Oil for soil: toward a grand bargain on Iraq and the Kurds

IV.Possible compromise
solutions

A.A Territorial Compromise

The key is Kirkuk. Both Arab and Kurdish officials seem to fear that by agreeing to certain territorial trades early on, they would lose their leverage to, respectively, retain/regain Kirkuk. For the KRG, the imperative is that Kirkuk become part of Kurdistan. Its vice-president, Kosrat Rasoul Ali, said as much when he declared in response to UNAMI’s June proposal, and after asserting that Kurds form the majority in both Hamdaniya and Mandali: “Let them [the Arabs/Turkomans] take Hamdaniya and Mandali. Kirkuk is the issue”.¹⁶⁸

In other words, the KRG’s maximalist demand for all territories that it claims historically had a Kurdish majority appears to be part of a bargaining strategy for securing Kirkuk at the expense of districts in which the Kurds constitute much less than the majority. As a Kurdish member of the federal council of representatives put it, “Kirkuk is a pressing issue for Kurdish politicians of both parties. It has more far-reaching results than demands on the other disputed territories. We rather exaggerate the latter so as to gain leverage for negotiations on Kirkuk”.¹⁶⁹

While UNAMI’s approach could lead to an outcome the KRG might accept – gaining Kirkuk and majority-Kurdish districts, but not majority-Arab/Turkoman and totally mixed districts other than Kirkuk – it is unlikely to do so. No Arab or Turkoman (except perhaps for the handful who joined the Kurds’ Kirkuk Brotherhood List) would agree to trade away Kirkuk for other districts. Their ability, via the federal government, to block progress on Article 140 implementation has made this abundantly clear. The government’s growing assertiveness in the second half of 2008 vis-à-vis its rivals, including the Kurds, is making the situation even more intractable.

If, as logic suggests, the territorial-compromise approach is bound to get stuck on Kirkuk, the question becomes whether the KRG’s position on Kirkuk is immutable or part of its bargaining strategy. The emotional hold Kirkuk has on Kurdish elites in particular suggests a middle ground will be hard to find. That said, the KRG has been unable to make headway in bringing Kirkuk into the Kurdistan region, and that reality might soon sink in.¹⁷⁰ This could point the way toward a more viable compromise: deferral of Kirkuk’s ultimate status in exchange for what, today, is of greatest practical importance to the Kurdistan region: extensive political and economic autonomy, open trade routes and a secure, UN-delineated and U.S.-guaranteed internal boundary.

B.A Grand Bargain

Claims to Kirkuk notwithstanding, what the Kurds arguably need most is protection for the Kurdistan region from a potentially powerful central state and surrounding countries, as well as a chance for the region to flourish by trading freely with the outside world. The KRG could meet these objectives by pursuing the following policy objectives: delineation of its internal boundary with the rest of Iraq, an advanced degree of political autonomy, significant economic leverage vis-à-vis the federal government, a decentralised Iraq to prevent the re-emergence of a powerful central state and peaceful relations with neighbours Syria, Turkey and Iran.

UNAMI is trying to solve the internal boundary question; its next proposal could be released as early as the end of November 2008. Should Iraqi actors agree with it, the federal Kurdistan region would receive both the boundary and the recognition it needs. Moreover, an overall deal could be supplemented with international protection, perhaps in the form of a U.S. military base, as some have suggested, or of a U.S. commitment to the KRG it will seek to prevent or punish any attempt to violate the boundary. The KRG already won extensive autonomy in the 2005 constitution; no KRG official has suggested it should be
increased. In economic terms, however, the KRG has yet to make strides. If it cannot have control over the Kirkuk field, it would need to gain economic leverage through the right to manage, develop and export the oil and gas of the Kurdistan region. An international energy expert offered this advice to the KRG: “Give up what you haven’t got to get something that you want: Give up Kirkuk to gain full control over oil and gas in the Kurdistan region”.¹⁷¹

