Oil Dispute: Agreeing to Disagree, for now

Views in the Kurdistan region on Baghdad’s position on the recent deals focus on “resolving the crisis.” The recent contracts that were widely understood as a start to a crucial trip of the region’s disintegration from Iraq and declaration of an independent state, are deemed by Kurdish officials who spoke to Al-Monitor as an effort to impose solutions to the years-long financial confusions with Baghdad about the budget, the dues of oil companies and the salaries of the Peshmerga forces, among other issues.

If we take into consideration the recent Kurdish viewpoint and exclude the political nature of the last decades, we find that the region has actually imposed its own mechanisms on Baghdad to resolve its accumulated crises with the central government. This is especially the case considering that the recent agreement with Turkey indicates oil proceeds are deposited in a Turkish governmental bank until an agreement is reached with Baghdad and Erbil.

But the negotiations between Baghdad and Erbil about the region’s budget and the dues of the companies will not be as good as they were before the conclusion of the agreement. Today, the Kurdistan region has imposed different negotiation mechanisms with Baghdad over its budget and its funds.

Apart from the conflicting assessment of the region’s recent step, and away from the accusation of a number of politicians in the Baghdad region of “wasting the wealth” and “disrespecting the constitution,” many questions are raised in this regard.

Was the Iraqi government truly surprised by the recent deal, knowing that news of the Kurdistan-Turkey pipeline broke almost a year ago?

It was most likely not surprised by the recent developments, particularly since it has insisted on not paying dues to oil companies in the 2013 budget. This move has represented a clear threat to Kurdistan’s aspirations to expand its oil production.

Surprisingly, the strict talk by government officials in Baghdad regarding those contracts has decreased, following the Turkish energy minister’s visit, instead taking on the form of an announcement that oil will not be exported without the consent of the oil ministry in Baghdad. This, however, has not taken care of the political situation, to the effect that the Kurdistan region has concluded the contracts alone without referring to the federal government in Baghdad.

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