The campaign against the Islamic State (IS) in Mosul has diverted attention from simmering problems inside the Kurdistan Region of Iraq that will affect post-conflict stabilization. Within the last several months alone, there has been another assassination of a Kurdish journalist, an "honor" killing of a university student, death threats against a female Kurdish parliamentarian, bombing of an Iranian Kurdish party office that killed seven people and a string of foiled terrorist attacks in Sulaimaniyah province. These incidents have occurred alongside ongoing demonstrations by civil servants for unpaid salaries, a nonfunctioning Kurdish parliament, swelling numbers of refugees and internally displaced persons, an expanded Kurdistan Workers Party (PKK) and Turkish airstrikes on PKK bases in northern Iraq. They have not only reversed most gains the Kurdistan Regional Government (KRG) has realized since 2011, but also leave the Kurdistan Region increasingly vulnerable to financial collapse and internal conflict.

Instead of "inevitable Kurdish statehood" after the defeat of IS, a more realistic scenario is weakened autonomy, political entropy and armed conflicts. The KRG launched "independent" exports in 2014, but the Kurdish economy is now in tatters. KRG debt exceeds $22 billion. The availability of electricity has decreased to 2005 levels, or about four hours a day in many areas without private generators. Tens of thousands of youths continue to migrate from the region. The once-touted Kurdish energy sector is being undermined legally and politically. Although the KRG exports about 600,000 barrels of oil per day to Ceyhan, these exports remain contentious, are dependent on Turkey and are largely sourced from Kirkuk — still a disputed territory — and not the Kurdistan Region. International oil companies have thus far abandoned 19 oil fields in the Kurdistan Region, including ExxonMobil’s withdrawal from three of its six fields.

Emails between the KRG Ministry of Natural Resources and Turkish officials released by WikiLeaks reveal the depth of the KRG’s financial crisis and the political fallout. In the eyes of some Kurds, the ministry's attempt to secure an additional $5 billion in loans from Ankara and offer Turkey a larger stake in Kurdish-controlled oil fields may help protect the economic interests of the Kurdistan Region. Others, however, including parliamentarians in Erbil, see things differently and oppose the ministry's proposal as the “selling of the Kurdish land to Turkey.” Iraqi officials in Baghdad have also reacted critically, arguing that the KRG does not have the legal right to sell oil fields to Turkey.

Expanded PKK influence in northern Iraq is feeding off these crises and reinforcing intra-Kurdish power struggles. In addition to its base in the Qandil Mountains, PKK groups are now embedded in the Sinjar Mountains to protect the Yazidis against future incursions by IS and to control this strategic territory. While the Patriotic Union of Kurdistan (PUK) and Gorran support or tolerate the PKK, Kurdistan Democratic Party (KDP) officials have threatened to potentially use force to eject the PKK from Sinjar. Ankara has also warned that it will intervene in Sinjar in the spring if the peshmerga fail to drive out the PKK. Although acting PKK leader Murat Karayilan has recently said that PKK forces are prepared to withdraw from the Yazidi district of Sinjar, it is unlikely that PKK-affiliated groups will depart entirely. Divisions between those that support the KDP and those against it in northern Iraq are also palpable. Concerns have emerged about the possibility of another birakuji, Kurdish civil war.