In a pact that seeks to close one of Iraq’s most difficult political rifts, envoys from Baghdad and the semiautonomous Kurdish region agreed Tuesday on a plan to divide the nation’s oil wealth and possibly bolster the fight against the Islamic State.
The multi-faceted deal could help boost unity and military coordination between Iraqi troops and the Kurdish militiamen, known as peshmerga. It also may quiet — at least for the moment — Kurdish factions calling for independence from Baghdad.
Such breakaway ambitions — fueled by growing oil wealth in the northern Kurdish region — raise alarms across the region and among the Kurds’ Western allies. Any move toward splintering Iraq could become a serious distraction from the fight against the Islamic State and stir strong backlash in countries with their own large Kurdish minorities such as Syria and Turkey.
Under the accord, Kurds will release up to 500,000 barrels of oil a day to Iraq’s central authorities — representing about a fifth of the country’s current export levels. In exchange, the Kurds will receive a 17 percent cut from the national budget, which has been strained by falling oil prices.
It also opens the way for Kurds to export oil along a pipeline to the Turkish port of Ceyhan on the Mediterranean. The exports represent another step in the Kurds expanding independence in making oil and gas deals.
On Monday, French oil giant Total and Houston-based Marathon Oil said they struck oil and gas near the Kurds main city of Irbil in the second such discovery in two years in the area. Last month, London-based Genel Energy, which already operates in the Kurdish region, said it reached an agreement with the Kurdish government to develop two natural gas fields.
The Kurds also now control the critical oil fields around the city of Kirkuk, which lies outside the Kurdish region. The Kurdish peshmerga fighters moved into the area during the summer to block advances by the Islamic State, which has seized other oil sites in Iraq and Syria.
“This deal is a win-win deal for both sides,” Iraqi Finance Minister Hoshyar Zebari, a Kurd, told the Associated Press. “The (Kurdish government) needed more stability in its relations with Baghdad and the Iraqi government is going through very serious financial difficulties because of the drop in oil prices.”
In addition to the share of the national budget, the Kurds also will receive payments of up to $1 billion to bolster the peshmerga fighters.
Baghdad and the Kurdish region have been at odds for years over a variety of disputes, including oil resources and political influence in Kirkuk, which many Kurds consider part of their traditional territory. During the rule of Saddam Hussein, thousands of Arabs were resettled in Kirkuk as a way to blunt Kurdish sway.
“For a long time, both sides have gone along with the formula that oil is money and money is power,” said Raad Alkadiri, managing director of Energy Insight IHS, a Washington-based analyst group. ``And neither side was willing to budge much.”
The change, he said, was pushed along by the “altered situation” of the Islamic State gains and slumping oil prices.
“If it holds, and provides a basis for closer cooperation, this deal could be the most significant political agreement between Baghdad and Irbil since the fall of the Saddam regime,” said Alkadiri. “It is arguably the first time the two sides have agreed on something that brings them closer together rather than farther apart since 2003.”
Negotiating an oil sharing pact — and seeking to address wider issues with the Kurds — was seen as an important test for Iraqi Prime Minister Haider al-Abadi.
Abadi took office in September amid appeals by the United States and allies to confront the country’s sectarian divides and unite against the Islamic State as part of a U.S.-led coalition conducting airstrikes and coordinating ground attacks from local forces.
Last month, Iraqi forces reclaimed territory from the Islamic State around the key oil refinery center of Baiji, about 140 miles north of Baghdad.
Brian Murphy joined the Post after more than 20 years as a foreign correspondent and bureau chief for the Associated Press in Europe and the Middle East. He has reported from more than 50 countries and has written three books.
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