Moreover, the KRG will need to be reassured that constitutionally mandated decentralisation will not be reversed, should a powerful central government rise again.¹⁷² And the KRG needs better relations with its neighbours. Economic ties with Turkey in particular have improved since 2003; the Ankara government prefers friendly dealings with a Kurdish autonomous entity ensnared in a web of economic relations over perennial enmity with an undeveloped, unhappy Kurdistan that would be uncooperative on issues of intense Turkish concern. Still, this relationship could become stronger yet if the KRG were to take strong action against the PKK.¹⁷³

Iraq’s Arabs, the great majority of the population, appear to prize the country’s territorial integrity above all;¹⁷⁴ they, therefore, would reject Kirkuk’s incorporation into the Kurdistan region if this increased the Kurds’ chances to become independent. Moreover, a strong nationalist current opposes surrendering any part of what is considered national treasure, its mineral wealth. Next, Iraqi Arabs, like the Kurds, want to be at peace with their neighbours after almost three decades of war and turmoil and be able to trade with them. In Kirkuk itself, Arabs want predominantly Arab districts outside the city, such as Hawija, to remain part of the governorate¹⁷⁵ – contrary to ideas aired by Kurdish politicians.¹⁷⁶ And they want Kirkuk to stay under the federal government, preferably as a stand-alone governorate, though some politicians appear willing to contemplate a one-governorate federal region (with extended powers, as per the constitution)¹⁷⁷ under certain conditions.¹⁷⁸

The primary concern for Iraq’s Turkomans, many of whom were born in towns in disputed areas, such as Kirkuk, and who have limited representation in Baghdad, is to be protected from both a powerful central government and a strong Kurdish regional government. They represent a Turkic outpost in an intense borderland struggle between Arab and Kurdish nationalism and feel squeezed. Their preferred option is for Kir­kuk to be a stand-alone governorate (as it was in Iraq’s 2004 interim constitution, the TAL) or a one-governorate federal region.

The dispute over Kirkuk to some extent has been internationalised, in part due to fear that Kirkuk’s absorption into the Kurdistan region could pave the way to Kurdish independence, a red line for the region’s three neighbours. Given this stake and their spoiling capacity, the latter’s views should be taken into account. Turkey, Iran and Syria share a strong preference for Iraq’s territorial integrity and notably for the Kurdistan region’s solid anchoring in the central state, for example via the hydrocarbons and revenue-sharing laws. They want Kirkuk and its oil wealth to stay under federal government authority. They also aspire to strong trading relations with the Kurds. Turkey in particular is keen to buy and/or export the KRG’s oil and gas and increase its companies’ investments there; it sees development of the KRG’s own mineral resources as a lesser long-term threat than inclusion of Kirkuk in the Kurdistan region. States such as Turkey and Iran also insist that the KRG crack down on violent non-state actors using Iraqi Kurdistan as a safe haven, notably the PKK and its Iran-focused sister organisation PJAK.¹⁷⁹

To protect their core interests, all actors will have to give something up. The KRG would have to defer its exclusive claim to Kirkuk. However, it could maintain the status quo in Kirkuk – demographic plurality and de facto political control – while continuing the process of normalisation, which should be placed under international supervision to review changes made since April 2003 and prevent any future demographic manipulation.

In addition to compromising on Kirkuk, which would allay the fears of Iraqi Arabs and the three neighbours, the KRG would almost certainly have to severely constrain the PKK. In exchange, trading channels could be widened,¹⁸⁰ and neighbouring states would stop interfering in the Kurdistan region’s affairs, whether directly or by proxy. Finally, the KRG would have to bring its contracts with international oil companies in line with a new federal hydrocarbons law.

Arabs would have to agree that certain majority-Kurdish districts join the Kurdistan region via a UNAMI-guided process and that the KRG be allowed, under the new hydrocarbons law, to manage its own oil and gas industry, consistent with a federal strategy and guidelines. They also would need to acquiesce in a special status for Kirkuk and perhaps certain other disputed territories that would reduce the federal government’s direct control. To permit the Kurdistan region’s development after decades of neglect, the federal government would have to grant the KRG an agreed and guaranteed share of the federal budget, as well as the right to issue contracts, as long as it renders these contracts consistent with standards outlined in the federal hydrocarbons law.

