Oil for Soil: Crisis Group Proposes "Grand Bargain" on Iraq Oil Land Dispute

Oil for Soil: The International Crisis Group is proposing what its calling a "grand bargain" to head of escalation of conflicts between Iraq's Kurdistan Regional Government and the central government in Baghdad.

A summary follows this update:

Tensions between Baghdad and the KRG appear to be escalating, not only on the oil law that was rejected again Monday. An attempt to form non-Kurdish tribal councils in heavily Kurdish Kirkuk -- the northern oil capital -- and Kanaqin has been nixed by the Kurdish leadership there, Alissa J. Rubin reports for the New York Times.

These two cities and a large strip of land outside the official KRG territory has grown increasingly tense 10 months past a deadline for a referendum in these disputed territories and as local elections are only months away. The land was gerrymandered and ethnically cleansed by Saddam Hussein, and the Iraqi Kurdish leadership is vying for it to be attached to the KRG's semi-autonomous northern region. While all of the land is officially considered under the purview of the central government, portions have been under the security and administrative umbrella of the KRG. Kanaqin, for example, recently saw Iraqi troops move in to take over security from the Kurdish forces, called the Peshmerga.

And now in Mosul, where insurgents are being routed - and Iraqi Christians ethnically cleansed - Iraqi troops and Peshmerga may face off, Sam Dagher reports for the New York Times. The U.S. says if it comes to confrontation, it will officially support neither side, both of which are considered allies.

"Grand Bargain" summary: ICG believes "piecemeal approach" to the Kurdish-Arab dispute in Iraq is no good and the "grand bargain" will solve or put on ice issues like "Kirkuk and other disputed territories, revenue sharing and the hydrocarbons law, as well as federalism and constitutional revisions."

From the executive summary:

The main culprit is a dispute over territories claimed by the Kurds as historically belonging to Kurdistan - territories that contain as much as 13 per cent of Iraq's proven oil reserves. This conflict reflects a deep schism between Arabs and Kurds that began with the creation of modern Iraq after World War I; has simmered for decades, marked by intermittent conflict and accommodation; and was revitalised due to the vacuum and resulting opportunities generated by the Baath regime's demise in 2003. In its ethnically-driven intensity, ability to drag in regional players such as Turkey and Iran and potentially devastating impact on efforts to rebuild a fragmented state, it matches and arguably exceeds the Sunni-Shiite divide that spawned the 2005-2007 sectarian war.

Stymied in their quest to incorporate disputed territories into the Kurdistan region by constitutional means, Kurdish leaders have signaled their intent to hold politics in Baghdad hostage to their demands. At the same time, the Iraqi government's growing military assertiveness is challenging the Kurds' de facto control over these territories. Rising acrimony and frustration are jeopardizing the current relative peace, undermining prospects for national unity and, in the longer term, threatening Iraq's territorial integrity. Rather than items that can be individually and sequentially addressed, Iraq's principal conflicts -- concerning oil, disputed territories, federalism and constitutional revisions -- have become thoroughly interwoven. Federalism cannot be implemented without agreement on how the oil industry will be managed and revenues will be distributed. Progress on a federal hydrocarbons law and a companion revenue-sharing law is inconceivable without agreement on the disposition of disputed territories that boast major oil fields, such as Kirkuk. And the constitution review has faltered over failure to settle all those questions, the solutions to which will need to be reflected in amendments reached by consensus. …

A sober assessment of these requirements suggests a possible package deal revolving around a fundamental "oil-for-soil" trade-off: in exchange for at least deferring their exclusive claim on Kirkuk for ten years, the Kurds would 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. Such a deal would codify the significant gains the Kurds have made since they achieved limited autonomy in the wake of the 1991 Gulf War and especially after April 2003, while simultaneously respecting an Arab-Iraqi -- as well as neighbouring states' -- red line regarding Kirkuk.

Key Recommendations: