July 17, 2017

Kurdish Oil Politics in Iraq: Contested Sovereignty and Unilateralism

http://www.mepc.org/kurdish-oil-politics-iraq-contested-sovereignty-and-unilateralism

  

Yaniv Voller

Dr. Voller is an independent researcher in Britain. An earlier version of this paper was presented at the annual meeting of the British Society of Middle Eastern Studies, March, 2013. The author would like to thank Dionysis Markakis and Richard Campanaro for their comments, as well as to the LSE Middle East Centre for supporting aspects of his research through the Emirates Research Scholarship.

Competition over natural resources between Baghdad and the Kurdistan Regional Government (KRG), which controls the Kurdistan Region in northern Iraq, has been a central component in the complicated relations between Arabs and Kurds in post-2003 Iraq. Particularly significant in this context has been the KRG's unilateralism with regard to control over, and exploitation of, oil reserves in the Kurdistan Region and in the contested Kirkuk and Diyala governorates. Such unilateralism has been manifested in independent hydrocarbon legislation and the signing of independent extraction and production contracts with transnational energy corporations.

Most observers have focused on the implications of the KRG's unilateralism for either Iraq's territorial integrity or its oil-export capacity. Little, if any, attempt has been made to trace and explain the sources of the KRG's policies. Most accounts have followed the assumption that the KRG's (and Baghdad's) actions have been driven by a desire to gain access to a strategic source of revenues, either for the purpose of facilitating Kurdish autonomy or for personal greed. This perception has been shaped, directly or indirectly, by the political-economy-inspired greed thesis, which views natural resources and the hunger for revenues as a central, if not primary, cause of both interstate conflicts and civil wars.

This paper seeks to challenge the tendency to view Kurdish unilateralism as motivated primarily by greed. It argues that a better explanation lies in the KRG's contested sovereignty and aspiration to legitimize and guarantee its precarious existence. Gaining and demonstrating its control over oil reserves in the Kurdistan Region and the territories claimed by the KRG has been viewed as essential in consolidating Kurdish sovereignty over the region and exhibiting this sovereignty to the international community, especially those objecting to Kurdish sovereignty.

This argument is based on two grounds: first, the KRG and its political elites have in fact benefited in the short-term from cooperation with Baghdad. Agreements between the Kurds and the new authorities in Baghdad have allocated a significant share of Iraq's annual budget, based almost entirely on its oil exports, to the KRG. Kurdish actions have risked compromising with Baghdad and consequently its sources of revenue. Second, the KRG's unilateralism has alienated not only Baghdad, but also Ankara. Turkey is the only corridor for the landlocked KRG to export its oil to markets in Europe. As long as the KRG has collaborated with Baghdad, Ankara has provided the KRG with the ability to export its oil. However, wary of any signs of Kurdish separatism, the Justice and Development Party (AKP)-led government has expressed its objection to any form of Kurdish unilateralism. Thus, in the short term, the KRG has actually jeopardized its ability to benefit from oil revenues.

This explanation not only better explains the KRG's policies and prospective developments in the area; it also contributes to the ongoing debate surrounding the role of natural resources in both interstate and civil conflicts. In order to support this argument, this paper details the KRG's unilateral oil policies since 2003. It then presents the greed thesis and the manner in which it has been applied to explain the KRG's unilateralism. The final section challenges this thesis, adding the element of sovereignty, which is often missing from otherwise critical analyses.

OIL IN POST-2003 IRAQ

The KRG was formed in 1991, after the Iraqi military and state apparatus withdrew from the three Kurdish provinces of Erbil, Sulaymaniyah and Dohuk, following Iraq's defeat in the First Gulf War. The vacuum created by the Iraqi withdrawal was soon filled by the Kurdish parties, particularly the Kurdistan Democratic Party (KDP), led by Masud Barzani, and the Patriotic Union of Kurdistan (PUK), led by Jalal Talabani. After decades of fighting Baghdad, these parties now faced the challenge of state building in the region, which they approached with substantial aid from international NGOs.1

Between 1992 and 1994, the Kurdish parties conducted the first democratic presidential and parliamentary elections in Iraq's history,2 established the KRG and the Kurdistan National Assembly in Erbil, the regional capital, resettled refugees and began rebuilding some of its infrastructure and villages. This period also witnessed unprecedented media freedom and fledgling civil-society activism.3 Since then, the KRG has gone through a prolonged process of state building, through which it has consolidated its domestic sovereignty. And while this process was interrupted during the Kurdish civil war in the mid-1990s, it was renewed following the overthrow of the Baath regime in 2003.

The emergence of the KRG was contested from its inception. While the Kurdish leadership never explicitly stated any desire to secede from Iraq, the building of autonomous state institutions in Kurdistan was immediately perceived by Baghdad, its neighbors, and the international community as a step toward secession. Most of them took immediate steps to counter the idea of Kurdish autonomy, including direct covert and overt intervention in the KRG's affairs.4 Turkey, under successive governments, has led this camp, driven by its fear of the implications of Kurdish secession from Iraq for its own restive Kurdish minority.5 Yet, the period following the removal of Saddam Hussein from power has been a period of relative prosperity and rapid development for the KRG.

Understanding the KRG's conduct and policies with regard to oil in the Kurdistan Region and the contested territories requires first an understanding of the postconflict reconstruction of Iraq. The Kurdish parties played a key role in the early stages of this process. The governments established in Baghdad following the invasion were weak, and the country soon sank into chaos and sectarian violence. Amid the collapse of central authority, the Kurdish parties overcame their divisions, clearly on view in the civil war during the 1990s, and presented a unified front. They ran in a joint list, the Kurdistani Alliance (KA), in the January and later the December 2005 elections, winning 75 and 53 seats respectively.6 It then joined a coalition with the Shiite-majority United Iraqi Alliance, headed by Nouri al-Maliki of the Iraqi Dawa Party, and came to play an important part in shaping the Iraqi constitution. Due to their electoral power, the Kurds have gained the status of "king makers" in Baghdad.