The federal government should publicly acknowledge the original crimes that added impetus to the Kurds’ demands over Kirkuk: Arabisation, the 1988 Anfal campaign and the gas attacks against Kurdish civilians during the tail-end of the Iran-Iraq war, most notably at Halabja.¹⁸¹ Playing down these events or denying them outright would do little to dampen the Kurds’ ambitions. Instead, the government should publicly recognise the former regime’s crimes and their victims and offer financial compensation to survivors.

For its part, Turkey would have to accept new realities, first and foremost the existence on its border of a Kurdistan region of unprecedented power and wealth. In exchange for concessions on Kirkuk and the PKK, and once a federal hydrocarbons law is in place, Turkey should actively promote open trade with the Kurdistan region and in particular purchase and/or export its oil and gas. This means dampening ultranationalist sentiments opposed to any type of relationship with Iraqi Kurds. An agreement endorsed by Iraq’s various communities and accepted by Turkey would be particularly important to Turkomans, whose survival as a small minority depends on a national consensus and a lessening of nationalist tensions in ethnically diverse areas.

The status of Kirkuk and its internal power arrangements will be among the most complex issues to address.¹⁸² Many Kirkukis point out that, as a multi-ethnic city, Kirkuk requires a multi-ethnic solution.¹⁸³ As Crisis Group proposed in an earlier report, one possible compromise is for Kirkuk to become either a stand-alone governorate administered by the federal government but with significant de facto ties to the KRG, or a uni-governorate federal region with (under the constitution) enhanced powers.¹⁸⁴ In any comprehensive deal, moreover, the window on Kirkuk’s possible incorporation into the Kurdistan region should be kept ajar via a mechanism designed to determine the area’s status following an interim period, given Kurdish sensitivities. In the past, Crisis Group has suggested ten years.¹⁸⁵ There are growing voices among Kurdish elites in (or from) Kirkuk advocating this kind of solution, even though they continue to believe Kirkuk eventually will join the Kurdistan region.¹⁸⁶

During the interim period, power should be shared between Kirkuk’s main communities. This is a principle to which all have agreed.¹⁸⁷ The challenge will be to find a specific formula they can accept as well. As noted above, when President Jalal Talabani made a visit of great symbolic and political significance to Kirkuk in late January 2008, he met with representatives of all sides and reportedly committed that appointments to major administrative positions would be allocated on the 32-32-32-4 per cent basis between, respectively, Arabs, Kurds, Turkomans and Christians. The KRG had already agreed to this formula for the yet to be created Kirkuk city council¹⁸⁸ but has rejected it for the provincial council, on which the Kurds currently hold a majority. Arabs and Turkomans, in turn, have rejected elections to the provincial council. Under Article 23 of the September 2008 provincial elections law, a committee is to present a consensus-based recommendation on the form of provincial elections in Kirkuk.

A compromise solution could involve something between an election and a power-sharing arrangement:
a caucus election within each community for a fixed number of council seats,¹⁸⁹ with the number of seats tilting further toward the Kurds. Indeed, a formula for such a quota-based election would have to recognise the Kurds’ political and demographic power, without giving them an absolute majority, while allowing the Christians to hold the critical swing votes: either 24 Arab – 24 Turkoman – 48 Kurd – 4 Christian, or 23-23-46-8.¹⁹⁰ For all other levels in the governorate (executive positions, district, sub-district and city council seats, as well as senior directorate positions), the 32-32-32-4 formula would be applied.

