Oil for Soil: Towards a Grand Bargain on Iraq and the Kurds

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“A long-festering conflict over Kirkuk and other disputed territories is threatening to disrupt the current fragile relative peace in Iraq by blocking legislative progress and political accommodation,” argues the International Crisis Group (ICG), an NGO, in an October report.

“A two-month stalemate in negotiations over Kirkuk’s unresolved status and a campaign by the Iraqi army in and around the Kurdish-controlled disputed district of Khanaqin” characterise the situation, according to the ICG.

The main cause of conflict is a “dispute over territories claimed by the Kurds as historically belonging to Kurdistan, which also contain as much as 13 per cent of Iraq’s proven oil reserves,” the ICG states. The situation reflects a deep schism between Arabs and Kurds, drags in regional players such as Turkey and Iran and “exceeds the Sunni-Shiite divide that spawned the 2005-2007 sectarian war,” according to the report.

To make legislative and political progress in Iraq, the ICG insists that addressing the conflict is urgent, owing to the fact that “federalism cannot be implemented without agreement on how the oil industry will be managed and revenues will be distributed”.

As a result, the IGC has proposed an “oil-for-soil” package to settle the dispute that “takes into account the principal stakeholders’ core requirements”. They suggest that “in exchange for at least deferring their exclusive claim on Kirkuk for ten years, the Kurds should obtain demarcation and security guarantees for their internal boundary with the rest of Iraq, as well as the right to manage and profit from their own mineral wealth”.

As the package requires painful concessions from all sides, the NGO maintains that a bargain is unlikely to be reached without “stronger backing from the USA and its allies”. Therefore, the IGC argues that the USA “should make it a priority to steer Iraq’s political actors toward a grand bargain they are unlikely to reach on their own and to secure its outcome through political, financial and diplomatic support”.

As US forces begin to withdraw and Washington’s leverage in Iraq diminishes, IGC concludes that there is “little time to waste” as the chance of striking a workable bargain recedes. 

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