Reconstructed Iraq emerged as a federal state, of which the Kurdistan Region became a recognized federal region. This was largely due to the constant lobbying by KA representatives in negotiations over the constitution. Thus, Article 115 of the constitution secured federal power, stating, "All powers not stipulated in the exclusive powers of the federal government belong to the authorities of the regions and governorates that are not organized in a region. With regard to other powers shared between the federal government and the regional government, priority shall be given to the law of the regions and governorates not organized in a region in case of dispute."7This article, according to Michael Kelly, an American constitutional adviser to the KRG, helped the latter to severely constrain federal authority in the region.8 Based on this, the KRG has portrayed its new position in Iraq as a voluntary union between Kurds and Arabs.

As part of the negotiations between Baghdad and the Kurds, Maliki also committed to allocation of 17 percent of the Iraqi federal budget to the Kurdistan Region. Senior Kurdish leaders were now nominated to high-ranking positions in Baghdad, with Jalal Talabani nominated as Iraq's president, Hoshyar Zebari of the KDP as foreign minister, and Barham Salih of the PUK as deputy prime minister. As Denise Natali has suggested, serving in Baghdad was seen as an avenue for lobbying for the Kurdish cause in Baghdad.9 In short, the KRG gained an even greater level of autonomy after 2003. The Arab population of Iraq, particularly its Sunni community, resented the new arrangement, realizing that Iraq had relinquished some of its autonomy.10 However, the complete breakdown of the Arab camp hindered any resistance to the new reality.

Not only Iraq's Arab population, but also its neighbors viewed with worry the KRG's new status. Its prosperity, reunification and increased autonomy amid the total collapse of the Iraqi state were the embodiment of Ankara's fears prior to the invasion.11 It was therefore quick to denounce any sign of Kurdish separatism and in some cases took a proactive stand, either covert or overt, to limit Kurdish autonomy. Thus, to prevent the Kurdish militias (peshmerga) from taking over Kirkuk, Ankara sent observers to the region. In other cases, Turkey sent Special Forces to assassinate local Kurdish leaders.12 Due to pressures from Turkey, a NATO member, the Coalition Provisional Authority was also wary toward increased Kurdish unilateralism and sometimes tried to denounce gestures of Kurdish autonomy.13On the other hand, the Kurdish parties took an active role in the allied invasion of Iraq and supported the occupation from its inception. Hence, the allies, especially their forces on the ground, have been more ambivalent or even receptive toward the KRG's existence.

The resurrection of the KRG marked the renewal of its fierce legitimation campaign, based on its earned sovereignty. While during the 1990s legitimation efforts relied chiefly on its successful democratic transition, in the post-2003 era it has been expanded to include other aspects, such as the KRG's successful state-building process and its economic potential. What is important about this campaign is that it actually forced the KRG to take measures in order to fit the image it has tried to create. Thus, under constant transnational pressure, it reformed laws concerning media freedom, gender equality and election practices.14

In order to counter its image as a haven for illicit activity and a source of regional instability, the KRG has been at pains to prove that it can be an important partner in efforts to stabilize the region. The American-led counterterrorism campaign in the region provided the Kurdish leadership with an excellent opportunity to demonstrate this aspect of earned sovereignty. Though the KRG did not experience the wave of terror that characterized Iraq after 2005, the Kurdish leadership was still keen to take an active part in the War on Terror campaign.15Thus, although peshmerga forces relatively easily crushed the Islamist insurgency (the Ansar al-Islam movement) in the region, it made sure to demonstrate its commitment to fight the insurgency. And even though by 2006 the KRG declared itself to be an island of stability in the region, it chose to formulate regional counterterrorism legislation independent of similar laws passed in Baghdad a year earlier.16

Making such commitments has been part of the KRG's efforts to strengthen its sovereignty and create a distinction between the Kurdistan Region and the rest of Iraq. These efforts, in turn, have propelled the KRG to take certain actions. The KRG's unilateralism with regard to oil extraction and exploitation is one of these.

KRG TOOLS AGAINST BAGHDAD

Oil has always been central to the Kurdish plight for international legitimacy. Already in 1972, Mula Mustafa Barzani, the leader of the Kurdish nationalist movement in northern Iraq, declared that "if he won control of those [Kirkuk oil] fields, he would give the oil to America."17 That the extraction of oil was perceived by the Kurdish leadership as a symbol of its sovereignty had become clear in 1992. One of the first institutions established by the KRG was a national oil company, KurdOil, though the Kurds did not have the knowledge and tools for extraction, and the company never became operative. The Kurds continued to rely on smuggling small quantities of oil through Turkey, their main source of revenue at least until 2005.18

The tensions between Baghdad and the Kurds over oil surfaced at the beginning of the reconstruction process after the overthrow of the Baath regime. The first battleground between Baghdad and the Kurdish leadership was the constitution. Under Kurdish pressure, it included Article 112, which stated that "the federal government, with the producing governorates and regional governments, shall undertake the management of oil and gas extracted from present fields, provided that it distributes its revenues in a fair manner in proportion to the population distribution in all parts of the country.…"19 The term presentremained intentionally nebulous, serving the KRG's future claims to oil reserves in its region. Hence, the Kurds were successful in "creating a constitutional framework for Iraq where the main question was not what control regions should have over oil, but rather what role was left for the national government."20

The second stage of contestation over oil was in the Kurdistan Region itself, in the form of the KRG's unilateral regional hydrocarbon legislation. The Kurdish representatives in Baghdad did initially participate in the Maliki government's efforts to formulate a federal hydrocarbon law. Yet, this cooperation encountered constant disagreements. One was over the KRG's support of the use of Production Sharing Agreements (PSA).21 Most other members of the coalition objected to this, viewing such agreements as a form of neocolonialism. Another issue revolved around the right to extract oil in the disputed territories in Kirkuk.

