Maliki Capitulates on the Kurdish Oil Deals, by Reidar Visser

February 5, 2011 at 10:17 pm | Posted in Turkmens | Leave a comment
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Maliki Capitulates on the Kurdish Oil Deals

Posted by Reidar Visser on Saturday, 5 February 2011 16:04

Comments to AFP by Iraqi Prime Minister Nuri al-Maliki today on the oil deals signed by the Kurds are nothing short of sensational. That exports from the Kurdistan fields will go ahead has been rumoured for some time, but the more crucial point is the clear assertion by Maliki that the contracts signed by the Kurds with foreign companies will be honoured.

To appreciate the extent of the change of Maliki’s position, one needs only remember the vehement criticism of these bilateral deals by his point men on energy issues like Hussain al-Shahristani and Abd al-Hadi al-Hassani. It was this kind of opposition that led to the breakdown of the first export attempt back in summer 2009. In fact, just weeks ago, oil ministry officials were adamant that even if the exports were to be resumed, costs only (and not profit) were to be paid to the operating foreign companies by the central government.

In terms of the perennial debate about the constitutional right of provincial entities to sign contracts without reference to Baghdad, Maliki appears to sidestep the question somewhat by offering an ad hoc justification to the effect that oil drilling in the Kurdish areas is technically more difficult than in the south and for this reason it is permissible to accord greater profits to the companies that invest in the north than those operating in the south (where technical service contracts and more modest per-barrel remuneration have been the norm for foreign companies dealing with Baghdad). In this way, it looks as if the affair has been dressed up as the oil ministry “recognising” the deals because of the special geological challenges presented by the Kurdistan region, but it still begs the question of whether any deal signed by the Kurds in the future, regardless of profits etc., will automatically be recognised. The question is important, because according to the constitution, existing governorates can do exactly the same as federal regions as far as oil is concerned, and the issue of bilateral energy deals between governorates and foreign companies therefore forces its way onto the agenda as a potential domino effect that could gradually make Baghdad less influential in the energy sector (and, arguably, in governing the country as a whole). What if an existing governorate can reiterate the Kurdish argument about having a particularly challenging environment for drilling oil or gas?

The political dynamic that has enabled these development has its roots in late 2009, when it became increasingly clear that Nuri al-Maliki was failing in an attempt to turn his State of Law coalition into a truly national political entity with appeal beyond the Shiite-majority areas of Iraq. Further weakened by the de-Baathification issue and results in the 7 March 2010 elections that were worse than he had hoped for, he needed both Iranian and Kurdish support to clinch a second nomination and to form the government. The Iraqiyya component in the government that was declared in late December was surprisingly strong and the Kurdish one comparatively weak, but Maliki has since come under fire for issues such as attaching the independent commissions to the executive, prompting protests from both the Kurds and Iraqiyya and even a surprise initiative to establish a new federal supreme court. In this kind of situation he is giving concessions to the Kurds even though they alone don’t have the votes to keep him in office. These developments are also a major defeat for his oil minister, Shahristani, who was unable to ramp up short-term production in the south and thereby became dependent upon comparatively modestly sized exports from the north while he is waiting for his own string of deals with foreign companies to come to fruition.

The big question is how Iraqiyya will react, since its constituencies are critical of the Kurdish oil deals and concessions to the Kurdistan Regional Government in disputed questions generally. In that kind of perspective, the logical thing for it would be to withdraw from government and focus instead on an opposition role headed by the speaker of parliament, Usama al-Nujayfi (Adnan al-Janabi of Iraqiyya also won the presidency of the parliamentary oil and gas committee today). However it does seem its members are more concerned with more Byzantine ways of seeking power in government, including vice presidencies (Hashemi) and strategic policy councils (Allawi). In fact, Iraqiyya is rumoured to be asking the Kurds for help in both of these issues, signifying the extent to which Arbil has managed to come out on top in the latest developments despite a somewhat adverse point of departure.

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