Petrostrategies - The World Energy Weekly

Petrostrategies - The World Energy Weekly

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Shockwaves from the Kurdish referendum are sending ripples down the political backbone of the Middle East

Petrostrategies, October 9, 2017

The referendum of September 25, 2017, in Iraqi Kurdistan, in which 93% of the voters opted for independence, has created a potentially explosive situation. Baghdad and Tehran were quick to react: they cut off all ties with Erbil and closed their air space, which could end up paralyzing Kurdish airports. Damascus’s reaction was rather surprising as, whereas it considered this referendum “unacceptable”, it said it was prepared to discuss “autonomy” with the Kurds of Syria. Turkey is angry: it did not think that Kurdistan’s regional government (the KRG), which depends so much on Ankara’s support, would discard its advice and go ahead with the referendum. Turkey is in an awkward position: it risks losing out from this development, regardless of the path it chooses. The wrath of the Turkish leaders says a lot about the tricky stalemate in which they find themselves. The Turkish President, Recep Tayyip Erdogan, accused the KRG leader, Massoud Barzani, of “betrayal”. He brandished the threat of an “ethnic and confessional” war, and ordered his government to look into possible retaliatory measures. And he announced a visit to Tehran that can already be described as historic. The Turks and Iranians have even conducted some joint military maneuvers at the Kurdish-Iraqi border, in spite of the deep-seated and long-running mistrust between them.

Thus, the first result of the Kurdish independence referendum will be a rapprochement between Ankara and Tehran. Washington (which is already at odds with Erdogan and regards Iran as an “evil”) will definitely not welcome this evolution. The second result will no doubt involve relations once again turning frosty between Turkey and Israel which, alone in the region, openly announced its support for the “self-determination” of the Kurds. Prime Minister Netanyahou accused Ankara of supporting the “terrorists” of Hamas (the Palestinian organization that controls the Gaza strip), whereas for his part, he does not support the “terrorists” of the PKK (a pro-independence Kurdish guerilla movement operating in Turkey). Saudi Arabia is keeping silent. In June 2015, in New York, a Saudi Army General (officially retired) had publicly stated that he was hoping for the emergence of an independent Iraqi Kurdistan. Riyadh became even more pro-Kurd in June, when Turkey stood up for Qatar, which was hit by the embargo of the Saudis and their allies.

Turkey will no doubt decree retaliatory measures against Erbil. The probability of a halt to Kurdish oil exports via the Kirkuk-Ceyhan oil pipeline (650,000 b/d) has already been factored in by the oil market, where prices have risen. But the main question that comes to mind is whether the Turkish measures will prove to be a prelude to an escalation, or whether they will serve as the background to negotiations between Ankara and Erbil. The latter have a lot to say to each other: they could do each other much harm in case of confrontation, but they could also give each other a lot, if they cooperate. For the Kurds of Erbil, cooperation with Turkey is vital, in the literal sense of the word. While a confrontation could prove fatal for them. But Ankara would then lose all of the good will that it has earned with the Iraqi Kurds in recent years. Erbil has even allowed the Turkish army to set up bases on its territory to carry out large-scale military actions against the PKK. If their situation became critical, the Iraqi Kurds would be left with no other choice than to build closer ties with their counterparts in Turkey, Iran and Syria, thus worsening the instability and insecurity in the whole of the Turkish south-east, over nearly 800 kilometers.

Since the end of the war in Iraq (2003), a number of countries (at the forefront of which the US and Israel) have done a lot to strengthen the autonomy of Iraqi Kurdistan vis-à-vis Baghdad. But no country has done as much as Turkey. Nearly 1,400 Turkish companies have invested in Iraqi Kurdistan in all sectors, particularly construction and hydrocarbons. Turkey helped this region to build road infrastructure and a $500-million international airport. Ankara supplies it with the complement of electricity and refined products that it needs and which Baghdad refuses to provide it with. Turkey also trained and armed the Peshmergas of Iraqi Kurdistan. It set up financial circuits without which the Kurdish banking system would never have been able to function. It is this system that ensures the payment of the oil exported by the Kurds, which is purchased by Turkey, Israel and a number of European countries. Turkish-Kurdish trade volume is put at an estimated $7 billion/annum.

