President Barham Salih on Oct. 27 announced that he has developed a proposal for resolving the dispute over Kirkuk between Baghdad and Erbil. Without going into detail, he said his plan focuses on the ethnic and religious components in determining its fate, ignoring the interests of outside players in discussions about the city's future. The recent agreement by Kurds, Sunnis and Shiites on the formation of a national government — with Salih as president, Adel Abdul Mahdi as prime minister and Mohammed Halbousi as parliament speaker — raised hopes among many Iraqis that the outstanding issues between Baghdad and Erbil might be resolved, but will the new leadership be able to deliver?

After nearly five months of post-election battling and political uncertainty, Iraqis are generally optimistic about the successful, peaceful democratic transition. The new leadership has been positively welcomed by major political parties as well as by Washington and Tehran. Some even see the new leadership as a “sign the country is stabilising after four decades of chaos and division.”

Despite the current optimism, the ongoing issues between Baghdad and Erbil may surprise Iraqis with new, potentially destabilizing conflicts. These issues include easing tensions stemming from the Iraqi Kurdistan independence referendum held in September 2017 that Baghdad opposed, oil policy and revenue sharing, allocation of the federal budget and disputed territories, particularly Kirkuk. On the budget issue, since 2003, the Kurdistan Regional Government (KRG) had received 17% of annual federal budgets, but that amount was reduced to 12.67% in the 2018 budget and the proposed 2019 budget much to the Kurds' displeasure.

If genuine stability is the goal in Iraq, the country's long-standing issues must be tackled. At first glance, there are indeed reasons to be optimistic. The new president is known to be a moderate Kurdish leader who has worked for decades with both Shiite and Sunni Arab politicians. Prime Minister Abdul Mahdi, who has a long history of working and cooperating with Kurds, had previously served as vice president, oil minister and finance minister in Baghdad, while Speaker Salih had served as deputy prime minister in Baghdad and as KRG prime minister from 2009 to 2012. They both enjoy good relations with Washington as well as Tehran and with main political parties in Iraq. On top of that, the two leaders are also good friends, which should enhance their working together and make conciliatory approaches more likely.