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Iraqi Elections Likely to Stifle Kirkuk's Energy Potential

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Western markets have their eye on the region's oil and gas, but political instability keeps them away.

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Editor's Note: This article was written by Gareth Jenkins of OilPrice.com, which offers free information and analysis on energy and commodities. The site has sections devoted to fossil fuels, alternative energy, metals, oil prices, and geopolitics.


The elections in Iraq on March 7 are likely to serve as an important indicator of the prospects for a resolution of the long-running dispute over the administration of the ethnically mixed and resource-rich province of Kirkuk in the north of the country.

The Iraqi Kurds have repeatedly called for Kirkuk to be transferred to the control of the semi-autonomous Kurdistan Regional Government (KRG), which already administers three provinces in the predominantly Kurdish north of Iraq. The other ethnic groups in Iraq -- including the Arab-dominated government in Baghdad -- are equally insistent that Kirkuk should remain under central control and that any oil or gas revenues should be divided between the entire population of the country rather than all going to the KRG.

The failure to resolve the issue of the eventual status of Kirkuk threatens not only prospects for permanent political stability in Iraq but also hopes of extracting the province's huge reserves and building new oil and gas pipelines from Kirkuk to Turkey, and from there to energy-hungry Western markets.

"We are very interested in the oil and gas reserves in Kirkuk. Who wouldn't be?" said one executive from a leading European energy company. "We would like to invest in the region, perhaps even become involved in building one of the pipelines. But we can't do anything unless this issue is resolved. At the moment, the risk of political instability is just too great."

The Iraqi Kurds have long maintained that, historically, Kirkuk is a Kurdish province but that it was subjected to a process of Arabization under former Iraqi President Saddam Hussein, who deported a significant proportion of its indigenous Kurds and replaced them with ethnic Arabs. No one doubts that such a campaign was launched, although the scale of the deportations is hotly disputed.

Since the US-led invasion and occupation of Iraq in 2003, the KRG has assumed de facto control of education and security in Kirkuk. Other ethnic groups have accused the KRG of resettling hundreds of thousands of ethnic Kurds in the province, including not only those who were originally from Kirkuk but also a large number of Kurds from other areas. They claim that the KRG's ultimate aim is to change the demographic balance in the province in the run-up to a constitutionally required -- but long overdue -- referendum on the status of Kirkuk. They fear that, if a referendum results in a vote for union with the KRG, the Iraqi Kurds will attempt to use the revenue from the province's oil and gas reserves as the economic foundations for their long-held dream of an independent Kurdish state. It is a prospect that alarms not only the Iraqi government in Baghdad but also several of the country's neighbors. Syria, Iran, and particularly Turkey all worry that the creation of an independent Kurdish state in northern Iraq will further fuel secessionist tendencies among their own already restive Kurdish minorities.
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