Baghdad and Erbil just finalized an oil revenue-sharing agreement, ending (for the time being) a long running dispute over crude exports from the semi-autonomous Kurdish region in Iraq. The FT reports:
Under the terms of the deal, the Baghdad government has agreed to send the Kurdistan Regional Government 17 per cent of Iraq’s national budget in monthly stipends, up from 12 per cent during the Maliki era. In exchange, the Kurdish authorities in Erbil are to supply 250,000 barrels of oil per day, drawn from the Kurdistan region, to the central government “for the purpose of export”. The KRG will also export 300,000 b/d drawn from northern fields near the city of Kirkuk to Turkey via a pipeline that runs through Kurdish areas. The Baghdad government will also supply ground troops to buttress Kurdish peshmerga warriors on the front lines against Isis in the north.
This is big news, though it’s by no means the final chapter in this stand-off over the KRG’s oil ambitions. Our own Adam Garfinkle sheds some insight what this deal means for the region:
[I]f Abadi cannot clean up Baghdad, he will not be able to deliver on his side of the bargain with the Kurds, who are clearly operating from a position of relative strength. Even with the deal, therefore, prospective Kurdish independence remains a real possibility—just delayed some, perhaps…Regardless of the actual mix of influence between Baghdad and Erbil, if Abadi can count the Kurds as allies for the time being, that affects not only the Turkish calculation of interest, but also Iran’s. The Iranian leadership prefers a weaker rump Shi‘a Iraq, the better to cajole, bribe, manipulate, and threaten. Adding Kurds to the Iraqi mix even potentially gives Baghdad a tool to affect Iran though its own restless Kurdish population. We’ll see what happens; my wager will be that the new deal fails.
Read the rest of Adam’s excellent essay, and stay tuned for more on this story as it develops.