Understanding the balance of power in the Kurdistan Region of Iraq, and identifying KRG strategies toward greater autonomy in the face of regional competing interests.

“We’ve been at the fault lines of the Arab, Persian, and Ottoman empires for thousands of years,” explained KRG Deputy Prime Minister, Qubad Talabani, in an exclusive interview with the author. “So we are under no illusion that we could manage all these different countries to our benefit.”

Geography has been perhaps less-than-gracious to the historical memory of the Kurdish nation. Having been exploited throughout much of its history by the imperial ambitions of its neighbors, greater Kurdistan has for centuries faced the challenge of balancing these three empires. Much of the time to little avail. Such an exacting challenge, coupled by its age-old struggle to unite around a common national-banner, has ultimately spoiled the Kurdish desire for independence.

Although some of the these vexing impediments still remain stark amongst greater Kurdistan, today the Kurds of northern Iraq play a much larger role in the regional dynamics of their neighborhood partly as a result of their semi-autonomous unity-government. The union, by no means infallible, between the Kurdistan region’s main-rivaling political parties, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), is part of a 2006 re-unification process that re-established the KRG in the region’s capital of Erbil. Since the unification, Erbil has taken unprecedented steps toward greater independence from the Iraqi federal government in Baghdad, even stoking its Kurdish population’s national desires through its recurring calls for statehood on the international stage.

Beginning as a region formerly made up of only three provinces in the northern periphery of Iraq’s federal system, as part of the post-Saddam Iraqi provincial configuration, the KRG has made significant strides in independently developing its infrastructure, economy, and foreign relations, particularly in the last decade. It has expanded its territory over Iraqi-Kurdistani disputed lands outside of its designated region by leading spectacular victories over the so-called “Islamic State” on the battlefield (albeit with the crucial support of coalition airstrikes), fashioned its own petroleum policy to the chagrin of Baghdad, and has furthered its regional relationships. These impressive developments have led some to speculate about the potential rise of an independent, proactive Kurdistani state in the region.

However, it has been made clear across political parties inside Erbil that the KRG’s greatest challenge is not the task of actually declaring statehood, but rather its ability to maintain independence without submitting to more powerful, external forces. Erbil realizes more than any actor that its success, lest its collapse, is largely determined by its ability to forge meaningful relations with its immediate neighbors. Moreover, vigilance and prowess in balancing those relations is of equal importance.

“There’s competing interests between Persia and the Ottoman Empire today in Kurdistan,” explains DPM Talabani. “Arab interests is somewhat confused and distracted, but we have to have equal distance from both Turkish and Iranian sides.” Much like its past, Iraqi Kurdistan still faces a clash of interests dispersed from both its Turkish northwest and Iranian east. Ultimately, Ankara and Tehran’s respective de-unification and unification policies toward Iraq have ultimately determined their divergent approaches toward the KRG.

Turkey’s relations with the KRG is a function of its greater strategic and economic interests in the Middle East

In 2006, Turkey’s foreign policy doctrine began placing greater focus on the Middle East. Dubbed the “zero problems with neighbors” policy, an economically thriving Ankara dedicated itself to building a more stable neighborhood by taking on the impartial task of mediating between conflicting parties in the region. Whether the formulation of its foreign policy doctrine always existed partly as a pretext, or in reaction to its subsequent frosting relations with Jerusalem, Baghdad, and the EU, it appears that Ankara is currently seeking partisan relationships in the Middle East. These efforts come seemingly without much regard for issues concerning regional stability. Rather, they appear to stem from cold, geostrategic calculations.

In previous years, particularly after the culmination of Tehran’s formidable ties with Baghdad following the establishment of the post-Saddam Iraq, Iran has been increasingly viewed as a threat to Ankara’s goals in the country. Moreover, Tehran’s crucial backing of Syrian President, Bashar Al-Assad’s forces in the Syrian civil war has only further menaced Ankara’s foreign policy goals.