These disagreements eventually led the KRG to withdraw from negotiations with Baghdad. In June 2007, the Kurdistan Parliament passed a regional Petroleum Law,22 ratified as a Hydrocarbon Law in May 2009,23 essentially declaring that the KRG would now contract independently with international oil companies through PSAs. Shortly after signing the draft legislation, the KRG declared it was capable of exporting crude oil in commercial quantities. The next step was to sign PSAs with several international companies. Here it should be noted that the KRG had already signed such contracts prior to the negotiations with Baghdad. One was with the Turkish Genel Enerji (joined later by Swiss Addax) in 2002. Nevertheless, the post-2003 government in Baghdad consented to this agreement retrospectively. In contrast, the contracts that followed were signed against Baghdad's will. Nevertheless, most of the corporations that entered PSAs with the KRG were small or middle-sized, as most major oil companies feared alienating Baghdad, regardless of the stagnation in the political process.24

Initially, the KRG expressed its commitment to sharing its oil income with the central government. But six months after the Hydrocarbon Bill was passed, the president of the region, Masud Barzani, threatened during a visit to the European Parliament that the KRG would keep for itself revenues from the extracted oil because "they [Baghdad] often use it [oil revenue] against us [the Kurds]."25 This threat has not been fully implemented, but it indicates the KRG's perception of its rights over oil extracted from the region. In October 2011, the KRG had a significant achievement in the form of a PSA with ExxonMobil. This contract was even more controversial than previous ones, as two of the six blocks given to Exxon were actually located in a disputed part of the Kirkuk governorate.26 Exxon was aware of the potential controversy; it initially refused to acknowledge the signing. Only in April 2012 did the company publicly commit to the agreement.27

This unilateralism entailed immediate hostility and suspicion from both Baghdad and Ankara. In Iraq, the KRG's "insistence on a decentralized oil regulation system… has helped awaken the sleeping giant of Iraqi nationalism."28Iraq's minister of oil at the time, Hussain al-Shahristani, described Kurdish oil exports as "illegal and illegitimate,"29 while members of other parties and religious organizations urged the government to fight this move.30 In 2008, both Shiite and Sunni parliamentarians signed a joint statement expressing "deep concern at individual acts without reference to central government, such as the signing of contracts with foreign companies."31 Shortly afterward, Sharistani revoked the memoranda of understanding signed between Baghdad and companies that had also signed contracts with the KRG.32 In August 2008, the tension between Baghdad and Erbil nearly deteriorated into armed conflict, when the Iraqi Security Forces laid siege to the town of Khanaqin in the part of the Diyala Governorate that is formally under KRG control. These "border" clashes between the Iraqi forces and the peshmerga lasted nearly a year, although full-scale conflict was eventually avoided after intense American intervention.33

Ankara was similarly suspicious toward the KRG's actions.34Immediately after the KRG drafted its petroleum law, Turkey's energy and natural-resources minister, Hilmi Güler, traveled to Baghdad and met with Sahristani. There he ratified the signing of the cooperation agreement between the two countries, notably a proposed pipeline to carry oil from Iraq to Western Europe through Turkey.35 In coordination with Iran and Syria, Turkey also made arrangements to "prevent the KRG from circumventing the central authority's embargo."36The United States followed a similar line. In response to Baghdad's uproar following the signing of a PSA between the KRG and Texas-based Hunt Oil, one official in the U.S. embassy in Baghdad stated, "We think that these contracts have needlessly elevated tensions between the KRG and the Iraqi government," adding that companies "could incur significant political and legal risk by signing contracts with any party before the national law is passed."37

The KRG responses to the challenges reveal that its leadership was aware of the implications of its actions. The KRG's natural-resources minister, Ashti Hawrami, justified this move by stating, "We do not want to be hobbled by the political paralysis in Baghdad."38 He also invoked Articles 112 and 115 of the Iraqi constitution, arguing that they allow regional governments in oil-producing governorates to "administer and supervise the extraction process" and meant that "local oilfield managers are answerable to the local authorities."39 In its dialogue with Ankara, on the other hand, the Kurdish leadership tried to underline the potential financial and political benefits that its actions have carried for Turkey.

Prior to the passing of the law in the regional parliament, the KRG had already made efforts to showcase these benefits. In March 2007, for example, Hawrami affirmed in an interview to a Turkish reporter, "It is in Turkey's interest to be in direct contact with us. It is a 'first come, first served' situation. There are 20-25 billion barrels of oil reserves in Kurdistan. It is more than we need." He then added, "It is in Turkey's interest as well to establish relations with us."40Reviewing the KRG's policies, Denise Natali asserted that the KRG invited the Turkish government to "invade economically and not militarily."41 Interestingly enough, shortly after the controversial legislation, the KRG stepped up its efforts prove to Ankara its willingness to counter PKK activism in the region and its understanding of Ankara's interest in regional stability. Thus, in August 2007, for example, Hawrami, with KRG Prime Minister Nechirvan Barzani, publicly committed the KRG not to support the PKK.42The urgency with which the Kurdish leaders approached Ankara is perhaps the best indication of the Kurdish leadership's sense of alarm.

This sense of alarm notwithstanding, the KRG nevertheless announced the Exxon deal in November 2011. Baghdad responded even more harshly to these steps. It began blacklisting companies with even indirect investment in regional oil initiatives, thus pushing further the limited embargo it set on unilateral Kurdish oil exports. In one instance, a Chinese oil company that had taken over Swiss Addax was blacklisted and barred from obtaining extraction licenses in Iraq and participating in oil and gas projects.43 In March 2012, Baghdad halted the allocation of money to the region, as part of its post-2003 commitment, albeit for a short period of time. And in reaction to Baghdad's halting of the budget allocation, the KRG stopped its own oil supply, thus threatening Baghdad's economy.44 In spite of the rising tensions, the KRG has made continuous efforts to woo other major oil companies, including Royal Dutch Shell. The latter, however, has been very hesitant in making contact with the KRG.45