Turkey will do its utmost to prevent an independent Kurdish State from emerging on its south-east border. Yet it knows that a Kurdish-Iraqi entity—in whatever form—has no choice but to keep close ties with it, as it cannot survive without Ankara’s support, unless the latter itself rejects this new entity. Erdogan and his government will therefore think twice before looking to destabilize the regime of Masoud Barzani, on which they have pinned high hopes. Also, such a destabilization would favor the opposing Kurdish camp, that of Jalal Talabani, which is supported by Iran. The reign of Barzani is almost total in Erbil and to the west of the capital. For his part, Talabani exercises a strong influence over the eastern part of the Kurdish region, with the city of Suleimaniyeh as his stronghold. True, Talabani said the holding of the referendum was ill-advised, but he did not try to prevent it from taking place, even if he was strongly urged to do so by the Iranians. Here we touch on the external Kurdish challenges of the referendum, the holding of which no doubt boosted the legitimacy of Barzani. This was the aim (perhaps the main one) of the old leader, who continues as the de facto Kurdish President (even though his mandate came to an end on August 19, 2015), and which is highly contested because of his clan’s stranglehold on political power and on oil revenues.

Iraqi Kurdistan is a landlocked geographic entity for which the top priority is to have at least one aerial corridor and a land corridor that remain open to the rest of the world. If not, it will not escape suffocation, with the risk of social and political implosion. Turkey has been the only State in the region that offered these two large-scale facilities to the Kurds of Erbil: all Kurdish oil exports have been carried out to and via Turkish territory. The liaisons with the Turkish cities have been the most intense of all the links that the airport of the Kurdish capital has dealt with, and overland trade on the Turkish border has flourished in both directions. “They would all die of hunger if we were to close the border”, said an angry Erdogan, on September 26, and he is not entirely wrong.

The Turkish economy has taken considerable advantage of the Iraqi Kurds, who have provided it with cheap oil, while making massive purchases of “Made-in-Turkey” merchandise, and opening up attractive investment opportunities. The future outlook is even more promising, as the transit of Kurdish and Iraqi oil to Ceyhan could double and Turkey could receive and re-export to Europe up to 30 bcm/annum of gas, thus definitively comforting its position as an energy hub. On the geopolitical front, observers in Ankara see Iraqi Kurdistan as a buffer with Baghdad, while also considering it as a lever that can be pulled at will to exert pressure. These prospects are now under the threat of disappearing.

The September-25 referendum, which is not binding, will probably not lead to a declaration of independence in due form by the Kurds of Iraq, but the shockwaves that it is triggering in a region that is already steeped in chaos, is sending ripples down each and every vertebra of the political backbone of the Middle East. Thus, by announcing that it would consider the autonomy of the Kurds of Syria, Damascus is letting a new threat float to the surface, in the eyes of Ankara. While fighting against Daesh, the Syrian Kurds, who are supported by the US, have gained control over a large zone located to the south-east of Turkey, which runs from the Iraqi border to the outskirts of the city of Aleppo. This Kurdish-Syrian zone has very close ties with the PKK, Ankara’s “bête noire”. Below it, Iran has a land corridor that runs straight to the Mediterranean. It was opened up thanks to the victories that were won on the Syrian circuit by its Al-Quds brigade and its Hezbollah allies (with the support of the Russian air force) and also thanks to the lenient attitude of the Iraqi government, dominated by the Shiites.

Turkey’s worst nightmare (as well as that of Iran and Iraq, as it happens) is that the Iraqi Kurds will manage to link up with their Syrian compatriots. The Turkish army entered the region of Nineveh, in northern Iraq, in September 2015, to create a buffer zone and prevent the creation of such a junction, because if the latter were to occur, it would for the first time create a continuous and homogenous territory encompassing the four components of the Kurdish people, who are spread out between Iran, Turkey, Iraq and Syria. In the end, Ankara should acknowledge that if Iraqi Kurdistan cannot be annihilated, it would be better to strike an understanding with it, in order to at least stop it from attaching to the other Kurdish regions. But “realpolitik” is not the natural choice of path taken by Middle Eastern states.