Iraq's civil war: Fueled by Kurdish oil, tied to Iran

Iraq knows that it cannot let the Kurds act autonomously in their oil fields.

As the civil war continues to ravage Syria, another civil war looms over its neighbouring country Iraq. Instead of looking towards the heavens and questioning fate, one need only look into the oil fields of Iraq to see the reason behind the impending civil war.

After the fall of the Saddam regime in 2003, the Kurds have been gearing towards achieving independence from Baghdad and already run a semi-autonomous region through the Kurdistan Regional Government. This region has its own ministries and a parliament with its capital city being Erbil (also called Hewler in Kurdish language).

Oil is one the reasons that keeps the Kurds at loggerheads with Baghdad. This time the situation has reached a point where a war between the two sides might be declared on the very slightest provocation.

The provocation, it appears, is the planned excursion of Exxon Mobil and other oil companies into the Kurdish region to drill for oil. The Iraqi government has said that if Exxon or any such company comes to the disputed Kurd territories, then they “will face the Iraqi army”.

On November 20, 2012, the Iraqi government dispatched thousands of troops and reinforcements to the front lines of the disputed Kurd territory, when a shootout between Iraqi and the Kurd Peshmarga forces, over an unpaid gasoline bill, took place in the town of Tuz Khurmatu. Relations have been extremely strained and unstable since then.

Ever since Saddam’s fall, the Kurdistan government has been maneuvering to distance itself from the main Iraqi government and projects itself as a safe a haven for the world oil companies, and all the signs show that the western oil companies are taking the bait.

With the declining security situation in Iraq, car bomb explosions, sectarian strife and the fact that the Syrian civil war might soon spill into Iraq, it only appears logical for the western companies like Exxon, Chevron, Mobil and even some Turkey and UAE based companies to come into the Kurd region for oil exploration.

This situation is not helped by the fact that the Iraqi oil contracts are the toughest in the world and still offering the lowest returns.  Other problems that arise are security issues and a deteriorating infrastructure that has suffered from the ravages of decades of war.

While companies are racing towards the Kurd region because of lucrative contracts offered by the government, the southern Iraqi region stills remains crucial to global oil supply. However, it is the events on the ground that shape the future.

Iraq’s government led by Nouri Al Maliki is striving to maintain closer ties with Iran, a move that has earned the displeasure of Washington. In addition, the Iraqi government has made little or no effort in stopping the arms supply from Iran to the Assad-led Syrian government. Furthermore in a sign of increasing independence from the US, the Iraqi government freed a key Hezbollah leader Ali Musa Daqduq, considered by the Americans as a threat to their interests in the region.

All these issues, it seems, are compounding the already complex security situation. If the Iraqi government continues to seek closer ties with Iran, the US and its NATO allies might be forced to rethink their arms and economic aid to the fragile Iraqi democratic government.

The western powers certainly do not want Iraq to have any ties with Iran. Iran, on the other hand, wants to woo Baghdad as the Assad-led government is nearing its end and might be replaced by a conservative Sunni government, which may not be very friendly with Tehran.

The Shia government of Iraq is already on the hit list of al Qaeda’s chapter in Iraq (AQI) and the Iraqi government fears the influx of Sunni fighters from Syria into Iraq. This has been confirmed by the fact that the AQI (in a hugely ironic twist) has actually benefited from the American backed Syrian civil war and has increased its terror activities in Iraq.

If al Qaeda actually establishes itself in Syria, then Iraq would face a security crisis that would be reminiscent of the Bush era occupation, with Improvised Explosive Devices (IEDs), suicide attacks and car bombings becoming a daily feature.

All this would ultimately affect the oil supply from Iraq, and so, world oil prices. The western and Middle Eastern oil companies are very interested in the Kurd oil fields, and Iraq is wary of this because it would mean loss of precious oil revenue in the future and increased security concerns.

That is why Iraq does not want the Kurds achieving autonomy over the oil fields in their areas. The Syrian civil war has given new impetus to terror activities in the Middle East and it appears that the effect will be felt outside the region, too.

Read more by Jamaluddin here or follow him on Twitter @einsjam