The end of October marked a high point in tensions between Iraq and its oil producing Kurdish region in the north.
Roughly two dozen oil tankers idly turned figure eights in the Mediterranean, filled with oil pumped from Kurdish Iraq that Iraq threatened to sue any country for purchasing, reported the New York Times. The Iraqi government claims to have exclusive rights to market oil from the Kurdish region, with profits split 83% to the Baghdad government and 17% to the Kurdish autonomous government.
The move was a political gamble on the Kurds’ part. Kurdish politicians gave the new Iraqi prime minister, Haider al-Abadi, roughly a month to settle, restoring payments to the Kurdish autonomous region for the gas and giving them more freedom to market the oil. The Kurdish government threatened that it would not participate in the Iraqi government otherwise.
There are about 5 million Kurds in majority Arab Iraq, which has a population of more than 30 million. Most live in the north, where they run their own affairs, but remain reliant on Baghdad for a share of the national budget.
Baghdad cut the Kurd’s share of the budget to punish them for exporting oil without its consent. The region was plunged into financial crisis, but has continued pumping oil through its independent pipeline to Turkey, and exports recently increased to around 300,000 BOPD, reports Reuters.
Oil for Salaries
Earlier this week, the government of Iraq and the Kurdish region reached an agreement. The two governments have agreed to a deal under which Baghdad will resume funding Kurdish civil servant salaries in return for a share of Kurdish oil exports. Under the agreement, Kurdish authorities committed to pumping 150,000 BOPD – around half their overall shipments – to Iraqi government export tanks in the Turkish port of Ceyhan. In exchange, Baghdad agreed to pay $500 million toward Kurdish salaries.
Iraqi Finance Minister Hoshiyar Zebari, said the Kurdish Regional Government received the first payment Tuesday, and will receive more payments in the future.
Iraqi leaders are under pressure to bury differences in order to counter Islamic State militants who control substantial parts of Iraq and neighboring Syria.
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