Iran’s Pipeline Politics reaches Iraqi Kurdistan

As far as the payment issue is concerned, Tehran can offer two distinct scenarios to ease the tensions. On the one side, Tehran could purchase the oil flowing through the KRG pipeline and pay both Erbil and Baghdad directly, or it could enter into a swap deal and just allocate the same amount of oil to customers of Kurdish or Iraqi oil. In both cases Iran would earn a transit fee as well as benefit from the fact that it would reduce the amount of oil that has to be pumped to the northern refineries.

Beyond geostrategic and economic benefits, the planned project would also help the Iranian government alleviate an existing issue, the relatively low level of infrastructure development in the Iranian province of Kurdistan. In fact, Kurdistan province has historically suffered from a lack of investment and any infrastructure project would create new capacities and also benefit Iran’s internal cohesion. Though one can argue that there has been a greater effort by the Iranian central government to invest in the Kurdistan province, there is still room for further investment.

Experience has shown that in Iran, projects that have an economic as well as a geostrategic and an internal political justification will materialize, even though they initially face resistance from various corners for political and economic reasons. The planned KRG-Iran pipeline is such a project, and there are good reasons to believe that it will materialize.

Once it is in place, one can expect a greater degree of interaction between the KRG and Iran, which should also benefit the economic and regional development of Iran’s Kurdistan province. It remains to be seen whether the other key decision-makers, especially in Erbil and Baghdad, will facilitate the implementation of this significant undertaking.