In outline, a grand bargain would essentially be an “oil-for-soil” deal – the KRG gives up or defers its exclusive claim on Kirkuk governorate in exchange for the right to manage its own oil and gas industry and export what it produces. It would contain the following elements:

• 
  Territory. UNAMI would guide a process to delineate a contiguous internal boundary for the Kurdistan region by making specific recommendations to the federal government to allocate districts and sub-districts to either a governorate in the Kurdistan region or their current governorate, based on the criteria it used in its phase one proposal of 5 June 2008. Kirkuk governorate would become a stand-alone governorate, or single-governorate region (to be determined), on an interim basis for a period of ten years. During that interim period, power would be shared and a mechanism would be established with UN assistance to determine the governorate’s ultimate status. The federal government would submit UNAMI’s recommendations as a yes/no proposal to a popular referendum in the areas concerned and implement it, if and when approved, consistent with Article 140 of the constitution.
  
• 
  Resources. Parliament would approve and the executive enact a federal hydrocarbons law (and companion revenue-sharing law) that provides for equitable development of oil and gas throughout Iraq, including the Kurdistan region; accepts the Kurdish oil and gas law; and recognises the KRG’s right both to manage its own fields and to export oil and gas.
  
• 
  Powers. The devolution of powers to the Kurdistan region would remain as stated in the 2005 constitution.
  
• 
  Constitution. The constitution would be amended to reflect the above compromises on territory and resources, as well as Kirkuk’s status. In addition, all sides would agree to a ten-year moratorium on the formation of federal regions south of the Kurdi­stan region and a constitutional limit on the size of such regions to three governorates (Baghdad excluded, which would remain a decentralised capital).¹⁹¹
  
• 
  International Support. The UN Security Council would endorse UNAMI’s recommendations, as well as the federal government’s decisions concerning the above.
  
• 
  Turkey-KRG Relations. The KRG would restrict the movement of PKK personnel in the Kurdistan region, disarm its fighters in areas under effective KRG control and prevent them from using the region as a staging area for armed attacks in Turkey.¹⁹² Turkey would establish formal ties with the KRG, put in place an economic policy of open borders with Iraq (in effect the Kurdistan region), encourage investment by its companies in the Kurdistan region and allow the KRG to export oil and gas to its Mediterranean port of Ceyhan.
  
• 
  Elections. Provincial elections would take place as per the provincial elections law approved in September 2008, by 31 January 2009. Elections to the Kirkuk provincial council would be carried out once election rules have been set in a separate law and a power-sharing arrangement for key positions has been put in place as part of a UNAMI-guided process, according to Article 23 of the provincial elections law.
  
• 
  Power sharing in Kirkuk. Senior executive (governor, deputy governor), administrative (directors general and their deputies) and quasi-legislative (district, sub-district and city council) positions would be distributed among Arabs, Turkomans, Kurds and Christians according to a 32-32-32-4 per cent formula. Provincial council seats would be divided among these communities according to either a 24-24-48-4 or a 23-23-46-8 per cent formula prior to elections, which should be held as caucuses within each community for the designated seats.
  

The odds against a grand bargain are enormous. Iraqi parties still hold to incompatible positions, and potentially destabilising factors abound. Washington’s policy will be in a transitional stage until sometime in the first half of 2009, when a new administration settles in and frames its approach. Iraq will go through two critical electoral exercises in the span of a year: provincial elections by 31 January and a parliamentary contest before the end of 2009. Integration of the awakening councils’ members into the security apparatus and bureaucracy remains doubtful, their loyalty uncertain. And Kirkuk’s undecided status will continue to be a lightning rod for rival Kurdish and Arab nationalisms, struck with each unilateral move, whether in the form of military manoeuvres, oil contracts signed or wells dug somewhere in the disputed territories.

These obstacles notwithstanding, there is little time to waste. The current effort to reach agreement on a hydrocarbons and related laws as well as on the constitutional review is unlikely to succeed; the same goes for efforts to determine a workable and consensus-based power-sharing arrangement in Kirkuk. Meanwhile, U.S. leverage inevitably will diminish as its forces begin to leave Iraq.