A Feb. 15 ruling by Iraq’s Federal Supreme Court docket that deemed the 2007 oil and gasoline legislation governing the nation’s Kurdistan area to be unconstitutional is a large blow to the Kurdistan Regional Authorities, with direct ramifications for its vital vitality offers with Turkey, sources say.
The KRG used the legislation to develop its personal oil and gas sector independently of Baghdad, a part of a concerted effort to wean itself off the central authorities because it pursued outright independence, signing multi-billion-dollar offers with worldwide oil firms. The KRG’s official justification is that Baghdad has and continues to fail to offer the Kurdistan Area its justifiable share of the nationwide finances and oil revenues.
The ruling comes amid continued political infighting between a plethora of Shiite and Sunni factions that has prevented the formation of a nationwide authorities since elections had been held in October 2021. The 2 main Iraqi Kurdish teams, the extra highly effective Kurdistan Democratic Get together and the Patriotic Union of Kurdistan, are additionally slowed down in squabbles over which of their respective nominees ought to be Iraq’s subsequent president.
The courtroom’s determination is seen as linked to the intrigues swirling in Baghdad, and based on well-informed sources, caught Iraq’s Prime Minister Mustafa al-Khadimi, who has superb relations with the Iraqi Kurds, off guard.
It’s additionally unhealthy information for Ankara.
The 2014 launch of KRG crude exports by way of a purpose-built pipeline operating to loading terminals on Turkey’s Mediterranean port of Ceyhan was a recreation changer. It gave Ankara unprecedented leverage over the semi-independent Kurdish zone, which it’s used — critics would say grossly abused — to prosecute its 38-year-long battle in opposition to the Kurdistan Workers Party (PKK) inside Iraq’s borders.
Baghdad was infuriated by the transfer and lodged an arbitration case in opposition to Turkey with the Worldwide Chamber of Commerce that’s now in its fifth yr. Turkey stands to probably fork out $24 billion in compensation to the federal government of Iraq.
A lot of KRG crude is purchased by Israel on the spot market with the proceeds pocketed by Erbil and a minimize given to Ankara beneath an settlement that has been criticized for its opacity.
The Federal Supreme Court docket’s ruling will undercut Ankara’s line of protection. Turkey argued that Iraq was obliged to find out how oil and gasoline revenues could be managed in line with the structure. The courtroom’s ruling destroys this argument, saying that the 2007 legislation violates numerous provisions of the structure and declaring the KRG’s contracts with overseas international locations and firms for exploration, extraction, export and gross sales to be subsequently null and void.
A last judgement has been held up by quite a few wrinkles, together with the deaths of two arbitrators, most not too long ago a Turkish-appointed one in 2021 in addition to the consequences of the COVID-19 pandemic.
This has given Turkey, at present submerged in considered one of its worst financial downturns in many years, some wiggle room. Diplomatic horse buying and selling has additionally helped. Khadimi reportedly mentioned asking the Worldwide Legal Court docket to delay a ruling with Turkish leaders when he traveled to Ankara in December 2020 to fulfill with Turkish President Recep Tayyip Erdogan. However the Iraqi authorities made no such formal request.
An extra listening to has been set for July.
Turkey has but to formally touch upon the choice. The KRG has rejected the ruling, calling it not solely “unconstitutional” however “unjust.”
Ankara can ask for a delay due to the ruling, however ICC arbitrators may but facet with Iraq, opening the door to additional horse buying and selling between Ankara and Baghdad, with potential dangers for Erbil.
“It is a authorized challenge with enormous political implications and this courtroom ruling has turned it much more political,” famous Bilal Wahab, a Wagner fellow on the Washington Institute for Close to East Coverage. “The Iraqi authorities has a really, very sturdy case within the courtroom of arbitration in Paris,” Wahab instructed Al-Monitor.
Turkey desires a delay as a result of it doesn’t need the embarrassment of being held in breach, which in flip would harm its credibility in worldwide markets because it struggles to maintain its funds afloat.
“Iraq hasn’t been pushing for a decision very onerous as a result of Iraq additionally is aware of that even when there’s a ruling, it has no technique of forcing Turkey to pay up,” Wahab mentioned. Iraq’s technique has thus been to make use of a profitable authorized case as political leverage in order that it may possibly nudge Turkey into shelving its non-public take care of the Iraqi Kurds.
The scenario poses one thing of a dilemma for Ankara. Its particular relationship with Iraq’s Kurds has given the Turkish army a free hand to pursue PKK targets throughout the Kurdistan area. The battle has escalated since final yr, with Turkey deploying precision drones to focus on senior and mid-level PKK members, notably within the Yazidi-dominated Sinjar area on the Syrian border. On the identical time, the connection offers Ankara home cowl for the brutal suppression of its personal Kurdish political motion by juxtaposing “the Kurdish terrorists” with the “good Kurds” in Erbil.
Nevertheless, there have been indicators of a shift since 2017, which is when the Iraqi Kurds held a referendum on full independence regardless of calls from Baghdad, Washington, Tehran and Ankara alike to scotch the train. Arzu Yilmaz, a visiting professor at Hamburg College who intently follows Kurdish points, believes that Ankara has since recalibrated its Iraq coverage to prioritize relations with Baghdad over these with Erbil and to emphasise the territorial integrity of Iraq.
Yilmaz instructed Al-Monitor that the change chimes with Ankara’s broader region-wide reset that has seen it mend fences with the United Arab Emirates and Israel and looking for to finish rifts with Egypt and Saudi Arabia as properly.
The persistent dysfunction in Baghdad, she added, stays the Kurds’ finest insurance coverage in opposition to any change in the established order.
