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Crisis in Kurdistan
Turkey to US: Let the Kurds Sell their Oil

Does the U.S. want to help the Kurds? Then let them sell their oil on the international market! So says Turkey, according to the Financial Times:

The call, by a senior Turkish official, comes while the US carries out air strikes against Isis in support of the Kurdistan Regional Government, even as officials in Washington discourage international purchases of Kurdish oil for fear such a trade could further fragment the Iraqi state.

“This is urgent: Isis is now selling its oil, but the Kurds are not allowed to sell their oil,” the Turkish official told the Financial Times, referring to oilfields captured by the jihadist group in eastern Syria and around the northern Iraqi city of Mosul.

He claimed Isis was selling cut-price oil to the Syrian government – there are also allegations of widespread oil smuggling from the jihadist-controlled region, notably to Turkey itself – and compared those sales with the legal obstacles faced by KRG exports.

In July, a U.S. court ordered a tanker full of Kurdish oil to be seized off the coast of Texas on the basis of Iraqi objections. Though the court later reversed the order after finding that the tanker was floating outside of the court’s jurisdiction, the move seems to have scared off potential buyers. Meanwhile, the Kurds, who have been struggling to repel ISIS, claim that a lack of funds is preventing them from accessing the weapons they need.

Turkey’s advice to the U.S. is also in its own interest, since most Kurdish oil is piped through Turkey. And though Ankara now is taking a harder line against ISIS and other militants, experts say Turkey is the destination of choice for ISIS’ smuggled oil shipments.

The stumbling block in front of Kurdish oil sales has been the Iraqi central government, which has threatened to ban any company or country buying Kurdish oil from doing business with Iraq’s state owned oil company and to pursue sanctions in international trade courts. Since the Iraqi central government (still) has much more oil than the Kurds, and since Iraq but not Kurdistan is recognized as a sovereign nation by those courts, the results have been predictable: very few buyers for Kurdish oil.

The Kurds, for their part, justify their independent shipments by pointing to Baghdad’s decision to withhold from the Kurds their constitutionally-guaranteed portion of Iraq’s national oil revenues. Baghdad’s policy was undertaken by possibly-ex-PM Nouri al-Maliki, and has been a key sticking point in the tensions between the Kurds and Baghdad. According to the FT, Maliki’s possible successor has also endorsed it:

Haider al-Abadi, the Shia politician recently nominated to replace Nouri al-Maliki as Iraqi prime minister, shares the outgoing Baghdad government’s opposition to unapproved Kurdish oil sales. He warned last year that they could lead to “the disintegration of the country” and backed the move to deny the KRG its share of budget revenues.

The Iraqi central government looks set to maintain its opposition to Kurdish oil sales. But as the Kurds hold the line against ISIS, we may hear more calls for letting them use their greatest asset to fund the fight.

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  • rheddles

    Letting the Kurds sell their own oil is like giving them arms sufficient to attack ISIS, inevitably they will be used to establish an independent Kurdistan. For some reason we seem determined to defend Sykes-Picot.

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