Erbil-Baghdad Agreement: Deal or No Deal?

But politicians in Baghdad fiercely oppose the KRG’s independent oil exports.

“This is not a practical way. Every country should have only one sale outlet,” Ibrahim Bahrolulum, an Iraqi parliamentarian from the major Shiite bloc of the Iraqi National Alliance, told Al-Monitor. “The existence of multiple sale outlets will harm Iraq and its economy.”

When Kurdistan first initiated major independent oil sales in 2013 and 2014, the Iraqi government embarked on a campaign of lawsuits in different countries where the Kurdish oil was headed, including the United States, to dissuade international clients from buying the Kurdish oil. The lawsuits complicated the KRG’s exports and at least one Greek oil shipper halted the transfer of KRG oil.

However, hesitation on the part of international clients appears to have eased up, according to anonymous Kurdish sources who spoke to Al-Monitor. One source, who did not want to be identified because of the sensitivity of the matter, said he knew of three companies — at least two of which are Europe-based — that have expressed readiness to purchase KRG oil with payments made in advance.

But Bahrolulum warns the KRG that legal measures could follow again if it persists with direct oil sales. “The old scenario could occur again, and this would hamper the sale process in the markets,” said Bahrolulum.

Baghdad’s acceptance of Erbil’s approach will have serious ramifications for Iraq’s domestic situation, as well.

“The Shiite alliance in Baghdad fears that Kurdistan’s practices will encourage Basra to follow suit as well,” Aziz said. “If Basra manages to become a federal region like Kurdistan, then Iraq will be a totally different country.”

The question for many in Iraq is how far Baghdad is willing to go in confronting the KRG over its independent oil exports, given that both sides are locked in a struggle for survival against the powerful enemy that is IS.

(Oil image via Shutterstock)