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Kurds Use Oil Tankers to Challenge Baghdad's Control

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An Iraqi Kurdish soldier stands guard at the Tawke oil field near the town of Zacho in Dohuk province.(Muhannad Fala'ah/Getty Images)

Summary
Ankara's relationship with Baghdad is being tested by 1 million barrels of crude oil, sourced from Iraqi Kurdistan, on board an oil tanker sitting idle off the coast of Morocco.
The attempt to export oil in defiance of Baghdad represents a bold move by Iraq's autonomous Kurdistan Regional Government, one that was probably calculated by Arbil and Ankara. Turkey wants the Kurds and Iraq's Shiite-dominated central government to resolve their differences so that oil from northern Iraq can be exported through Turkey. Ankara also wants to consolidate its influence in its southern neighbor.

To do that, Ankara is trying to draw in the United States to mediate the situation. As tensions flare, Washington will work to maintain the regional balance, key to the United States' goal of disengaging from the Middle East to focus on greater strategic priorities.
Analysis
The tanker, owned and operated by Greece-based Marine Management Services, was chartered by the Kurdistan Regional Government and set sail May 22 from a storage facility in the Turkish port of Ceyhan, with the approval of Turkish Energy Minister Taner Yildiz. Baghdad opposes unilateral exports by the Kurdistan Regional Government and has threatened legal action against any company that facilitates the oil's sale. The United States has backed Baghdad by emphasizing its support of Iraq's central control over oil exports.

Ankara, in league with Kurdish President Massoud Barzani's Kurdistan Democratic Party, timed the exports as Iraq is at a key juncture in the process of forming a new government. The Kurds want to play kingmaker for an eventual Shiite-dominated coalition in Baghdad, and the leadership in Iraqi Kurdistan is hoping that the threat of unilateral oil exports will enhance their leverage in negotiations, forcing Baghdad to strike an agreement on ensuring oil revenue (Baghdad, from Arbil's point of view, has been withholding large portions of oil revenue owed to the Kurds) and on allowing limited export options through Iraq's north. The Turks, meanwhile, want to ensure a stable flow of Iraqi energy and bolster their influence within the Iraqi state.
 

Ankara has to tread carefully. For its own reasons, Turkey does not want to see the formation of an independent Kurdistan, nor does Ankara wish to draw the ire of authorities in Baghdad or Iraq's supporters in Tehran. Yildiz has repeatedly referred to the exports as "Iraqi oil" in an effort to mollify Baghdad. Nevertheless, Iraq has filed a request for arbitration at the International Chamber of Commerce against Turkey and its state pipeline operator, Botas.

Ankara was probably trying to demonstrate its ability to sell Iraqi Kurdistan-sourced oil and disburse the revenues from the sales -- revenues that Yildiz has guaranteed would be distributed in line with Iraqi law. (The Iraqi constitution calls for Kurdistan to receive 17 percent of federal oil revenues.) The plan has not panned out as hoped; no one seems willing or able to buy the oil, especially not against pressure from Baghdad and Washington. Despite claims from authorities in Arbil and Ankara that the tanker reached its final destination and sold its oil, the most recent AIS tracking indicates the ship carrying the oil still sits idle off the coast of Morocco. No buyers have been identified, and no funds have been deposited into the account in Turkey's Halkbank. Reports of varying credibility place as many as two additional tankers in the Mediterranean. On June 10, Yildiz confirmed that a second tanker of Kurdish crude oil -- the Greek-flagged United Emblem, also owned and operated by Marine Management Services and chartered by the Kurdistan Regional Government -- set sail carrying another million barrels. But in both cases, no buyer has been identified.
 

The Turks appear now to have fallen back to a secondary plan. Ankara hopes that the exports alone, having ignited a long-simmering conflict, will require the intervention of outside powers -- namely, the United States -- to hash out a resolution on revenue sharing and oil exports between Baghdad and Arbil.

Washington has tried to stay out of this dispute, but it may soon find itself compelled to intervene. The United States has several interests at stake. First, it needs to safeguard the negotiations process with Iran, so Washington cannot afford to be seen backing a Turkish challenge to Iran's allies in Baghdad. Second, the United States has no interest in undermining the territorial integrity of Iraq. This is especially true at a time when jihadist forces are spreading their reach and threatening to create a bigger confrontation between Baghdad and Arbil in territories bordering Iraqi Kurdistan and disputed between Arbil and Baghdad. Washington wants to contain such disputes in the Middle East so that it can focus on more critical foreign policy concerns, such as containing Russia. In order to deal effectively with Russia, the United States needs Turkish cooperation. The United States is unwilling to overtly support Turkey's policy toward the Kurdistan Regional Government, but it is willing to intervene in hopes of forcing a compromise among all parties.

A senior delegation of U.S. State Department officials traveled to Arbil on June 8 to meet with Kurdish leadership and reportedly submitted a proposal to resolve the oil dispute -- one that might entail U.S. oversight over the distribution of oil revenues. Turkey tried earlier to play this role but was not a neutral enough player to shepherd a compromise between Baghdad and Arbil. Any U.S. proposal so far is preliminary, but the effort shows the United States taking the initiative to prevent further escalation and to ensure regional stability.
 

 

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