U.S. Calls for Resuming Kurdish Oil Exports—after adverse ruling in nine-year-old arbitration case
WASHINGTON DC, United States (Kurdistan 24) – On Monday, the U.S. expressed its support for the resumption of oil exports by the Kurdistan Regional Government (KRG) through the pipeline to Turkey.
The International Chamber of Commerce’s International Court of Arbitration (ICC-ICA) issued a ruling on Thursday in favor of Iraq and against Turkey. The immediate impact of the court’s decision is to halt oil exports to Turkey from the Kurdistan Region, as well as from Iraq proper.
The case actually dates back nine years—to 2014, when Nuri al-Maliki was Iraq’s Prime Minister. That was the same year that ISIS suddenly emerged, seizing one-third of Iraq and threatening both Baghdad and Erbil, and Maliki was obliged to resign, as a condition for U.S. support against the terrorist organization.
In its case before the ICC-ICA, Baghdad used a Saddam-era accord—a pipeline transit agreement with Turkey—to make its case. The 1973 agreement reflected the extreme centralization of the Iraqi government under the Baathist regime, and it stipulated that Baghdad must agree to all oil exports through the pipeline.
It may seem a bit odd that an international court can take nine years to rule on a case, particularly as a lot may change in those nine years. Moreover, the court relied on a fifty-year old rule, from a regime that no longer exists!
Nonetheless, as a result of its ruling, Turkey has halted the pumping of crude oil from both the KRG, which was exporting 370,000 bpd through the Ceyhan pipeline as well as from the federal government, which was exporting 75,000 bpd.
However, there is a very different government now in Baghdad, and relations between Baghdad and Erbil are much improved. Indeed, Iraq’s Prime Minister, Muhammad Shia al-Sudani was elected with Erbil’s support, specifically the support of the largest Kurdish party, the Kurdistan Democratic Party (KDP), and its head, Masoud Barzani.
In turn, Sudani has expressed his great respect and regard for the Kurdish leader, calling him “one of the pillars of politics in Iraq,” who “plays a very important role in the understandings and the alliances that pave the way for the political process in Iraq.”
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Erbil is now engaged with Baghdad in discussions on how to deal with the court’s decision, as well as how to resolve their disagreements over the budget, and KRG Prime Minister Masrour Barzani has tweeted his optimism that they will be able to overcome the problems created by the ruling.
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U.S. Support for Kurdish-Iraqi Negotiations
Asked on Monday about the ICC-ICA decision, Patel urged Turkey and Iraq to resume oil exports, while he expressed support for the talks between Baghdad and Erbil.
“Since the ruling, we have urged the governments of Turkey and Iraq to resume the flow of oil through the Iraq-Turkey pipeline,” Patel said. “Disruptions to global energy supply would not serve anyone’s interest.”
“We also understand that the Kurdistan Regional Government is in discussion with the Government of Iraq to find a mutually acceptable path forward on related budget and hydrocarbon issues. As was discussed during the February U.S.-Iraq Higher Coordinating Committee in Washington,” Patel added, “U.S. officials continue to urge the Government of Iraq and the Kurdistan Regional Government to resolve their budget and hydrocarbon disputes in a manner that will benefit Iraqi citizens.”
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Thus, to the extent that the U.S. embassy in Baghdad has influence over those discussions, it will be promoting a quick resolution of the disagreements and the earliest possible resumption of oil exports.
In addition to the considerations cited by Patel, there is also Russia’s assault on Ukraine. The Western response—to sanction Russian energy exports—has put a high premium, internationally, on promoting the availability of energy supplies. Freed of external constraints, the Kurdistan Region can make its contribution, and it is certainly trying to do so.