Arab Spring Year 2: Kurdistan Begins to heat up Again with Oil Embargo against Baghdad

by John Galt
April 2, 2012 19:55 ET


The disaster which is the Middle East is the gift that keeps on giving to oil speculators in addition to the current U.S. regime. The instability of the region with the Iranian and Syrian situation gathered more steam today with the Kurdistan regional government cutting off all oil shipments to the central government in Baghdad. This basically cuts the Iraqi government off at the knees financially which only expands a corrupt nation’s crisis from a regional dispute to a national crisis.

The full story from VOA News is available at the link below:

Iraq’s Kurdistan Region Halts Oil Exports to Baghdad

(click on the title above to read the article in full)

The news from the story above is somewhat stark yet indicative of the mess the departure of the United States has left behind. The Kurds accuse the Iraqi government of making no payments for the oil produced since May of 2011, almost one full year. This excerpt indicates the kind of camel trading and insults being traded between the two parties:

The Kurdish region’s Ministry of Natural Resources said Sunday that Baghdad had not made any payments to Kurdistan since May 2011. A ministry statement said that Kurdistan has “reluctantly decided to halt oil exports until further notice,” due to the lack of payment. The region has been shipping about 50,000 barrels a day to Baghdad.

Iraq’s Finance Minister Rafaa al-Issawi said last week that Baghdad approved the payment of $560 million to Kurdistan, but he said a final audit is pending.

Iraq’s Shi’ite Vice President Hussain al-Shahristani said Monday that Kurdistan has not been sending all its oil output to the central government.

He said large quantities of oil are being smuggled into Iran [and Turkey] and that Iraq is urging both countries to monitor their borders to prevent such smuggling. Iraqi oil, he insisted, must only be sold through two legal pipelines [via Basra and the Turkish port of Ceyhan.

That accusation against the Kurds smuggling the oil via Iran was highlighted further in the Gulf News of Dubai via this AFP story tonight:

Iraq accuses Kurdistan of smuggling oil via Iran

(click on the title above to read the article in full)
While the idea of the Kurds working with the Iranians sounds absurd, it is a win-win situation for both parties. The first two sentences of the story drop a hint as to why:

Baghdad: Iraq’s Kurdish region, which has halted crude exports in a row with Baghdad, owes the central government more than $5 billion (Dh18.3 billion) and is smuggling the oil it produces through Iran, Iraqi officials said yesterday.

“Kurdistan does not have any refineries to refine oil, so the biggest part is being smuggled outside Iraq, especially through the Iranian border,” Deputy Prime Minister for Energy Affairs Hussain Al Shahristani told a news conference.

So if the Kurds are smuggling oil via Iran and to the open market, then how can they survive? By selling it below market price as alleged by the Iraqi government thus giving the Iranians and Kurds pricing power to obtain precious foreign reserves via the black market. The interactions are supposedly occurring with the Turkish government also which is a fascinating turn of events considering the current state of relations between the Kurds and Turks. Regardless of the outcome to this dispute, the simmering disdain and burning hate between the Kurdish people and the Iraqi central government continue to point to a wider split and greater risk of a civil war permanently fracturing the nation and inviting foreign powers to intervene once again.

The map of the Kurdish oil producing region inside of the country provides a stark reminder as to the value of this strategic reason and why the Baghdad government would like to eradicate the Kurdish people and nation to erase a bitter enemy and seize their assets, as the map below reflects so starkly:

This time however, the intervention will be by regional powers based on historical and religious disputes from the past and genocide against the Kurdish people, once and for all.

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