One of the key problems blighting Iraq lies in the lack of accord among the main communities of Iraq, namely, the Shias, Sunnis, and Kurds. In 2005, Iraq adopted a federal constitution, which the Kurds played a major role in drafting. One goal of the constitution was to devolve a large part of political, economic, and administrative powers from Baghdad to the Iraqi provinces, as well as divert a considerable portion of oil revenues to them. But the new constitution soon met with two major obstacles: the ambiguity which marked many of its provisions, especially those addressing the relationship between the central government and the provinces; and the lack of faith among the Arab constituents (Sunnis and Shias) in the federal system, at a time when the Kurds adopted the view which held that continuing to be part of the new Iraqi state on their part required implementing the constitution to the letter, particularly those articles related to their affairs. The Kurds also adopted a policy of full participation in the political authority and the decision-making process in the federal government. But despite the importance of this issue in their political program, it was not at the top of their priorities, which include a comprehensive agenda calling for the establishment of the autonomous Kurdistan region, which is what happened. The Kurdistan Regional Government (KRG) went on to sign around 50 production sharing agreements with international oil companies, which the central ministry of oil only heard about through the media. The KRG also achieved most of its development goals, while Baghdad failed to develop the rest of Iraqi regions, and even to provide basic services to Iraqi citizens like water and electricity, not to mention security. All this has exacerbated disputes with Erbil, while the KRG continued to implement its comprehensive agenda at a time when it receives around 17 percent of overall Iraqi oil revenues. Yet negotiations between Erbil and Baghdad endured despite many major differences, mainly because of Iranian pressure on Baghdad. However, it was clear that they failed to reach agreements on many of the basic contentious issues, especially those involving the oil resources. On June 3, President Masoud Barzani told Reuters that the KRG would be forced to adopt a "new form of relations" with the government in Baghdad, if negotiations failed to reach an accord over oil and territory. Although Barzani had previously threatened to secede from Iraq, he told the news agency that the current round of negotiations was the last chance to end the disputes, which he said was a huge obstacle to the federal system in the country. Barzani said, "There has been a softening of their (Baghdad's) position, but practically speaking there has been no progress. Either we will be able to reach an agreement... or we will have to think of a new form of relations between the region and Baghdad." Oil has played a crucial role in Iraq the past fifty years. Every decision related to oil has a profound effect on the future of the country and its policies. Recently, the KRG took a bold—if not a far-reaching— decision to build a pipeline to export Iraqi crude oil directly from its territories to Turkey, with a capacity of 300 thousand barrels per day (bpd). The pipeline would link the production fields in the KRG to the Faysh Khabur pumping station (located within Iraqi borders near Turkey) which feeds the Kirkuk-Ceyhan pipeline grid. This is while bearing in mind that this grid and the Faysh Khabur station are owned by the central government of Iraq on the Iraqi side, while the pipeline grid within Turkish territory is owned by the Turkish government. Exporting Iraqi oil in this fashion, which is set to begin early next year, is therefore a flagrant violation of the Iraqi constitution. Hussain al-Shahristani, Deputy Prime Minister of Iraq, has threatened to sue the KRG in the event export of Iraqi oil takes place through the pipeline in question. The repercussions of exporting oil through the pipeline entails a significant challenge by the KRG for the Iraqi constitution, which the Kurds have called on Baghdad to adhere to, and which gives them considerable power and political autonomy from Baghdad, not to mention financial power which enables them to rely on their own resources rather than on Baghdad. However, the international oil companies operating in the KRG are concerned about the Kurdish decision, because it would result in the Baghdad government suspending the payment of exploration and drilling fees which these companies collect, worth billions of dollars, not to mention the legal impediments Baghdad can impose on marketing their oil. Recently as well, the Turkish government approved the usage of a part of the Kirkuk-Ceyhan pipeline (which encompasses two separate pipelines with a nominal capacity of 1.6 million bpd). However, the State Oil Marketing Organization (SOMO) of Iraq does not pump more than 450 thousand bpd in one pipeline, and the reason Ankara has been hesitant in approving the move was its concern for the relations with Baghdad. According to US press reports, Washington advised the KRG not to go ahead with building the pipeline, fearing its political implications which could lead to the partitioning of Iraq. Nevertheless, it is clear that the KRG intends to press ahead with the project, as it has already built around 90 percent of the pipeline. And at the same time, there are concerns in Baghdad over the possibility of a radical shift in relations with the KRG, should the pipeline come online next year. It has become clear for Iraqi politicians, regardless of their respective affiliations and interests, that the situation is extremely fragile in the country and the region, something that should prohibit reckless adventures. And since the constitution stipulates federalism, and referenda for amendments to those ambivalent articles of the constitution, this means agreeing to a new system of government for the country is necessary, in such a manner as to avert running all the affairs of the country from Baghdad. Furthermore, oil revenues must be distributed equitably among the provinces and regions. Since the KRG has taken major oil-related decisions, it is difficult to reverse those now, and Baghdad has to accept the fait accompli. The KRG, if it has the will to continue to be part of Iraq, must allow the federal government to be the designated owner of the new pipeline, and hand it over to the legitimate authority authorized for the task, namely, SOMO. * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
