House of Commons - UK Government policy on the Kurdistan Region of Iraq

UK Government policy on the Kurdistan Region of Iraq - Foreign Affairs Contents

7 The Kurdistan Region's constitutional future: UK policy

126. Kurds enthusiastically backed Iraq's new constitution in the 2005 referendum. Since then, the public rhetoric of the KRG has been to the effect that the democratic, plural and federal Iraq envisaged by the constitution is an experiment which Kurds are committed to help make work;[195] but that if the experiment turns out to be a failure, Kurds will consider other options. By 2014, that point had been reached.[196] At informal meetings near the start of the inquiry, KRG representatives told us that Iraq's federal model had failed, and that the only remaining solution, short of full independence for the Kurdistan Region was the "confederation" of Iraq into Arab and Kurdish parts. On 1 July, following the fall of Mosul, President Barzani told the BBC that it was time to push for Kurdish independence on the ground that "Iraq is effectively partitioned" and that it was time for Kurds to escape the country's "tragic situation".[197]

127. The intensification of the security crisis in August has brought a pause: President Barzani's proposals for a referendum are still before the Kurdistan National Assembly, but the timetable has been suspended, and it would appear that there will be no further movement in the foreseeable future. In other respects, the constitutional crisis appears slightly less acute: Prime Minister Maliki has gone, replaced by a man who has said he wants to mend fences with the Kurds, and a 12-month deal has been reached on oil and the restoration of national budget payments to the KRG, just within the three-month deadline that the KRG had set for the new Prime Minister to make demonstrable progress on constitutional disputes.

The Kurdistan Region's long game

128. We took back from our visit to Erbil in October an impression of a Kurdish political establishment, of all parties, that is committed to the ultimate goal of full independence but recognises that a series of obstacles lies in its way and is proceeding cannily.[198] Good relations with neighbours is one of these, especially those with Kurdish minorities; thus the cultivation of friendly bilateral relations with Turkey and Iran.[199] Another challenge is in the words of one of our witnesses, for the Region to "find its southern boundary" by resolving the status of the disputed territories.[200] This process may also help the Kurdistan Region achieve its penultimate goal of economic self-sufficiency, if most or all of the Kirkuk oilfield were to be incorporated into the Kurdistan Region. The final challenge would be to secure international recognition as a sovereign state. We were struck by comments of a very senior figure in the government in Erbil that the KRG had no desire to achieve independence if the price of it was for the Kurdistan Region to become "another Northern Cyprus".

129. We should add that we do not see the outcome of any future referendum as one of these significant obstacles: it was made clear to us during the inquiry that voters in the Kurdistan Region are very likely to vote for independence, if this option is presented to them in a referendum.[201] However, we are far less clear what practical outcome such a vote would have, given that the rest of Iraq is likely to portray it as unofficial, or unconstitutional, and non-binding.

Overview of UK policy

130. The UK Government's policy has generally been to avoid being drawn into detailed public comment on the merits of each dispute but to encourage dialogue and reconciliation. The UK Government says that it supports a strong and unified Iraq. It does not favour independence for the Kurdistan Region but says that questions over Iraq's constitutional future are ultimately for the Iraqi people to decide.[202] We are not aware of UK Ministers elaborating on the thinking behind its policy, but it may be presumed to be representative of a general foreign policy bias in favour of the status quo[203] and against perceived interference in the affairs of a sovereign state, and a fear of the consequences of an unravelling Iraq on the wider Middle East, particularly in the current climate, with ISIL openly propagandising for a rebirth of a Sunni caliphate.[204]

131. We invited the Minister to comment on what criteria the FCO would use to determine whether to recognise the independence of the Kurdistan Region, but he declined on the grounds that this was speculative.[205]

132. The UK's policy of favouring the unity of Iraq puts it at odds with what is now the official policy of the KRG, but nothing in our evidence-gathering indicated that the this policy currently poses an obstacle to good relations with the KRG (although, as we noted earlier, there was some evidence to suggest that it may have inhibited the development of a deeper trading relationship).[206] This may be because the KRG recognises that there would be little currently to be gained from insisting that the UK take a different side on the constitutional question: should the KRG ever seek a new constitutional dispensation, it would be in need of friends in the international community. We appreciate that if UK diplomacy in Iraq is to be effective it must to some degree be a balancing act between Baghdad and Erbil, and one of our witnesses told us that one of the better aspects of the FCO's performance was that it had managed to remain on cordial terms with both sides, despite their ever worsening relations.[207] The UK Government may begin to face more difficult diplomatic choices if and when Kurdish independence becomes more than a theoretical possibility.[208]