Motivated by its hunger for energy and desire for regional stability, the AKP government around 2007 began a process of rapprochement toward the KRG. By so doing, it accepted the latter's right to take unilateral actions at both the national and international levels. The increased volume of bilateral trade and Ankara's opening of its first consulate in Erbil, in March 2010, signaled Ankara's new pragmatism. Nonetheless, the Exxon deal actually drove Ankara to step back from its high-profile collaboration with the KRG. At least for 2012, Turkey was still refusing to build a pipeline from the Kurdistan Region through its territory.46 Even its need for energy and deteriorating relations with the Maliki government did not resolve the AKP government's uneasiness toward Kurdish unilateralism.47

Perhaps the most important thing to note, given Baghdad's and Ankara's anxiety amidst Kurdish unilateralism, is the fact that the Kurdistan Region, being landlocked, must depend on Turkish infrastructure to export oil in commercial quantities to markets in Europe. Acting against Baghdad's whims in such a provocative manner, and arousing Turkey's old fears of Kurdish separatism, have been detrimental to the KRG's export of oil from its territory, preventing it from maximizing its capacity.

Kurdish unilateralism, meant to increase Kurdish revenues for whatever purposes, has not yielded the desired results. Even more important, it seems that the Kurdish leadership had actually predicted the consequences of its actions. One may argue that the KRG had actually taken a risk, gambling with Baghdad's willingness to prolong the conflict. However, such an explanation does not fit well with Kurdish conduct so far. First, the Kurdish leadership has proven to be risk-averse on most other fronts. For example, although conditions were ripe and the Kurdish public was eager, the KRG avoided publicly discussing or explicitly using the secession card. Kurdish willingness to cooperate with Turkey on the PKK front is yet another example. Second, even though its policy did not yield the desired outcomes, fierce Iraqi and Turkish reactions have only emboldened the Kurdish leadership, particularly Oil Minister Hawrami. How can we explain Kurdish unilateralism?

GREED, GRIEVANCES OR SOVEREIGNTY?

Both academic and nonacademic observers often assume that control over natural resources is the "top prize" for governments, separatists, terrorists and other parties involved in belligerency. They argue that regions with large endowments of natural resources are conflict-prone. In one of the major works on the subject, Paul Collier and Anke Hoeffler argue that civil wars are the result of the greed of rebels and separatists. According to this "greed thesis," rebels and separatists will launch wars against central governments if they feel that they can individually gain from looting (e.g., appropriating and benefiting from independent oil extraction).48 Collier and Hoeffler assert that regions endowed with natural resources will be more prone to wars. Moreover, Collier asserts in his study of the emergence of Scottish separatist tendencies in the 1970s, the possession of large reserves of natural resources may incite ethnic or other group sentiments. This, he suggests, would likely be the result of elite-driven mobilization.49

The greed thesis has been applied frequently to Kurdish decision making policies with regard to oil extraction. The Kurdish leadership has been depicted by many as corrupt and greedy, manipulating the Kurdish struggle for national liberation with the purpose of increasing the personal wealth of the Talabani and Barzani families.50 Others who have followed the burgeoning tensions between Kurds and Arabs have inclined toward grievance-based explanations, assuming that Kurdish unilateralism is the product of secessionist aspirations.51 Even if not necessarily using the term "greed," the message has been quite clear: the KRG has taken firm, sometimes aggressive, unilateral steps to consolidate its control and utilization of oil reserves in the Kurdistan Region and contested territories because it has sought to expand its access to oil revenues.52

Nevertheless, the greed thesis cannot fully explain Kurdish unilateralism. In fact, unilateralism did not yield any profit for the KRG in the short term. Certainly, at the time of writing, the KRG has yet to become a major oil exporter. It has had a better chance of securing higher revenues by collaborating with Baghdad, given that its budget allocation relied almost entirely on Iraq's oil income. Applying the greed thesis relates short-term calculations to the Kurdish leadership, but ignores the fact that such short calculations have actually gone against the KRG's interests — and the KRG has been aware of this. Collier and Hoeffler have argued that "countries with a very high dependence on natural-resource incomes have a relatively lower risk of conflict."53 The case of Iraq questions the validity of this aspect of their argument.

A better explanation for the KRG's unilateralism comes from the recent literature on the subject of identity and natural resources. Based primarily on empirical studies of civil wars in regions endowed with natural resources, it demonstrates that competition over natural resources has on many occasions been the result, rather than the cause, of conflict. Furthermore, many of these critical studies have linked natural resources with identity. Elliott Green, for example, has noted that Scottish separatist sentiments actually emerged in the 1960s, before the discovery of major oil reserves in the North Sea.54 Jenny Pearce has argued that conflicts are no less the result of lack of interest or intervention by the international community.55Based on a study of Darfur and South Sudan, Aleksi Ylönen refuted the application of the greed thesis to regional conflicts, instead suggesting that only historical analysis can explain civil wars that involve competition over natural resources.56 Focusing on the conflict between the secessionist Acehnese liberation movement and the Indonesian central government, Edward Aspinall refutes the utility of the greed thesis. As he points out, during the 1970s the Acehnese leadership had been keen to collaborate with the Jakarta-based Indonesian central government because it benefited from the regional oil revenues. But this was at a time when Islamic identity was dominant among the Acehnese population. Grievances over oil extraction by the Jakarta government, Aspinall suggests, emerged only after the formation of local Acehnese identity and the rise of Acehnese secessionist aspirations. The Acehnese rebels have come to associate oil with their identity and desire for independence. In turn, they have also come to describe Indonesian control over the region as "Javanese colonialism."57

Similar versions of the greed thesis also exist in relation to interstate conflicts, manifested in the widespread notion that states tend to go to war out of a desire to control natural resources. Here as well, several recent studies have now come to challenge this idea. Emily Meierding demonstrates in her research that, in most cases, a state's invasion of an oil-producing market is likely to hinder oil production. Invaders and occupying powers are likely to face fierce resistance and interruptions to their oil production efforts.58 True, the KRG is not a state. Yet, its wide autonomy and military capacities have turned relations between the KRG and Baghdad into state-to-state or at least "state-to-government" relations.59 Meierding's study, based on a large number of conflicts involving takeovers of large petroleum reserves, highlights the dissonance in relating oil greed to the KRG's actions.