Partially in reaction to Baghdad’s alignment with Tehran, coupled with former Prime Minister, Nouri al-Maliki’s, oppressive-sectarian rule, subjugating Sunni groups who might have otherwise pushed for closer relations with Ankara, the Turks altered their Iraq policy from primarily engaging the federal Iraqi government as the representative body of the entire country, to forging group-based relationships in the country where it could maintain its sphere of influence in specific regions. In short, Ankara could now forgo Baghdad without losing all of Iraq.

Such posturing has necessitated direct economic relations with the KRG, far more than what is legally permitted according to Baghdad. Indeed, Ankara set up oil exporting deals with Erbil knowing full-well the Iraqi federal government had not recognized the legality of Erbil’s independent oil trade.

As a result, Turkey has reaped both political and economic gains in its trade and investment with the KRG. The Kurdistan region’s oil-rich geography has offered international oil companies lucrative opportunities in petroleum production that it can, in turn, sell to the global market via the Kirkuk-Ceyhan pipeline. This is an incredibly important pipeline for Erbil, as it provides its international oil companies with a cost-effective avenue to sell its oil to the global market through the Mediterranean Sea, but only by way of Turkey. According to Dr. Bilal Wahab, a KRG expert leading the Center for Development and Natural Resources in Suleimani, “Turkey’s economy is energy-thirsty…[it] is eyeing Iraq’s natural gas, which Turkey needs for its domestic energy consumption and industry.”

However, Turkey’s major gain from this economic relationship is not monetary. It is important to note; Erbil’s oil exports through Turkey, nearing 580 barrels per day in May, is its principal source of revenue. The KRG is largely dependent on Ankara’s share of the pipeline for its oil exports. Halting the flow of oil from the Kurdistan region to the global market has disastrous economic repercussions for the KRG. For instance, when parts of the pipeline were temporarily shut down as a result of militant attacks by affiliates of the Kurdistan Workers’ Party (PKK) in late July 2015, the KRG claimed the assault had cost them over $250 million in revenue. The amount is equivalent to the entire monthly budget for salaries of its security forces, including its over-extended military, the Peshmerga, who are still active in their fight against IS forces.

The current arrangement illustrates the deleterious consequences facing the KRG should it decide to go against Turkish interests; like supporting upheaval amongst Turkey’s sizable Kurdish population, reacting against Turkish intermittent attacks on the PKK, as well as Kurdish villages inside Iraqi territory, or even taking Ankara to task for its dispassionate, enigmatic approach between its dealings with IS, and the Kurds effectively fighting the Jihadist group.

Iran’s relations with the KRG is ultimately a function of its broader Iraq policy

On the other hand, Iran, incidentally in alignment with the US, promotes a one-Iraq policy. Tehran’s calculus in Iraq is mainly based on protecting its national security interests by reinforcing stabilization through better unification. Additionally, it appears the Iranians view the splintering of Iraq into Kurdish, then Sunni, states as a threat to its strong political and economic clout in the country.

Further destabilization in Iraq means dire consequences for Iran: the progression of IS toward Iran’s western borders; Kurdish unrest within Iran’s large Kurdish population (specifically in the event the KRG feels it must make a break for independence in greater chaos); and similar unrest from its own Arab-Sunni population bordering southern Iraq. Iran is widely-believed to have lost over a million soldiers and civilians during its devastating war with Iraq in the 80s. Such deep socio-psychological scars still remain in Iran’s national memory causing collective fear of what a destabilized Iraq might mean for the security of Iran.

Tehran’s formula for stabilizing Iraq is to unify the country. To this end, Iran has been pushing for greater representation of divergent ethno-religious groups in the Iraqi central government. Indeed, Iran has been a force in spurring Baghdad to include Kurds and Arab-Sunnis in the central government. For instance, Tehran made significant moves to pressure the sectarian former prime minister, Nouri al-Maliki to step down by reallocating its support for current Iraqi prime minister, Haider al-Abadi.

