Recent developments in Iraq and the region have renewed speculation about Kurdish statehood. Some argue that the increasing presence of major oil companies in the Kurdish north provides the economic leverage needed for independence. Others see the political vacuum in Syria as an impetus for a Syrian Kurdish state or autonomous region, one that could potentially merge into a greater Kurdistan with access to the sea.

Yet, while stirring nationalist rhetoric and investor confidence, these claims ignore regional geopolitics, security issues and political trends that make statehood highly unlikely. Rising Iraqi nationalism, conflicting aims in Syria and a strengthening PKK problem have intensified divisions not only between Baghdad and Erbil, but also between Kurdish groups inside and across the Kurdistan Region. The real concern is not a potential Iraqi Kurdish state, but the extent to which Iraq Kurdish autonomy can be sustained and the compromises needed to advance energy-sector development.

The entrance of oil majors in the Kurdish north is a feat for the Kurdistan Regional Government (KRG), but not a surprising one. It reflects an expected trend of mergers and acquisitions that has required smaller and medium-sized companies to sell their fields or seek larger partners to help defray costs, particularly since most have not yet been paid for their operations. These financial demands, as well as potential profits from generous Kurdish production-sharing contracts (PSCs) and the current disincentives for working in Baghdad’s oil sector, have turned many larger international oil companies (IOCs) to the Kurdistan Region.

Still, there is no positive causal relationship between IOC presence and Kurdish statehood. Just as modernization theory neglected the path dependencies embedded in each country’s character and traditions, the idea that market logic (and investor hopes) can override the deep-rooted politics that drive Iraq’s energy sector is another form of misguided economic determinism. Nor do IOCs have the same role in developing countries’ economies and asserting political leverage as they did in the 1980s. In the Middle East in particular, resource nationalism and commitment to state sovereignty have given national oil companies a greater role in energy-sector management, assuring that oil-generated revenues are controlled by the state and not by foreign or private companies.