Grievances and the association of oil with identity are good starting points for explaining why oil would play such an important part in the conflict between Kurds and Arabs. But they are not enough. Kurdish grievances with regard to treatment by Baghdad date as far back as the mid-twentieth century. Yet the KRG was willing to collaborate with Baghdad in other fields.60 A better explanation for the KRG's unilateralism, and consequently for the role of natural resources in conflicts, lies in the concept of sovereignty — more precisely, contested sovereignty — and the resultant pursuit of international legitimacy.

As noted above, the existence of the KRG was contested from its establishment. Even if not explicitly intended as the foundation for an independent state, the KRG was perceived as such by its antagonistic neighbors and the international community. This objection has constantly threatened its already precarious existence. The lack of international legitimacy meant that the KRG faced a constant threat of destruction and forced reintegration into Iraq. To understand the KRG's situation, we can resort to Stephen Krasner's definition of sovereignty as a complex, multi-dimensional institution. According to Krasner, the term sovereignty has four uses: domestic, international-legal, Westphalian and interdependence. An actor is said to have secured domestic sovereignty when it is successful in asserting control over its claimed territory and running its affairs. Westphalian sovereignty is used when an actor secures its right to determine its "structures of authority." Interdependence sovereignty refers to an actor's capacity to control movements across its borders: migration, capital flows and so forth. And international-legal sovereignty refers to the legal diplomatic recognition that members of the international community extend to another member.61 The post-2003 KRG can be said to have domestic, Westphalian and some interdependence sovereignty — but it lacks international-legal sovereignty.62 Yet, in addition to denying it international legal sovereignty, outside actors have also tried to challenge other aspects of its sovereignty. It has been denied not only membership in international organizations, but also the right to take actions in its own territory.

In this manner, the KRG is similar to various other separatist entities that emerged in the aftermath of the Cold War (or earlier), such as Somaliland, Taiwan, the Turkish Republic of Northern Cyprus, Somaliland, Abkhazia, and Nagorno-Karabakh.63 They have all faced a prolonged crisis of legitimacy. When actors face crises of legitimacy, "self-justification becomes a foreign-policy priority, reflecting both the lack of confidence in the state itself and the perceived skepticism or indifference of the outside world."64 As both Barry Bartman and Nina Caspersen have demonstrated, in order to cope with such crises these entities have often embraced a strategy of emphasizing their earned sovereignty in their pursuit of international legitimacy. To justify their de facto autonomous position, they have relied on their domestic sovereignty and ability to function independently even without recognition.65 The conception of earned sovereignty has encompassed various elements. Inspired by developments in the post-Cold War era, their (genuine or exaggerated) democratic credentials have been central to this process.66 It has also involved a growing emphasis on these actors' ability to maintain their local security and contribute to regional security, as a response to their constant depiction as pockets of instability and safe-havens for organized crime and terrorism.67

A very common way for such de facto states to prove their earned sovereignty has been through claiming to possess democratic credentials. Inspired by developments in the post-Cold War era, particularly the case of Kosovo, the leaders of many of these contested states have come to base their claims upon successful election campaigns and (mostly limited) progressive and liberal legislation in the fields of freedom of expression, economy and the protection of minority and women's rights. This has been true for actors as diverse as Somaliland, Taiwan, Abkhazia, Nagorno-Karabakh and the Turkish Republic of Northern Cyprus.68 It has also been true for the KRG, whose leadership throughout the years kept stressing its democratic and tolerant nature, based on the fact that the KRG was the first entity in Iraq to conduct democratic elections, take formal measures to integrate women into the political system and protect minority rights. The KRG's portrayal of itself as a democratic oasis in a desert of tyranny has been mostly exaggerated. Nonetheless, it has been based on an understanding of what constitutes legitimate sovereignty in the international system.

Not only democracy, but also economic viability has become part of the concept of earned sovereignty. A study conducted by Pal Kolstø and Helge Blakkisrud reveals that unrecognized de facto states have tended to stress in their interaction with the international community their economic viability and prospects for economic survival. This is because recognition of such entities has been denied, at least partly, based on their poor economic prospects. More important, it has also demonstrated to the residents of contested countries that their government will be capable of providing them with jobs and income upon gaining independence.69 Given that, since its formation, oil has been Iraq's only major source of income, the KRG has regarded control over oil reserves to be closely associated with domestic sovereignty.

It should be noted here that the KRG is far from being an exception. Various studies have demonstrated that states and societies often come to relate natural resources as symbols of independence and sovereignty, regardless of the financial rewards they carry. Oil has been a popular example,70 but other resources serve the same function. One observer has pointed out Norway's refusal to ban whaling in its waters, even though it hindered Nordic integration and cooperation. This is because whaling has been viewed by the Norwegian people as part of their tradition, and hence as constituting Norway's sovereign rights.71

Kurdish unilateralism indicates that the KRG associates control over oil reserves, even if theoretical, with sovereignty. By taking one-sided steps with regard to the control and use of oil reserves in the Kurdistan Region and the disputed territories, the KRG has signaled to Baghdad, Ankara and the other parties involved that it has control, or domestic sovereignty, over its region. More than anything, independent legislation helped the KRG to validate its autonomy from Baghdad. This was true not only in the case of oil; Kurdish legislation in many other fields has been used by the Kurdish parties to assert their authority. Thus, even in the less controversial field of counterterrorism legislation discussed earlier, the PUK felt the need to justify independent Kurdish legislation by arguing that it took into account the "uniqueness of the Kurdistan Region and bestow[ed] it with the necessary distinction in a manner harmonious and consistent with our Kurdistani identity."72 That Kurdish unilateralism was associated with asserting sovereignty was also noted by Ban Ki-Moon when he protested against Kurdish assertion of sovereignty over the disputed territories, following an increase in tensions between the Kurds and Baghdad.73 Hawrami's invocation of the controversial Article 115, which essentially guarantees the KRG's contested sovereignty, is an excellent example for the way in which the KRG has perceived control over oil.

