Turkey and KRG insist on oil trade

Prime Minister Recep Tayyip Erdoğan and his Iraqi Kurdish colleague Nechervan Barzani discussed at length late Saturday the current political situation in Iraq and the deadlock over the energy dispute between the KRG and the central government in Baghdad and concluded that a solution can only be expected after the April 30 elections that will probably put Prime Minister Nouri al Maliki back in power.

The Iraqi Kurds are financially hard pressed as Maliki is delaying payment of oil revenue shares for the KRG in a bid to pressure the Kurds to avoid following a more independent energy policy. The tension between Baghdad and the KRG further increased last year after Turkey agreed to help the KRG build its own infrastructure to export oil produced in the northern territories. Sources close to Barzani told Daily Sabah that for three months the central government did not send any monthly oil revenue payments to the KRG, thus creating a serious crisis where 68 percent of the budget goes to civil servants pay. The sources said recently that the Maliki administration is probably under pressure from the Americans to deliver $580 million of these funds, which is about one third of what Baghdad owes to the Kurds.

Turkey feels that the pressure on the KRG is only alienating the Iraqi Kurds and strengthening calls for the declaration of a separate Kurdish state, and thus by helping the Kurds overcome their current problems Ankara is encouraging them to remain in the Iraqi fold.
Maliki, who has been at odds with Turkey both over this issue and Ankara's support of the opposition forces that were against him in the previous election, accuses Turkey of plundering Iraqi energy resources through the Kurds.

Iraq and Turkey have a twin pipeline that carries Kirkuk oil to Turkey's Mediterranean oil terminal off Ceyhan. The Iraqi Kurds have built their own pipeline as part of their new infrastructure to export their own oil. Baghdad says this pipeline cannot be operated without its consent and threatens legal action against Turkey and also cut the oil revenue funds for the KRG. Meanwhile, Turkey allows Kurdish crude oil to be transported to Ceyhan by trucks where the oil is stored for eventual sale.

Meanwhile, there are reports that the U.S. is unhappy with these developments. The American objections center on two reasons. One is the fact that the U.S. feels that by allowing Kurds to sell Iraqi oil independently not only is Maliki being further antagonized but also the KRG may be encouraged to split from Baghdad and go its own way and that this is unacceptable for the sake of regional stability. The second is the fact that any oil sold through Turkey would go to Turkish banks rather than the "secured" special development fund account in New York.

Experts explained that the Saddam administration owed huge amounts of money in the world and with the protected fund 5 percent of Iraqi oil revenues go to Gulf War reparations and then the rest can be used by the Maliki administration without fear of being legally confiscated by third parties for Iraq's old debts.

Nechirvan Barzani met with Erdoğan in Istanbul on Feb. 15 and after that flew to Baghdad to seek a solution to the energy deadlock.
However, it seems Maliki is not in the mood to accommodate the Kurds for the time being.

According to close aides of Nechervan Barzani, he explained in his analysis of the political situation in Iraq to Erdoğan that Maliki has maintained his political strength among Iraqi Shiite voters and is set to win a majority of the Shiite votes that will make him again the leading candidate for prime minister. However, he will not have a majority in parliament and will again have to set up a coalition with the Sunnis and Kurds where he will be required to make concessions on the energy issue. However, this too could be a long process as it took eight months for the coalition to be set up after the last elections.

Thus it seems the Kurds will have to continue enduring more financial hardships and Ankara will make every effort to ease their pain in the months to come. Prime Minister Erdoğan has told Barzani that Ankara will continue to support the KRG no matter what decision it takes in its dealings with Baghdad.