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.