Moreover, Iraq is a large market for Iran’s economic trade interests totaling to $12 billion in trade in 2013, and is expected to reach $20 billion in 2015. Iran’s close ties with Baghdad means that it can ultimately enjoy a greater sphere of influence in Iraq, particularly if it is unified, whereby the federal government controls the entire country’s oil exploration and trade policies. A splintered off Iraq could significantly weaken Iranian political and economic relations in Iraq. In short, the greater goal for Iran in Iraq is to have a united, stable neighbor.

However, the Iranians are still active in maintaining relations with Erbil despite its defiance toward its allies in Baghdad. Although Tehran wishes the KRG to abandon its moves toward greater, and perhaps ultimate, independence, reacting with punitive measures may cause adverse alternatives.

Indeed, Tehran maintains economic relations with the KRG partially to check Ankara’s complete influence over the Kurdistani enclave. In 2013, Tehran-Erbil trade surpassed $4 billion, in effect making Iran the KRG’s second largest trading partner. In the previous year, Tehran has been negotiating with Erbil to extend trade by establishing natural gas and oil pipelines across their borders.

Moreover, through maintaining close political, economic, and security relations, Iran is better able to keep an eye on US and Israeli developments in the region. The Iranians fear a concerted Israeli military partnership in the Kurdistan region that could be used against them, much like the one developed to its north in Azerbaijan in previous years.

The Financial Times recently raised awareness of Israel’s growing oil ties with Erbil reporting that according to shipping data, trading sources, and satellite tanker tracking, “Israeli refineries and oil companies imported more than 19m[illion] barrels of Kurdish oil between the beginning of May and August 11.” This is believed to be approximately 77 percent of Israel’s average demand. Likely knowing of such a relationship, Tehran wants to ensure that such significant economic relations for both Jerusalem and Erbil do not evolve into extensive military ones.

Finally, to prevent instability in Iraq, Iran was the first country to provide the Peshmerga with crucial arms and ammunitions to prevent Jihadist advances. KDP’s head of Foreign Relations, Hemin Hawrami, begrudgingly admitted Iran’s presence in Iraq during the Peshmerga’s earlier battles against IS, “Yes, [Major General] Qassem Suleimani and the Iranians — they tried to offer [military support], unfortunately the Turks refused to offer something. The Americans were late, and the Iranians they were the first country to send some shipments of ammunitions that we needed for our fight.” Tehran’s own forces and its organized Shia militias have coordinated across divided Peshmerga forces in their fight against IS.

In order for the KRG to become a viably independent and more proactive actor in the region, it must make substantial changes to its bilateral relations. Moreover, it must reform its domestic political system and mismanaged, oil-dependent economy

Currently, Turkey weighs far too heavily at its end of the Kurdistani scale. With Ankara’s strong political and economic influence over the region, Erbil cannot afford to risk confronting the Turks. To be fair, at the moment it does not appear that Ankara is leading its relations nefariously with Erbil. However, because the KRG has invested – perhaps too much – of its eggs in the Turkish basket, a change in Ankara’s regional calculus could end badly for the economics of the entire Kurdistan region. Moreover, Ankara’s conflict with the PKK often forces Erbil to refrain from reprimanding Turkish military actions against them or from their collateral damage to Kurdish villages in Iraqi soil. As a result, this has also been stoking tensions between the KRG and the PKK.

To balance Turkey properly, Erbil must look to extend its relations with Iran. Iran is already an important economic trading partner for the KRG. However, due to the crippling international sanctions regime imposed on the country over its controversial nuclear program, trading has been far less robust than that of Turkey. According to Dr. Nader Entessar, a prominent scholar of Kurdish politics, it is speculated that the KRG’s trade with Iran is around a fourth of its trade with Turkey.

Many opportunities lie with strengthening trade relations with Iran. Perhaps the ideal scenario for the KRG’s task of adequately balancing Turkey is by establishing a cost-effective oil exportation avenue into the Persian Gulf through Iran. Such a route, ostensibly by pipeline, though also reportedly being considered by truck or train, would provide international oil companies in Kurdistan with additional access to the Asian market via the Gulf. This would allow the Kurds to avoid having to cooperate with Baghdad for a pipeline treading down through unstable Iraq to the Gulf. At the moment, Baghdad seems to have neither the ability nor desire cooperate on such a grand Kurdish endeavor.

