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Let's Make a Deal
Baghdad and Kurds Resolve Oil Dispute

The Kurds struck a deal with the central government in Baghdad late last week that settles longstanding disputes with the oil-rich semi-autonomous Kurdish state. As the New York Times reports:

Under the agreement signed Thursday, the central government will pay $500 million to the Kurdistan Regional Government, or K.R.G., from the national budget while the Kurds will let the Iraqi government sell 150,000 barrels per day of the oil exported by the Kurds.

Although the agreement put in place no long-term solutions, some hailed it as an important step.

“Hopefully this will be the starting point for addressing all the outstanding issues between Baghdad and the K.R.G.,” said Hoshyar Zebari, a Kurd and Iraq’s finance minister.

He said that resolving the disputes between the Kurdish government and Baghdad had taken on a greater urgency because the country was facing an economic crisis caused in part by the recent drop in the price of oil, the basis of Iraq’s economy. This in turn could undermine efforts to fight the Islamic State, the jihadist organization that has seized about one-third of Iraqi territory.

As we’ve noted before, there’s strong evidence that Iraq’s budget woes, exacerbated by widespread corruption, are already undermining the fight against ISIS. The Iraqi government has been slow to provide aid and weaponry both to the Kurds and the Sunni tribesmen who oppose to ISIS, and has yet to pass legislation approving the Iraqi “National Guard” units that are expected to play a large role in the next phase of re-integrating Iraq’s Sunnis into political life.

The barriers to Iraq’s political and military effectiveness remain steep. But the deal between the Kurds and the central government is a small but meaningful sign that Iraq’s new PM could be more willing to enact political reconciliation than his predecessor.

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