton College (MA) before earning his M.A. with distinction in Democracy and Governance Studies from Georgetown University in 2013. While in graduate school, Eli worked at the National Democratic Institute and the U.S. Department of State. He has spent over a collective year living in Turkey as a Fulbright Fellow and a recipient of the Critical Language Scholarship. He is primarily interested in issues affecting Turkey and the Southern Caucuses. The views expressed on this site are Mr. Lovely’s and do not necessarily represent Kroll’s positions, strategies or opinions.

Connect

Subscribe to our RSS feed and social profiles to receive updates.

Trackbacks/Pingbacks

  1. Pipeline to Turkey intensifies dispute over Iraqi oil | Global Risk Insights - March 2, 2014

    […] In 2013, the KRG did not pay any oil revenue to the federal Iraqi government. According to KRG, Erbil has the authority to sign energy contracts for fields discovered after the enactment of the Iraqi constitution in 2005. The Iraqi federal government insists that it is the only authority that can govern Iraqi energy contracts. […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: