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October 25, 2006

Kurdistan Oil Troubles
Begin to Surface


by Jim Lobe

ARBIL - Through a steadily worsening security situation and deepening political divisions, a dispute is now erupting between Kurdish leaders and the Baghdad regime over access to oil resources.

Kurdish authorities and the federal government in Baghdad have exchanged sharply worded statements recently in their rival claims for control over northern oil fields. The row is expected to intensify after the Kurdistan regional government (KRG) in charge of the three northern provinces Arbil, Sulaimaniya, and Dohuk presents an oil bill to the regional parliament.

This would then be a basis of claims from the federal government, and an assertion of rights over oil in the north.

In an attempt to calm this growing confrontation U.S. Secretary of State Condoleezza Rice urged Kurdish leaders on her last visit to Kurdistan to make concessions to Baghdad on distribution of oil revenues.

Kurdish leaders agreed to share an unspecified portion of their revenues with Baghdad, but they say they will not hand over control of oil wells to the Iraqi oil ministry.

"We have not made any concessions, and the KRG has constitutionally the right to exploit the oil wealth in areas under its control," Dler Shaways, head of the economic and financial committee of the Kurdistan Parliament in Arbil, told IPS. "It is part of the characteristics of federal systems that regions can govern themselves and control their revenues."

Accusing federal authorities of adopting "a colonialist approach in dealing with Kurdistan," Shaways said "the regimes in Baghdad have so far used our oil wealth to buy bombs and destroy the country with it."

Disputes emerged first in December last year when the KRG officially declared the discovery of oil in the northern town Zakho by a small Norwegian firm.

Such oil explorations in the north have led Iraq's Shia Oil Minister Hussein al-Shahristani to declare that his ministry "isn't committed to oil investment contracts signed in the past … by officials of the government of the Kurdistan region."

The Kurdish government in turn held out options other than coexistence with the federal government if it refused to recognize its authority over oil wealth in the north.

Over the course of the past three years, since the U.S.-led invasion of Iraq, the Kurdish government has signed three production-sharing deals. These are with the Turkish companies Petoil in April 2003 and Genel Enerji in January 2004, and recently the Canadian company Western Oil Sands.

Much of the disagreement over oil management and revenue distribution has emanated from ambiguities in the text of the national constitution.

The constitution gives ownership of oil and gas resources to Iraqi people, but stipulates that "the federal government, with the producing governorates and regional governments, shall undertake the management of oil and gas extracted from present fields."

The phrase "present fields" has been interpreted by Kurdish officials as those that are producing oil already, not new fields.

Many see the oil dispute as a major battle of self-assertion for the Kurdish and Iraqi governments. Baghdad fears that Kurds' control of their oil wealth will give them powers challenging the central government's domain of influence.

Sunni Arabs, who constitute the core of insurgency against the U.S. and Iraqi government, are afraid that the Kurdish example would inspire Shias to follow a similar path in their southern oil-rich regions, and leave their oil-barren central region impoverished.

As squabbling over oil increases, what many Iraqis want is only an end to the fuel shortage they have been facing for years.

Abdullah Razwan, 32, a government employee from Arbil, is not interested in the dispute. Stopping every now and then to wipe the sweat off his face as he rolled an empty barrel to a kerosene tanker, he said the oil controversy is all politics.

"When I cannot get a barrel of oil easily without paying the whole of my monthly salary for it, what difference can it make in my life who controls the oil?"


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  • Jim Lobe, works as Inter Press Service's correspondent in the Washington, D.C., bureau. He has followed the ups and downs of neo-conservatives since well before their rise in the aftermath of the September 11, 2001 attacks.

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