The road map to economic independence: oil and gas

133. The single biggest dispute of the last few years has been over what the KRG says is its right to sell oil and gas. Baghdad says this is disallowed by the constitution, which declares oil and gas the property of the people of Iraq.[209] The KRG says that the federal government is wrong, pointing out that the constitution gives the federal government a right of joint management only over "present fields", which the KRG argues means fields being exploited at the time of the constitution being agreed.[210] All the fields being exploited in the Kurdistan Region are new.[211] Both sides in fact agree that, under the constitution, oil and gas are a common resource of the Iraqi people, and that any receipts from their sale should be distributed proportionately. The dispute may therefore appear technical, even artificial. In fact, it cuts to the heart of the acrimony between Erbil and Baghdad. It is clear that the dispute touches on at least three sensitive issues: competence (it appears that the KRG does not trust the federal government to manage the industry as efficiently or profitably as it does); trust (it appears that neither side trusts the other to apportion receipts fairly); and above all power.[212] For the Maliki government, unilateral management of oil and gas fields by the KRG was an unconscionable breach of Iraqi sovereignty. For Kurdish politicians, it means the prospect of an end to any remaining financial dependency on the federal government. Kurdish politicians of all stripes have been open with us during the inquiry that they see oil and gas as a route to economic and, potentially, political self-determination.[213] We sense that, for the politicians and perhaps also the people of the Kurdistan Region, management of the oil and gas fields also fulfils an important psychological and symbolic need: to demonstrate, after decades, if not centuries, of political marginalisation and neglect, that Kurds in Iraq can finally be masters of their own destiny.

THE KURDISTAN REGION'S OIL AND GAS POTENTIAL

134. We were cautioned during the inquiry to take any estimate of the Kurdistan Region's oil and gas reserves with a pinch of salt,[214] but by any reckoning they are extensive and potentially transformative. A commonly cited estimate is of around 45 billion barrels of oil, putting the Kurdistan region in roughly the same league as Libya and Nigeria, and 110 trillion cubic feet of gas, which would place the Region around tenth or twelfth in the world for reserves, were it a state.[215] Over the past decade, the KRG has invested considerable effort in building the industry by attracting foreign investors, selling the region on the basis of its relatively safe and politically stable environment, comprehensive regulatory framework, and business-friendly policies.[216] A number of big names have started drilling and investing in infrastructure, including Exxon, Chevron, Repsol, Total, the local giant KAR, and the British-Turkish company, Genel Energy.

135. The key practical problem for the industry in the Kurdistan Region, namely that oil and gas reserves are a largely stranded asset, now looks on the point of being comprehensively addressed, thanks to Erbil's 2013 oil and gas agreement with Ankara, and the completion in 2014 of a spur to connect Kurdish fields with the main pipeline running through eastern Turkey. Kurdish crude can now to be loaded onto tankers at the port of Ceyhan on Turkey's southern coast, and we understand that a number of sales were made over 2014.[217] Kurdistan has also agreed to supply Turkey with liquefied natural gas by 2017[218] although work on the necessary infrastructure appears to have barely begun.[219]

136. According to the KRG itself, as of November 2014, exports to Ceyhan were at around 300,000 barrels per day (BPD)[220] and continuing to increase, with production as of December standing at 400,000 BPD.[221] In July, Dr Hawrami, the KRG's Natural Resources Minister, told us at an informal meeting that the plan was to be exporting 1 million BPD by the end of 2015, and 2 million by 2020.[222] Recent media reports indicate that Dr Hawrami considers the KRG still to be on target, although we note evidence that the KRG's current midstream capacity is limited.[223] On our visit to Iraq, 500 BPD was mentioned as the "magic number" at which the Kurdistan Region would wean itself off reliance on the Iraqi national budget. A long-term continuation of the current slump in oil prices could clearly have the effect of postponing the Kurdistan Region's economic independence, at least until it becomes a significant exporter of liquefied natural gas.

137. We sought information during the inquiry as to how robust the deal between the KRG and Turkey would turn out to be, given possible domestic barriers to deepening relations on both sides and the hostility of Baghdad. The overwhelming balance of evidence was that the deal was too much of a "win-win" for both sides for either to be deterred by any foreseeable political obstacles, and as we noted earlier, that was very strongly the message from the KRG itself.[224]

Iraq's federal moment?

