Ruled for centuries by larger empires and oppressive states, Kurds often saw their snowy and green mountains as their only refuge. Although mountains may still be paramount in the uncertain future of Kurds in Turkey, the Iraqi branch of the Kurdish family now boasts another, more “lucrative” friend: large reserves of oil.Although Iraqi Kurds see vast oil fields as their ticket to wealth and prosperity, the reality may save some room for disappointment. For starters, there is the question mark of Kirkuk. To many, the city is a time bomb that may once again bring the whole country to the brink of civil war. Kirkuk, in many ways, is a microcosm of the Iraqi problem: a mixed ethnicity and demographics combined with the black gold underneath. The province is home to about one-third of all the oil produced by Iraq. As Turks often grudgingly point out, “this historically Turkmen city” is now the Kurd's Jerusalem. In any case, oil wealth may turn out to be a curse rather than a blessing for Kirkuk.
Oil has long been the subject of dispute between the regional government in Kurdistan and the central government in Baghdad. Under the proposed national hydrocarbons law, Kurdistan would receive 17 percent of the federal oil revenues. While the Kurds believe they deserve a bigger share of the pie, Arabs, not surprisingly, want to give them less. For the last two years, the Kurdish and Iraqi oil ministries have remained locked in a bitter row about who should control the oil revenues. But at its heart, the dispute centers on a simple question: Who should control future reserves? During the stalemate of the last two years, international oil companies have held off making big investments and decided to wait for the national hydrocarbons law to pass the Parliament.
In the meantime, the largely autonomous Kurdish government has enacted its own hydrocarbons law and has independently signed more than 20 exploration and development deals in its territory, which Baghdad considers illegal. The national capital responded by banning some companies that signed contracts with Kurdistan from bidding for national deals. The stakes are highest for the Sunni Arabs who, unlike the Kurds in the north and the Shiites in the south, have no oil in their traditional territories. So much for oil being a blessing in improving ethnic relations in Iraq.
Although the fall in oil prices with the global financial crisis has created some new momentum to resolve the stalemate between Arbil and Baghdad, the loss of revenue has also heightened tensions as both capitals have come under increasing financial strain. After all, if exports from Iraqi Kurdistan grind to a halt, it would mean serious loss of revenue for the whole of Iraq. This would also increase the risk of a shortage in world oil supplies just as the global economy begins its recovery.
All this helps explain why the federal government in Baghdad finally decided to let the Kurds export oil off their own land, from newly developed fields in Tawke and Taq Taq. The volume is 10,000 barrels per day (bpd), with a hope to reach 50,000 bpd in the next few months. As of today, the good news for Turkey is that the crude oil from both fields is flowing through the Iraq-Turkey pipeline to the Mediterranean port of Ceyhan. Moreover, the revenues will be controlled by Baghdad's finance ministry. The new fields should produce 450,000 bpd by 2011 and 1 million bpd by the end of 2012. That would represent 42 percent of Iraq's production, if output from the rest of the country stays the same. Of course, all these optimistic projections can turn into wishful thinking if there is a war over Kirkuk. Whether oil has become a blessing or a curse for Kurds will therefore remain unclear until the fate of Kirkuk is determined. For now, oil appears to have changed the gloomy destiny of Kurdish lands. But worst comes to worst, there will always be majestic mountains…
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