The Turkish-Kurdish Energy Deal Could Pave Way for Iraq’s Breakup

Aug 31, 2015 | Ozan Serdaroglu
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When they signed an energy agreement in November 2013, the Turkish AKP (Justice and Development) government and the Kurdistan Regional Government (KRG) of Northern Iraq faced an important challenge.

Their deal to export the 45 billion barrels of oil lying in Iraqi Kurdistan via the Turkish port of Ceyhan was not only a risky cooperation initiative within a chaotic region but also lacked international recognition. Perceived as a fait accompli, the agreement was condemned by the central Baghdad government, declaring any sale without its approval as unconstitutional and this stance was also backed by the US government.

Furthermore, according to the agreement, the revenues would be deposited in the Turkish state-owned Halkbank which was under Washington´s spotlight for receiving payments in Turkish lira on behalf of Iranian energy exporters (The US-led sanctions then prevented Iran from being paid in euros or dollars and the Iranian exporters were buying gold with their Turkish money which they later sold it in Dubai in foreign currency). Shortly after the energy agreement was signed, Halkbank made international headlines when its manager was detained on 17 December for allegations of receiving bribes for organising illegal transfers to Iran.