Turkey weighs pivotal oil deal with Iraqi Kurdistan

By Ben Van Heuvelen, Published: December 11

ANKARA, Turkey — American diplomats are struggling to prevent a seismic shift in Turkey’s policy toward Iraq, a change that U.S. officials fear could split the foundations of that fractious state.
The most volatile fault line in Iraq divides the semiautonomous Kurdistan region in the north from the Arab-majority central government in Baghdad. As the two sides fight for power over territory and oil rights, Turkey is increasingly siding with the Kurds.
Kurdish and Turkish leaders have had a budding courtship for five years. But now Turkey is negotiating a massive deal in which a new Turkish company, backed by the government, is proposing to drill for oil and gas in Iraq’s Kurdish region and build pipelines to transport those resources to international markets. The negotiations were confirmed by four senior Turkish officials, who spoke on the condition of anonymity because of political sensitivities.
“Turkey hasn’t needed to ask what we think of this, because we tell them at every turn,” said a senior U.S. official involved in Middle East policymaking, speaking on the condition of anonymity because he was not authorized to talk with the media. The official said that any bilateral energy deals with the Kurdistan region would “threaten the unity of Iraq and push [Prime Minister Nouri] al-Maliki closer to Iran.”
Iraqi Kurdistan has already staked out significant autonomy, providing its own public services, controlling airports and borders, and commanding police and army forces. The energy deal with Turkey would all but sever Kurdistan’s economic dependence on Baghdad, which is perhaps the primary tie that still binds the two sides.
“We are having serious discussions with the [Turkish] company,” said Nechirvan Barzani, prime minister of the Kurdistan Regional Government. “We hope they participate in the region.”
The Turkish government has not made a final decision. Energy Minister Taner Yildiz is leading a review of the deal, according to senior Turkish officials, and expects to issue a formal recommendation to Prime Minister Recep Tayyip Erdogan by the end of the year.
Turkey’s moves come at an especially volatile time for the region. Along Turkey’s southern border, Syria’s Kurdish minority has gained control of a large expanse of territory in the midst of a civil war. That instability has worried Turkish leaders, who have used their sway over the Iraqi Kurdish leadership — both Prime Minister Barzani and his uncle, Massoud Barzani, Kurdistan’s powerful president — to help ensure that they exert a benign influence in Syria.
Iraq is also in crisis. On Nov. 16, a minor confrontation between Kurdish security forces and Iraqi soldiers combusted into a deadly firefight. Since then, both sides have deployed thousands of troops, as well as tanks and artillery, to each side of their contested border, where they remain within firing range.
Strategic shift
Erdogan has left little doubt where his sympathies lie, accusing Maliki of “leading Iraq toward a civil war.”
Yet Turkey’s embrace of the Iraqi Kurds is not just a function of personal enmity. Rather, it represents a deliberate strategic shift that has upended the conventional wisdom that once governed Turkish policy toward Iraq.
After the U.S.-led invasion in 2003, Turkey advocated against giving autonomy to Iraqi Kurds, fearing that such a precedent might strengthen Turkey’s Kurdish minority in its quest for greater rights and self-governance. Turkey also was wary that any Iraqi Kurdish territory would become a haven for the militant Kurdistan Workers’ Party, known by the acronym PKK, which the United States has designated a terrorist organization.
In 2007, Erdogan began to soften that stance. He took primary responsibility for his Iraq policy away from the military and gave it to a diplomat named Murat Ozcelik. “My instructions from the prime minister were to build ties with the Kurds,” Ozcelik said.
U.S. diplomats encouraged the rapprochement. By pursuing economic cooperation, Turkey could form a bulwark of mutual interest with mainstream Iraqi Kurds who might otherwise be inclined to sympathize with the PKK’s nationalism.
Turkey also recognized the strategic value of Iraqi Kurdistan’s abundant oil and gas resources, which had barely been explored under previous regimes. Turkey’s economy was growing rapidly, at an average annual rate of about 5 percent. To sustain that growth — and the enormous popularity it brought Erdogan — Turkey would need new energy supplies.