138. The then KRG High Representative to the UK told us that the only deal not on the table for the future of Iraq is the continuation of the status quo. She said that Iraq had to escape the "strongman" model of centralised governance which had been a "catastrophe" for the country.[225] (Other witnesses expressed similar sentiments.)[226] She told us that President Barzani's referendum proposal did not mean that the Kurdistan Region had rejected the possibility of a confederal model of future governance. It is not clear exactly what the "confederal model" would entail, but presumably it would mean a loose and decentralised form of governance, in which Baghdad would retain only residual or joint control of a handful of matters affecting the Kurdistan Region, such as foreign relations or defence.[227]

139. A renewed discussion over the constitutional future of the Kurdistan Region may provide an opportunity for a wider debate over the constitutional future of Iraq as a whole, including the possibility of addressing what might be considered the anomaly of Iraq's "asymmetrical" federalism, with Kurdistan as its only region. We noted earlier the relative disunity of the Sunni Arab political establishment as a partial cause of the Sunni community's increased alienation from the political process. One aspect of that disunity has been a failure to come to a collective view on whether to pursue the goal of federalism for the Sunni-majority districts of Iraq.[228] On our visit to Iraq, we sensed a mood from discussions with senior federal politicians that a truly federal Iraqi model might at last be seriously up for discussion.[229] This was a model proposed by one of our witnesses, Dr Ali Allawi, who said that relatively loose federalism could be seen both as Iraq's last chance to remain a united and sovereign state, and also as Iraq's great opportunity to be an exemplar of diversity and decentralisation in the Middle East.[230] We recognise that such a model brings challenges as well as opportunities; it may arguably entrench sectarian differences rather than overcoming them. There is also the challenge of enabling decentralisation of power whilst maintaining an equitable allocation of resources, so as not to leave one region relatively impoverished. (An Iraqi "Sunnistan" would be both landlocked and oil-poor relative to the rest of Iraq.[231])

140. We were interested to note public comments of the Foreign Secretary on his visit to Iraq just before our own that a form of "devo max" could provide the best model of future democratic governance in Iraq.[232]

141. We agree with the UK Government that for the time being it is far better that Iraq seeks to recover its unity and strength in order to defeat the common enemy of ISIL. It is also rational to be concerned about the possible consequences of Iraq's break-up. But the Kurdistan Region's desire for increased self-governance, or even independence, is itself rational, given its economic potential and demonstrable capacity for effective self-governance, and also understandable, given its recent history. We do not judge that independence is imminent, but it is a medium-term possibility, depending in large part on the Kurdistan Region's energy export strategy, for which the UK Government should be prepared.

142. It is for the Iraqi people to decide their future, but it appears to us that a looser federal model, permitting greater self-governance by its diverse mosaic of communities, offers best hope for Iraq remaining united and sovereign. Highly centralised rule under a "strongman" in Baghdad will never work.

143. If the Kurdistan Region is to become independent, it should be with the consent of the rest of Iraq. But the UK and its international partners should stand ready to help ensure that any clear expression of will in favour of independence, and on reasonable terms, is accepted and respected.

195 KRG High Representative to the UK (KUR 15), paragraphs 11 and 12 Back

196 Q92-96 and Q124 [KRG High Representative to the UK] Back

197 "Iraq Kurdistan independence referendum planned", BBC News Online, 1 July 2014 Back

199 Q122 [Peter Galbraith]; APPG Kurdistan Region of Iraq (KUR 16), paragraph 18; Professor Gareth Stansfield (KUR 14), paragraph 10 Back

200 Q26 [Professor Gareth Stansfield] Back

201 Peter Galbraith (KUR 17), paragraph 4; Q115 [Peter Galbraith] Back

202 Q208-212 [Tobias Ellwood MP] Back

203 Q55 [KRG High Representative to the UK] Q124 [Dr Ali Allawi]. Former Ambassador Peter Galbraith referred to the US Government's commitment to "the integrity of every country that exists on the globe" as "a kind of inertia" and a cause of frequent foreign policy mistakes, legitimising the use of violence to hold some countries (such as Iraq) together, when a better policy would be to pursue the outcome of peaceful separation (Q118-120) See also London Kurdish Institute (KUR 7), paragraph 5 Back

205 Q213-214 Back

206 Q10 [Gareth Stansfield] Back

207 Q11 [Professor Charles Tripp] Back

208 Q8-9 [Professor Gareth Stansfield]; Professor Gareth Stansfield (KUR 14), paragraph 9. See also Ranj Alaaldin (KUR 18), pages 1-2 Back