On Tuesday, two major developments took place to the south of Turkey which will reshape the political and economic future of the region. Iraqi federal forces took over the oil fields in the city of Kirkuk from the Kurdistan Regional Government (KRG) and Daesh was all but defeated in their self-proclaimed "capital city" of Raqqa. While the collapse of Raqqa and the annihilation of Daesh was a long time coming, the Iraqi government's move to destabilize the KRG came as a major surprise.
In an ironic twist of fate, the apparent dismantling of the KRG forces and the peshmerga came on the same day that Raqqa fell. The peshmerga were a critical part of the fight against Daesh but appear to have worn out their usefulness. Iraq is currently heavily influenced by Iran and in a column I wrote two weeks ago, I spelled out the extent to which Iran is involved in Iraq. Iran would do everything it could to stop the KRG from declaring independence and walking away with 40 percent of Iraq's oil revenue. Iran leaned on the Iraqi federal government, most probably, to seize the oil fields of the KRG, and the KRG, surprisingly, gave in without a fight. To add insult to injury, Iraq's U.S. trained anti-terrorism unit took the lead in dismantling the KRG's control of its oil fields.
So where are we now? The landlocked KRG's borders are shut and it has lost over 70 percent of its oil fields. Will the Iraqi government continue north to Irbil, the capital of the KRG? Will it arrest Masoud Barzani, the head of the KRG who spearheaded the vote for independence? Will the United States allow Iran to take over the north as well, turning its back on its allies in the fight against Daesh? It is too early to tell, but at present, it is not looking great for the KRG. With the oil fields gone, it has no revenue to speak of and no way of governing. If the Iraqi forces move into Irbil, will the peshmerga put up a fight? Will there be a firefight in Irbil? In the worst case scenario, Iraq's push into the north sets off another civil war in Iraq. This results in thousands of deaths, years of turmoil and bloodshed.
Turkey has been the KRG's number one trading partner since its inception and much of its oil revenues are spent on Turkish goods and services. Many Turkish firms operate freely in the KRG and its dissolution would be devastating for them, especially those with receivables from the "government." It would be hard to imagine the KRG completely turning over in defeat and succumbing to the Iraqi government's demands to disband. Has the Abadi government prepared to keep the KRG bureaucracy in place while convincing Barzani to quietly relinquish his authority? This would be the best solution for all. Keep Barzani as a figurehead, use forces loyal to him to police the north, and slowly integrate the peshmerga into the Iraqi armed forces. This would allow the Kurds to save face and forego any drawn out armed conflict.
What has Turkey gained from all of this? The answer to this question is still unclear to me, however, the disbanding of the KRG's fighting forces may also mean the disbanding of other Kurdish forces that Turkey considers terrorist groups. While the KRG has nothing to do with the PKK-affiliated Democratic Union Party (PYD) and its armed wing People's Protection Units (YPG), the forces fighting Daesh, Turkey, Iran, Russia and the United States may have come up with such an agreement. If this were the case, this would poison the U.S.'s credibility in its ability to attract allies on the ground in the future.
With the near complete defeat of Daesh, rebuilding Syria and western Iraq can now begin. Turkey is a natural fit for spearheading the rebuilding of these areas. Should Turkey take the lead in reconstruction, Turkey would be able to replace its lost revenue from the termination of the KRG. In such a scenario, Turkey gains economically from construction and from the opening of new markets. Foreign aid will be critical, however, to reconstruction and convincing those that were the root cause of the birth of Daesh to pony-up will be crucial to speeding up the process.