No less important, reasserting Kurdish control over oil aimed to demonstrate to the international community the potential for Kurdish prosperity and its prospects for surviving independently. Even without securing oil revenues, the signing of contracts with oil giants emboldened the Kurdish leadership. Shortly after Exxon reaffirmed its deal with the KRG, President Barzani hinted in an interview with the Associated Press that if nothing changed in Baghdad's attitude, the KRG would consider secession.74

CONCLUSIONS

Observers have tended to view the solution to the tensions between Baghdad and the Kurds as lying in revisiting current agreements between the KRG and the Maliki government and the reallocation of income.75Nevertheless, if we follow the line presented in this paper, it becomes clear that this would not resolve Kurdish-Arab tensions. If indeed control over oil is associated with sovereignty, any potential resolution must take this into account. It may render any peaceful solution to the conflict impossible.

Though focusing on the case of the KRG and its souring relations with Baghdad, this paper carries lessons that can be applied to various other conflicts. Competition over natural resources takes place in many cases where the legitimacy and sovereignty of at least one party is contested by the others. This has been true whether in the so-called water conflicts in Eastern Africa, in the conflicts over minerals in Africa, in other cases where oil has been argued to stand at the center, such as the conflict between Sudan and South Sudan, or in the conflict between Israel and its Arab adversaries. This paper serves as the starting point for critically examining the relations between sovereignty, legitimacy and natural resources.

 

1 Denise Natali, The Kurdish Quasi-State (Syracuse University Press, 2010), 29-51.

2 Or at least the first relatively free elections, as reported by international monitors. Michael Meadowcroft, Kurdistan Elections for Iraqi Kurdish National Assembly and Leader of the Kurdistan Liberation Movement, 19th May 1992, Monitoring Report (Electoral Reform Consultancy Services, London 1992), 4.

3 Denise Natali, The Kurds and the State (Syracuse University Press, 2005), 64.

4 As revealed by reports from the era. See "Turkey Shells Kurds," Guardian, May 5, 1992; Sid Balman, "U.S. Warns Saddam Not to Interfere with Kurdish Elections," United Press International, May 15, 1992.

5 Recent reports and analyses have shown that Turkey's early antagonism toward the KRG has moderated. For a more recent account, see Gönül Tol, "Turkey Cozies Up to the KRG," Middle East Institute Website, May 24, 2012, http://www.mei.edu/content/turkey-cozies-krg. Although essentially true, we should still bear in mind that the Justice and Development Party (AKP) government still vehemently objects the idea of Kurdish independence in Iraq.

6 In January 2005 the KA benefited from the Sunni boycott of the elections.

7 Iraqi Constitution, Article 115. English version available at http://www.uniraq.org/documents/iraqi_constitution.pdf[emphasis added].

8 Michael J. Kelly, "The Kurdish Regional Constitution within the Framework of the Iraqi Federal Constitution: A Struggle for Sovereignty, Oil, Ethnic Identity, and the Prospects for a Reverse Supremacy Clause," Penn State Law Review 114, no. 3 (2010): 727.

9 Denise Natali, The Kurdish Quasi-State (Syracuse University Press, 2010), 105.

10 Karna Elkund, Brendan O'Leary and Paul R. Williams, "Negotiation Federation in Iraq," in Brendan O'Leary, John McGarry, and Khaled Salih, eds.,The Future of Kurdistan in Iraq(University of Pennsylvania Press, 2005), 143-145.

11 Åsa Lundgren, The Unwelcome Neighbour: Turkey's Kurdish Policy (I.B Tauris, 2007), 76-77.

12 These were caught by American forces, which led to Turkish condemnation of the United States. Olson, The Goat and the Butcher (Mazda Publishers), 28-29.

13 Quil Lawrence, Invisible Nation (Walker & Company, 2005), 203-218. Nevertheless, several commentators did call Washington to reconsider its commitment to Iraq's territorial integrity, e.g. Leslie H. Gelb, "The Three State Solution," New York Times, November 25, 2003; Peter W. Galbraith, "The Case for Dividing Iraq," Time Magazine, November 5, 2006, 16; and John Yoo, "United Iraq — What's the Point?," LA Times, August 30, 2005.

14 For an elaborate report on these reforms, see Yaniv Voller, "From Rebellion to De Facto Statehood: International and Transnational Sources of the Transformation of the Kurdish National Liberation Movement in Iraq into the Kurdistan Regional Government" (PhD diss., London School of Economics, 2012), 240-283.

15 Whereas the rest of Iraq experienced thousands of terror attacks between 2003 and 2010, the Kurdistan Region experienced between seven and 16 attacks during the same period, with only a few of them resulting in casualties. Only one of the lethal attacks resulted in more than three casualties. In February 2004, a suicide attack killed 117 people in Erbil, including senior Kurdish leaders. The RAND Database of Worldwide Terrorism Incidents recorded 16 terror attacks in the Kurdistan Region: http://www.smapp.rand.org/rwtid/incident_detail.php?id=17952; while the University of Maryland START Global Terrorism Database documented 7 attacks: http://www.start.umd.edu/gtd/.

16 Al-majlas al-watani likurdistan [Kurdistan National Assembly], Qanun Raqm (3) li-Sanat 2006: Qanun mukafahati il-Irhab fi iqlim Kurdistan – Iraq, [law no. 3 for the year 2006: Counterterrorism legislation in Kurdistan-Iraq] (no English copy available), March 4, 2006, http://www.krg.org/uploads/documents/law_anti_tiror__2008_09_10_h17m15s56.pdf.

