Turkey’s Kurdish oil gamble

Rather than assume regional leadership and help resolve the oil dispute between Baghdad and the Kurdistan Regional Government (KRG), Turkish Prime Minister Recep Tayyip Erdogan has done just the opposite. Ankara’s sale of Kurdish crude without Baghdad’s authorization — with revenues to be deposited in a Turkish bank — may pressure Iraqi Prime Minister Nouri al-Maliki, give Turkey access to cheap Kurdish crude and provide much-needed revenue to the KRG. Yet, it has unleashed a legal and political backlash in Iraq. Erdogan’s goodwill gesture toward the Kurds has also deepened the polarization between Baghdad and Erbil without resolving the KRG’s current revenue crisis. The KRG remains in financial limbo, dependent upon both Ankara and Baghdad, and still in need of a grand bargain that can permit large-scale, risk-free exports through the northern corridor. 

Although Ankara’s sale of Kurdish crude has not fundamentally reshaped regional energy markets, it reveals the extent to which Erdogan and the KRG are willing to defy and pressure Baghdad. The timing of the sale was no coincidence. It not only followed months of a budget dispute between Erbil and Baghdad, but the Iraqi elections that left Maliki with a plurality of seats although an insufficient number to form a government. Ankara and Erbil may either seek to force an energy deal from Maliki in return for Kurdish support or assure that Maliki does not reassume the premiership. For the KRG, the sale also reflects a highly salient oil nationalism that has become embedded in its political agenda and society, and the ongoing efforts to gain economic autonomy from Baghdad.