Indeed, oil exports through Iran have been on Erbil’s radar for the last decade and have reappeared in continuing trade negotiations with the Iranians in the last year. It is still unclear whether there are plans for a pipeline intended for Kurdish oil exports into the Persian Gulf via Iran. Dr. Entessar is skeptical of a large-scale pipeline being built anytime in the near future, citing that “there is very little [in Tehran’s interests] in such a project for Iran, and the KRG does not have the financial resources to help much in constructing such a pipeline.” However, Erbil and Tehran have agreed to construct two transnational gas and fuel pipelines within modest distances from their shared border. Kurdish media has also reported that Erbil’s leaders are considering an offer proposed by Tehran to provide the KRG with access to an overland route into the Persian Gulf for oil exports.

“Iran is an important neighbor of our country…Iran will play a positive role in the economic area of Kurdistan,” explained former head of the Gorran bloc in the KRG parliament, Dr. Rabun Maroof. “It will bring more boom to our economy.” The lifting of international sanctions within the next year will open up a $400 billion economy to the international community, allowing Iran smooth transactions with the world, including its direct neighbors. Due to international engagement, and re-integration into the world economy, it has been widely-predicted that Iran’s economy will grow exponentially in the coming years — allowing it to take on much larger, lucrative projects. This may be the impetus the Kurds need to effectively nudge Tehran for greater cooperation on bilateral pipelines intended to further export oil eastward.

Some, particularly those who might be wary of Iranian influence in the region, might argue that there are other significant actors in the Middle East that can safeguard Kurdistani interests and maintain equilibrium in Kurdistan. It is true that Washington’s security role, as well as American businesses – like many of the international oil companies – play an indispensable role for the Kurdistan region. However, the US cannot offer a diversified, secure, and efficient economic relationship with the KRG, at least not in the same way its neighbors can.

Given such close proximity, the Kurds and Iranians (especially Iranian Kurds) have enjoyed relations on multiple levels, including deep economic ties. Moreover, such a land-locked entity often requires the cooperation of its neighbors to extend its exports anyway. The Kurds cannot expect Washington to make proactive decisions for the benefit of their region. Washington’s, at times, disregard for the Kurdish people of Iraq has left doubt amongst many Kurds on the will of the US to help them with their long-term needs.

As a senior executive leader of the Gorran party told me, “The Americans never take leadership [in Kurdistan]…they always react. They wish everything to be quiet and calm so they can spend their time on their farms, and offices.” Many Kurdish leaders, like Hawrami, do not forecast US support extending to greater KRG security interests in the future. “Do you think that in the next three, four years the international community will be as much interested in the fight against ISIS as they are right now? I don’t think so.” “With the wild cards of Ukraine, of Russia, China…and many other issues, will they [even] be interested in Iraq?”

Perhaps the most important factor in determining greater Kurdistan independence is the health of its economy. DPM Talabani explains, “Put independence aside briefly. Get the economy right. It can be the launch pad for everything else going forward…It can be the launch pad of having better bilateral relations between Turkey and Iran, or it can mean you capitulating and submitting to Turkey and Iran.” Currently, the Kurdistan region’s economy is struggling. Erbil’s expenditure is much greater than its revenue, and it has been continuously relying more on foreign funds to reduce its deficit. In addition to government mismanagement, several shocks – all in the last year – have contributed to the Kurdistan region’s struggling economy. These include Baghdad’s inability to meet its budgetary obligations to Erbil; the ensuing war against IS; the absorbing of 1.5 million IDPs; and the spiraling global fall in oil prices. In short, Kurdistan must stabilize its economy before it relies too much on external actors.

