Kurdish Independence: It’s All About the Oil

Oct 5, 2017 | Amy Myers Jaffe
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For over a decade, U.S. efforts to promote stability across the Middle East have run afoul of many complexities. The recent independence referendum in the Kurdish Regional Government (KRG) territory of Iraq is no exception. Both the sudden actualization of the referendum and some of the related geopolitical maneuvering associated with it, could provide new challenges for the United States in the region and harken back to a repeating failure of even seasoned American diplomats to head off conflicts over the final dispensation and control of important disputed oil and gas assets.

The idea that Iraq’s Kurdistan region meets the prerequisites for nationhood is compelling. An independent Kurdistan was, in fact, drawn into the Treaty of Sevres almost a century ago in 1920. But the devil will be in the details of how the long-term status of the KRG gets resolved. Many complicated variables have to be navigated in the post referendum equation. Seasoned experts will weigh in on the complicated politics that has led to the KRG action and how it should be handled by the United States. This blog is aimed to underline specifically how any effort to mediate conflicts arising from the referendum will need to consider carefully the oil geopolitical aspects to the crisis. At issue is not just the possible loss to the global oil market of 500,000 to 600,000 barrels a day of Iraqi oil exports from KRG controlled territory via Turkey. In today’s oil world, this volume would eventually, if not quickly, be replaced. Rather, it is the dangerous precedent of letting subnational political and military “events” and shifting regional geopolitical alliances dictate the final dispensation of the Kirkuk oil field, which sits in historically disputed territory, before an adequate effort at a negotiated (read, internationally legally binding) resolution can be attempted.