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
198
See also Peter Galbraith (KUR 17), paragraph 2; London Kurdish
Institute (KUR 7), paragraph 6; Ranj Alaaldin (KUR 18), page 3 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
204
See also Q119 [Peter Galbraith] 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
209
Article 111 Back
210
Q100 [KRG High Representative to the UK]; Q130 [Peter Galbraith] Back
211
Article 112. The further link in the chain of the KRG's argument
is article 115, which provides that any powers not stipulated
under the constitution as being within the federal government's
competence are within the competence of the Kurdistan Region. Back
212
Q20-22 [Professor Gareth Stansfield and Professor Charles Tripp];
Q 40 [John Roberts]; John Roberts (KUR 19), page 5 Back
213
KRG High Representative to the UK (KUR 15), paragraph 22 Back
214
Q41-42 [John Roberts] Back
215
Q41-42 [John Roberts]; KRG High Representative to the UK (KUR 15),
paragraph 17; Genel Energy (KUR 2), paragraph 1 Back
216
Amongst the latter are that contracts are awarded on a production-sharing
rather than (as in the rest of Iraq) a service basis, offering
potentially far greater rewards to those who take the calculated
risk of investing in the Region. (Q43 [John Roberts]) Back
217
Q84-87 [KRG High Representative to the UK] Back
218
Genel Energy (KUR 2), paragraph 8 Back
219
John Roberts (KUR 19), pages 7-8 and 8-10 (Evidence provided May
2014); "Genel to Produce Kurds' Gas as Turkey Said to Ready Pipeline", Bloomberg,
13 November 2014 Back
220
"Kurdistan oil sales reach almost $3 billion this year", Rudaw,
7 November 2014. In May, John Roberts informed us that the KRG
would need to significantly increase its pipeline infrastructure
if it was to meet its future export targets (Q35) Back
221
"Kurdish exports to rise despite falling oil prices", Rudaw,
18 December 2014 Back
222
See also John Roberts (KUR 19), pages 5 and 6 Back
223
John Roberts (KUR 19), pages 8-9 (Evidence provided May 2014)
Back
224
Q24 [Gareth Stansfield]; Q45 [John Roberts]; Q133 [Peter Galbraith] Back
225
Q52-55 Back
226
Q3 and Q20 [Professor Charles Tripp] Back
227
The KRG High Representative told us that the confederal model
envisaged by the KRG would be a form of "devo-max, with almost
total authority and definitely economic independence" (Q55) Back
228
The Iraqi constitution describes Iraq as a federal state, though
there is in fact only one federal region; the Kurdistan Region.
The constitution, however allows groups of governorates, to petition
to become a region. There were some abortive moves by Sunni politicians
to press for federalisation of Sunni-majority districts, blocked
by the Maliki government on the ground that Iraq was not yet ready
for full federalisation. Back
229
See also Q16 [Professor Stansfield] and Q21 [Professor Tripp];
Professor Gareth Stansfield (KUR 14), paragraph 12; APPG Kurdistan
Region of Iraq (KUR 12), paragraphs 44 and 45; Ranj Alaaldin (KUR 18),
page 2 Back
230
Q116; Q124; Q134; Q138 Back
231
This would be especially the case if the Kurdistan Region were
to retain Kirkuk, and its oilfield, currently held by the Peshmerga Back
232
"Iraq is in last-chance saloon as a single state, says Philip Hammond",
The Telegraph, 14 October 2014. Back
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