Moreover, Turkey’s ambitious leaders aspired to elevate their country to the highest echelons of international diplomacy. To do that, Foreign Minister Ahmet Davutoglu has argued, Turkey should leverage its geographical position at the crossroads of East and West into geopolitical power. One way to accomplish this, he suggests, is to make Turkey a transit hub for energy.
“The Foreign Ministry’s analysis was that relations with Baghdad are important, but relations with the Kurds are strategic,” said Serhat Erkmen, the Middle East political adviser at ORSAM, a research institute connected to the Foreign Ministry. That idea now frames Turkey’s Iraq policy, according to several officials charged with implementing it.
Ozcelik said he initially envisioned that a strong relationship with the Kurds could help Turkey referee the persistent disputes between Irbil, the capital of the Kurdish region, and Baghdad.
But political progress has been elusive. Instead, Baghdad and Irbil have fought their battles largely through their oil policymaking. Iraqi Kurdish leaders enlisted international companies to develop oil and gas resources, including in territory whose official status is contested. Baghdad responded by banning any company that contracted with the Kurdish regional government from southern Iraq’s much larger oil fields — a policy that secured the loyalty of the world’s biggest energy companies, including Turkey’s state oil company, Turkish Petroleum, or TPAO.
That stalemate was broken in October 2011, when Exxon Mobil, which was already developing an enormous oil field under a contract with Baghdad, decided to defy the ban and sign contracts with the Kurdish government, including three swaths of disputed land. By doing so, it implicitly endorsed Irbil’s expansive claims of contracting and territorial authority.
Exxon Mobil’s move was pivotal, said a senior Turkish official involved in foreign and energy policymaking. “Here is Exxon coming in, and what is Turkey supposed to do? Keep waiting? There will be nothing left for us!” the official said, speaking on the condition of anonymity because of political sensitivities.
This calculus led Turkey to accelerate its courtship with Irbil, according to several officials in the Turkish foreign and energy ministries. At the beginning of this year, Turkish and Iraqi Kurdish leaders began to discuss the details of a strategic energy partnership — culminating in the exploration and pipeline deal under consideration.
Keeping Iraq united
Obama administration officials as high-ranking as Secretary of State Hillary Rodham Clinton have advocated against such moves, according to the Turkish officials involved in the deal, warning that bilateral pipelines would open a route for the Kurds to circumvent Baghdad’s authority over oil exports. That, in turn, would bring the Kurds a big step closer to independence.
The State Department and the White House declined to confirm these accounts or to comment on their efforts to discourage Turkish investment in Iraqi Kurdistan. Iraqi Kurdish leaders have denied that they are seeking independence, but they confirm that they are using energy deals to achieve their political goals of greater autonomy.
Turkish leaders also insist that they have no interest in an independent Kurdistan. Erdogan’s foreign policy strategists say that Turkey will always have power over the pipelines and, with that leverage, can help keep Iraq united.
“They need us in terms of their outreach to the world, especially in light of their problems with the central administration,” a senior Foreign Ministry official said. “And Turkey still supports the unity of Iraq.”
While Erdogan has recently been happy to showcase his rapport with Iraqi Kurdish leaders, his relationship with Maliki has never been worse. Erdogan has given harbor in Istanbul to Iraq’s fugitive vice president, Tariq al-Hashimi, who was sentenced to death over allegations of running a sectarian death squad; Erdogan also has backed Maliki’s political opponents, including their unsuccessful effort in the summer to remove the prime minister through a no-confidence vote.
The Obama administration has argued that Turkey’s diplomatic clout and investment dollars make it an important counterweight in Iraq against Iran. If Turkey were to write off southern Iraq as a lost cause, U.S. diplomats worry, Iran would fill the breach by increasing its political and economic presence there, gaining even more influence over Maliki.
But those arguments have not resonated in Ankara, where many senior officials think a major energy partnership with Iraq’s Kurdish region is imminent. “U.S. support would be appreciated,” said one official involved in the deal, “but it’s not a condition.”

http://www.washingtonpost.com/world/middle_east/turkey-weighs-pivotal-oil-deal-with-kurdistan/2012/12/10/2bd7d7e0-3fe9-11e2-ae43-cf491b837f7b_print.html