17 Aaron Latham, "What Was Kissinger Afraid of in the Pike Papers," New York Magazine,October 4, 1976, 58.

18 P.V. Vivekanand, "Kurds Said Exporting Oil to Turkey,"Amman Jordan Times, April 21, 1992, 7.

19 Constitution of Iraq [italics added].

20 Sean Kane, "Iraq's Oil Politics," Peaceworks, United States Institute of Peace Publication 64 (2010): 6.

21 Namely a contract in which an international oil corporation is guaranteed a certain share of potential revenues from oil in return for the exploration and extraction of oil reserves.

22 KRG, Petroleum Law of the Kurdistan Region — Iraq, June 29, 2007, http://www.krg.org/pdf/2_English_Version_Kurdistan_Petroleum_Law.pdf.

23 Michael J. Kelly, "The Kurdish Regional Constitution within the Framework of the Iraqi Federal Constitution: A Struggle for Sovereignty, Oil, Ethnic Identity, and the Prospects for a Reverse Supremacy Clause," Penn State Law Review 114, no. 3 (2010): 748-749.

24 ICG report counts about 20 oil companies signed contracts with the KRG, including companies from Turkey, the United States, Australia and Canada. See "Oil for Soil: Toward a Grand Bargain on Iraq and the Kurds," Middle East Report 80 (October, 2008): 16; see list of corporations by oilfields on http://www.krg.org/pages/page.asp?lngnr=12&rnr=296&PageNr=1.

25 Luke Baker, "Iraq's Kurds Will Hold on to Oil Revenues," Reuters, November 10, 2009.

26 ICG, "Iraq and the Kurds: The High-Stakes Hydrocarbons Gambit," Middle East Report 120 (April, 2012): 2.

27The Kurdish Globe, "Exxon Mobil Committed to Its Contract with KRG," April 7, 2012.

28 Lydia Khalil, "Stability in Iraqi Kurdistan: Reality or Mirage," Saban Center Working Papers 2 (Brookings Institution, 2009), 1.

29 "Iraq Still Doesn't Recognize Kurds' Oil Deals," AP World Stream, May 12, 2009.

30 The Association of Muslim Scholars, an organization of Sunni religious scholars, for example, issued a fatwa against any trade with companies signing deals under the new Hydrocarbon Law. This was dismissed by the KRG as "politics." See "Iraqi Kurds: AMS Anti-oil Law is Politics," UPI Energy, August 9, 2007.

31 Ruba Husari, "Iraq: Sunni and Shiite Lawmakers Sign Fragile Pact Against Kurds," Oil Daily,January 15, 2008.

32 Ruba Husari, "Iraq Punishes Oil Firms with Kurdistan Deals," Oil Daily, January 16, 2008.

33 Gareth Stansfield and Liam Anderson, "Kurds in Iraq: The Struggle Between Baghdad and Erbil," Middle East Policy 16, no. 1 (Spring, 2009): 136-140.

34 Iran and Syria as well feared Kurdish actions on the same grounds. Yet their objections were not as acute as Turkey's, from the KRG's perspective, mainly because Turkey is the Kurdistan Region's only land gateway for Kurdish oil to potential markets in Europe.

35 Ayın Traihi [history of the month], Turkish Prime Minister's official press and information agency, August 8, 2007, item 4. http://www.byegm.gov.tr/ayin-tarihi.aspx.

36 Justin Dargin, "Securing the Peace: The Battle over Ethnicity and Energy in Modern Iraq,"The Dubai Initiative Working Paper (June, 2009), 7.

37 "Hunt Oil Deal Creating Tension in Iraq," Agence France Presse, September 27, 2007.

38 "Iraq Oil Future Uncertain under KRG Law," UPI, August 7, 2007.

39 In "Oil and Gas Rights of Regions and Governorates," KRG, June 12, 2006, http://www.krg.org/articles/detail.asp?rnr=95&lngnr=12&anr=11678&smap=. In an official statement, the KRG also invoked Article 141. See KRG, "Full Text Response to Iraqi Prime Minister's Accusations," KRG, http://www.krg.org/articles/detail.asp?smap=02010100&lngnr=12&anr=26811….

40 Cengiz Çandar, "Türkiye'nin petrol için Bağdat'ın değil, Erbil'in kapısını çalmak zorunda" [For its oil Turkey needs to knock on Erbil's door, not Baghdad's], Hürriyet, March 17, 2007, http://arama.hurriyet.com.tr/arsivnews.aspx?id=6140787.

41 Natali, The Kurdish Quasi-State, 93.

42Ayın Tarihi, August 7, 2007, item 7. The 2007 statements paved the way to more such statements by the Kurdish leadership between 2007 and 2009.

43 "Politics Likely to Limit China's Kurdistan Options," Energy Intelligence Finance, November 23, 2011.

44 Serena Chaudhry and Mariam Karouny, "Iraq Approves $560 Mln for Kurdish Oil Payments," Reuters, March 27, 2012.

45 "Oil Firms Confront Baghdad-Erbil Divide," International Oil Daily, November 13, 2012. This article also noted that Exxon has been considering its investment in the North (i.e., the Kurdistan Region).

46 "Iraq Northern Game Changer?," Energy Compass, November 18, 2011.

47 A good example of Ankara's nervousness with regard to the Exxon deal can be found in a report on the coming Iraqi licensing round, published by the Office of the Commercial Counselor in the Turkish Embassy in Baghdad in May 2012. As the report stated, "[The Iraqi] Oil Ministry has refused to accept the illegal contracts signed with the northern-based administration. ExxonMobil and American Hess, which had signed contracts with Iraq's northern-based administration, were excluded from the list." It is probably not a coincidence that the report omitted the word Kurdistan from the region's title and refrained from using its official title. See Petrol & Doğalgaz [oil and natural gas], May 2012, http://www.musavirlikler.gov.tr/upload/IRQ/petrol%20sektörü.docx.

48 This conclusion was reached based on a statistical analysis of civil wars in different parts of the globe. See Paul Collier and Anke Hoeffler, "Greed and Grievance in Civil War," World Bank Policy Research Paper (The World Bank, 2001).

