KurdistanObserver.com

Kurds Aim for Own Oil Ministry
The regional assembly may vote as early as next week on creating the agency. Setting it up could further destabilize the divided nation.
By Borzou Daragahi, Times Staff Writer
April 19, 2006

BAGHDAD — Leaders of Iraq's Kurdish north have unveiled a controversial plan to consolidate their hold on the region's future petroleum resources, raising concerns about how the ethnically divided nation will share its oil revenue.

The Kurdish parliament will be asked to vote on the creation of a Ministry of Natural Resources that would regulate potentially lucrative energy projects in newly discovered oil and natural gas fields within the three provinces of Iraqi Kurdistan.

The new ministry, if established, would be another step in the Kurds' gradual retreat from the Baghdad government, as well as a potentially destabilizing development in a country already on the verge of fragmenting along ethnic and religious lines.

"They have the right to make a decision in their territory, but it is dangerous," said Mohammed Aboudi, a divisional director-general of the national Oil Ministry and a government advisor. "They are starting to search for oil without any consultation with the central government. What if Basra does the same, or any other province?"

Interim Oil Minister Ibrahim Bahr Uloum, advised of the proposal, warned against unilateral decisions on oil.

"At the end of the day, it's important to have coordination and communication, especially with oil, because it's a very sensitive issue," Bahr Uloum told the Los Angeles Times.

Long oppressed and marginalized under Arab governments in Baghdad, Kurds pushed aggressively for a constitution that limits the central government's power and gives regional officials the authority to exploit newly discovered oil and gas fields.

In a controversial move in November, a Norwegian energy firm began drilling for oil in northern Kurdistan. The regional government had signed the deal without seeking approval from Baghdad.

The constitution is deliberately vague about how future oil profit is to be distributed nationally, leaving a highly volatile issue unresolved.

A vote on the proposed Kurdistan Ministry of Natural Resources could come as early as Monday in the Kurdish regional parliament, which is debating a plan to reunify and streamline the two halves of the Kurdistan Regional Government.

Kurds and their advocates characterized the proposed regional organ as a slight elevation in status to a Cabinet-level post for the state-owned oil company that manages such matters and dismissed concerns in the capital as overblown.

"Forming a new ministry is an arrangement that will help increase oil production," said Peter Galbraith, a former U.S. diplomat who has advised the Kurds. "If oil production increases in Alaska, it may be that the Alaskans get a major part of the benefits, but Alaska is still part of the U.S."

Besides, control of the oil under their soil is their birthright, said Fadhel Merani, an Irbil-based official of the Kurdistan Democratic Party, or KDP, one of two political groups controlling the Kurdish region

"People have the right to express what they feel," he said in a telephone interview, "but they have to understand other ethnic groups' feelings also, especially those who suffered in the past."

But though few contest the legality of the Kurdish proposal to create a parallel agency, Iraqi officials argue that doing so now, without coordination with the national Oil Ministry and amid a mounting national crisis over the failure so far to form a government, risks exacerbating already violent ethnic passions and fueling the perception that the country is coming apart.

"There is still a central government," Aboudi said. "There is a Ministry of Oil. Yes, there is no political stability in Iraq. It doesn't mean we leave all laws and regulations and every region does what it wants."

Iraq's 4 million Kurds, nestled in a mountainous, Switzerland-sized region that has been autonomous since the 1991 Persian Gulf War, have been charting their own course for a while.

Kurds fought side by side with U.S. special forces three years ago as they stormed into the oil-rich cities of Kirkuk and Khaneqin during invasion of Iraq. With a language and culture distinct from Iraq's Arab majority, Kurds have isolated themselves in their relatively safe enclave, looking upon the violence ravaging the rest of the country with some detachment.

Kurds and their supporters say the creation of a new ministry is well within the parameters of the constitution.

"There are people who haven't faced the reality of what has gone on in Iraq," Galbraith said. "They still think that the old central state is going to be put back together again. It's not going to happen in Kurdistan. It's not going to happen in the south. It's not going to happen in Baghdad."

Each half of the Kurdish region, which split apart in a 1990s civil war between forces of the Patriotic Union of Kurdistan, or PUK, and the KDP, has its own ministries of defense, interior, health and education. The Iraqi Constitution, ratified in an Oct. 15 referendum, gives Kurdistan the authority to wheel and deal with the international petroleum industry within Irbil, Sulaymaniya and Dahuk, where Kurds make up more than 95% of the population.

But Kurds also lay claim to much of the region around Kirkuk, which is said to contain up to 40% of Iraq's proven oil reserves. A referendum on the disputed area's future is to take place by the end of 2007.

Officials in Baghdad, including allies of the Kurds, said they were blindsided by news of the proposed ministry.

"We know what the ambitions of the Kurds are," said Iyad Samarrai, a leader of the Iraqi Islamic Party, a Sunni Arab group. "But everybody agreed to make such moves within the [national] political process."

Times researcher John L. Jackson in Los Angeles contributed to this report.