The first step to fixing the KRG region’s economy is to reach a final settlement on the oil-for budget agreement with Baghdad. Currently, Erbil is selling a fair amount of its oil at approximately half the market price to Baghdad in order to get its share of the budget from the federal government. The KRG endeavors to send less oil to Baghdad in order to sell more of its oil independently at higher prices, generating greater revenues. However, this will be a difficult obstacle to pass as Baghdad fears negotiating such terms effectively means handing the Kurds enough leverage to smoothly secede from Iraq.

The second step is to reform the current divisive political system, as well as economic infrastructure. Like much of Kurdistan’s history, factionalism still remains an inherent part of the KRG. Although the KDP and PUK are perhaps more united than divided ever in recent memory, they still have separate Peshmerga forces, security apparatuses, and economic infrastructures. Both parties have been described by some in the region as patronage circles who accumulate power through handing out public-sector jobs and entitlements to the public, often in-exchange for their support. In order to establish a secure, sustainable, and independent economy, the KRG must work cohesively to make controversial, and at times unpopular, decisions that will ultimately benefit the Kurdistan region in the long-run. That means the myriad of Kurdistani political parties must collectively take necessary actions, like reducing its bloated public sector, allocating excessive funding away from government operations to investments in physical infrastructure and human capital, and developing a plan to create and diversify other revenue sources in order to break its current dependence on oil sales.

Additionally, divergent factions in the KRG should come together to forge policy, and not become pawns in the regional strategies of their neighbors. Many Kurdish civilians believe that the KDP and PUK are ultimately stooges of the Turks and Iranians respectively. It is true that the KDP most definitely has a warmer relationship with the Turks, and the PUK with the Iranians. But from the author’s meetings with authority figures in government and executives of political parties, it seems clear that they are far more united than divided on their regional strategy.

However, there are some voices, particularly in the KDP, that seem to align more with Ankara’s regional calculus than they do with Erbil. To be fair, the KDP does also have good relations with Tehran. But, its close and independent relations with Ankara, often without other KRG party leaders, may be delivering benefits that have discouraged greater engagement with Iran in order to prevent losing its fruitful relationship with Turkey. MP Maroof voices his concerns on the matter; “We need to establish a very healthy, friendly relations with Turkey. But again, we are not for relations between Turkey as a state and a political party [(KDP)]. We are for relations on the national level, between two countries — Kurdistan and Turkey. And this relation must be very transparent and the political parties and the public should know what is the basis of this relationship.”

The secret dealings between Ankara and the KDP is a salient issue in the KRG, especially given that the KDP has enjoyed the majority in parliament, the executive cabinet, and an extended-presidency. As a result, this lack of transparency can be even observed at the majority KDP appointed cabinet level. For instance, the Ministry of Natural Resources has been publicly criticized as corrupt. This is mainly because the ministry documents the amount of barrels sold without publishing revenues collected by the KRG from such sales.

Finally, upon building greater bilateral relations with its neighbors and stabilizing its economy, the KRG should consider becoming a unifying force for other countries in its neighborhood. Often times, Kurds view their geography in the region as the bane of their inability to prosper amongst their neighbors. However, it is precisely because of its location, at the crossroads of the Turkish, Persian, and Arab worlds, as well as the Sunni and Shia religious spheres, coupled with its large stake in the stability of its region, that the KRG may be in the ideal position to facilitate the role as a bridge for regional cooperation on multiple levels.

Indeed, this role as a unifier in the region can be heard by a number of Kurdish leaders. “Kurdistan, if we play our cards right, we are here to be a unifier,” echoed Dr. Barham Salih, former Deputy Prime Minister of the federal government in Iraq. “The hope that I have for the Middle East is that at the end of the day there is an integrated economy in the Middle East, an integrated security arrangement in which Iran, Saudi [Arabia], Turks, Iraqis, Kurdistan, and others will all be together as part of a mission to make our part of the world more stable, more secure…Kurdistan has suffered a lot from the instability. Kurdistan could benefit greatly from stability and prosperity.”

This article is based on the author’s travels to the Kurdistan region of Iraq this summer.