49 Collier, "Ethnic Diversity: An Economic Analysis," Economic Policy 16, no. 32 (2001): 127-166.

50 Michael Rubin, "Is Iraqi Kurdistan a Good Ally?,"American Enterprise Institute Middle Eastern Outlook, 1-9; Kamal Said Qadir, "Iraqi Kurdistan Downward Spiral," Middle East Quarterly 14, no. 3 (Summer, 2007): 19-26; and Hussein Tahiri, The Structure of Kurdish Society and the Struggle for a Kurdish State (Mazda Press, 2007), 332-340.

51 Alexander Dawoody, "The Kurdish Quest for Autonomy and Iraq's Statehood," Journal of Asian and African Studies 41 (2006): 488; Kenneth Katzman, The Kurds in Post-Saddam Iraq: Report for Congress RS22079 (Congressional Research Services, Library of Congress, 2010), 10-11; Salah Nasrawi, "Kurdish Moves to Secession from Iraq," Al-Ahram Weekly 1095, March 22-28, 2012, http://www.weekly.ahram.org.eg/2012/1090/re7.htm; and Ofra Bengio, "Will the Kurds Get their Way?," The American Interest (November/December, 2012), http://www.the-american-interest.com/article.cfm?piece=1323.

52 It should be noted here that not only individual analysts of KRG actions have followed this tendency. The objection of the Turkish government to any sign of Kurdish unilateralism has been shaped by a similar perception.

53 Collier and Hoeffler, "Greed and Grievance in Civil War," 1.

54 Elliott Green, "What Is an Ethnic Group? Political Economy, Constructivism and the Common Language Approach to Ethnicity," DESTIN Working Paper Series 05-57 (February 2005).

55 Jenny Pearce, "Policy Failure and Petroleum Predation: The Economics of Civil War Debate Viewed 'From the War-Zone'," Government and Opposition 40, no. 2 (2005): 152-180. However, it should be noted here that Collier and Hoeffler, together with other authors, have actually taken this factor into account. See Paul Collier, V.L. Elliott, Havard Hegre, Anke Hoefler, Marta Renal-Querol and Nicholas Sambanis,Breaking the Conflict Trap: Civil War and Development Policy(World Bank, 2003).

56 Aleksi Ylönen, "Grievances and the Roots of Insurgencies: Southern Sudan and Darfur," Peace, Conflict and Development: An Interdisciplinary Journal 7 (July 2005): 99-134.

57 Edward Aspinall, "The Construction of Grievance: Natural Resources and Identity in a Separatist Conflict," The Journal of Conflict Resolution 51, no. 6 (December 2007): 950-972.

58 Emily Meierding, "No Blood for Oil? The Dynamics of Interstate Petroleum Disputes" (PhD diss., University of Chicago, 2010).

59 To borrow a term used by Robert Olson in describing relations between the KRG and Turkey in The Goat and the Butcher.

60 Usually in spite of general objection to such collaboration among the Kurdish public. See Tahiri, The Structure of Kurdish Society; and Azad Berwari and Thomas Ambrosio, "The Kurdistan Referendum Movement: Political Opportunity Structures and National Identity," Democratization 15, no. 5 (2008): 891-908.

61 Stephen Krasner, Sovereignty: Organized Hypocrisy (Princeton University Press, 1999), 9-25.

62 Especially since 2003; one example for the KRG's interdependence sovereignty was the KRG's capacity to allow into the region Christian refugees, but prevent Sunni and Shiite refugees the rights.

63 Scott Pegg, International Society and the De Facto State (Ashgate, 1998); Deon Geldenhuys, Contested States in International Politics (Routledge, 2009); and Nina Caspersen, Unrecognized States: The Struggle for Sovereignty in the Modern International System(Polity, 2012).

64 Barry Bartmann, "Political Realities and Legal Anomalies," in Tozun Bahcelli, Bartmann and Henry Srebnik, eds., De Facto States: The Quest for Sovereignty (Routledge, 2004): 15-16.

65 Often, this has come to replace notions of remedial sovereignty, namely secession as a way to compensate for past persecution or claims for historical rights over land. Ibid; Caspersen, Unrecognized States.

66 Nina Caspersen, "Separatism and Democracy in the Caucasus," Survival 50, no. 4 (2008): 114.

67 A good example for that is Somaliland, whose leadership frequently presents its achievements in combating both piracy and Islamist insurgency in the Horn of Africa as justification for its independence of the rest of Somalia. See Stig Jarle Hansen, Piracy in the Greater Gulf of Aden (Norwegian Institute for Urban and Regional Research, 2009).

68 Caspersen, Unrecognized States.

69 Pal Kolstø and Helge Blakkisrud, "Living with Non-recognition: State- and Nation-Building in South Caucasian Quasi-States," Europe- Asia Studies 60, no. 3 (2008): 483-509.

70 David Hirst, Oil and Public Opinion in the Middle East(Faber and Faber, 1966); and Carl E. Solberg, Oil and Nationalism in Argentina: A History (Stanford University Press, 1979).

71 Sonja Marta Halverson, "Small State with a Big Tradition: Norway Continues Whaling at the Expense of Integration and Nordic Cooperation," Syracuse Journal of International Law and Commerce 31 (2004): 121-148.

72 'Awni al-Bazzaz, "Aara wa afkar: adhwaa 'ala qanun mukafahati il-irhab fi Iqlim Kurdistan – al-Iraq" [thoughts and ideas: shedding light on the anti-terror law in the Kurdistan Region - Iraq], al-Ittihad, http://www.alitthad.com/paper.php?name=News&file=article&sid=14602.

73 Qassim Khidhir Hamad, "Ban Calls for Kurdish Compromise on Disputed Territories," Niqash August 13, 2009, http://www.niqash.org/articles/?id=2507&lang=en.

74 Lara Jakes, "AP Interview: Iraqi Kurd Leader Hints at Secession," AP, April 25, 2012.

75 As suggested, for example, by the ICG in "Oil for Soil," ii

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