The autonomous enclave that the Kurds have created in northern Iraq, which had been a model of economic and political success, is facing a deep crisis that threatens its ability to stand up to the Islamic State.
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Iraq’s Kurdish region, which is almost totally separate from the rest of the country, and until recently has been considered the safest place in Iraq, began last month to enter a state of unrest. There have been stormy demonstrations, in which five civilians have been killed and more than 200 injured. That, along with the dismissal of cabinet ministers, the battle over the presidency and the economic crisis, are threatening the enclave’s unity and its capacity to function, including its ability to stand up to the Islamic State.
The first fissures surfaced on August 20, which by law marked the end of the term of President Masoud Barzani. For Barzani’s party and supporters (and Barzani himself), it’s hard to imagine Kurdistan without this charismatic leader who has become a legend. A short time after the August 20 date, the enclave’s Justice Ministry decided to extend his term to 2017, to the dismay of his opponents in parliament and the government. The current government, which was established following elections in June 2014, sparked hopes for democratization in Kurdistan, which until then had been controlled by representatives of the two major parties — Barzani’s Kurdistan Democratic party, or KDP, and the Patriotic Union of Kurdistan, or PUK, led by Jalal Talabani, who has been sidelined by illness.
The new government includes the Gorran (Change) party, which was active in the opposition, as well as representatives of smaller parties, some of which are religious. The intent was to set up a “government of everyone,” but from the outset, differences of opinion surfaced, particularly as a result of Gorran’s demand to enact political reform and fight corruption that had resulted in prize jobs and generous slices of the budget going to the large parties. Gorran officials claimed that businessmen and other close associates of the parties were reaping hundreds of millions of dollars in customs receipts at border crossings with Turkey and Iran without disclosing it.
At the same time, while the old political elite is benefiting from a heavy flow of cash, employees of the enclave have not been paid their wages for the past three months, and the region’s treasury is nearly empty. Kurdish oil is in fact continuing to be sold via Turkey, but profits from the sale are no longer enough to cover ongoing expenses. The slump in world oil prices is only one of the reasons for the crisis. After major birth pangs, in February 2014 an agreement on splitting oil revenues between the Kurdish region and the Iraqi central government was reached, but when it got underway, each side accused the other of violating it and the deal finally collapsed last February when the Iraqi government stopped the transfer of payments, about $1.1 billion a month.
The Kurdish government also faces the expense of accommodating more than 2 million refugees as well as the ongoing cost of the war it is waging against ISIS. The leadership of the enclave has received aid from the United States to deal with the refugees, and has also gotten loans from international financing agencies, but even this pipeline is drying up due to delays in meeting loan repayments.
And so the enclave, which since the fall of Saddam Hussein was a model of economic success and an island of quiet in a sea of troubles surrounding it, has found itself in a political and economic crisis that is also a source of concern for the West. Envoys from the United States and Britain have rushed to the Kurdish capital, Erbil, to try to resolve the crisis, and the speaker of the Iraqi parliament, Salim al-Jabouri, has spoken to Kurdistan’s prime minister, Nechervan Barzani, in the hope of jump-starting the suspended agreement, but a solution doesn’t appear in the offing. Prime Minister Barzani has declared that Kurdistan “will no longer allow Iraq to control its oil,” while Iraq doesn’t intend to compromise on Kurdish oil revenues.
At the same time, it doesn’t look like the other Barzani, Masoud, intends to give up the presidency, but he currently doesn’t have a way of paying civil servants in the hopes that it will quell the protests. Ironically, it is actually hundreds of thousands of Iraqis who took refuge in Kurdistan who are running commercial activity in the enclave. They brought money with them, built homes and became real estate contractors. Recently it has been Iraqis who have been buying homes while Iraqi civil servants in Kurdistan are the only ones to be getting their salaries, as they come from the Iraqi government.
This has intensified the resentment against them and the fear of a demographic shift in the enclave. So, for example, the council of the Sulaymaniya district, where about 400,000 Iraqis live, has decided to bar foreign citizens from buying property there. Although the regulation is worded in general terms, it’s clear that it is aimed at only at Iraqis.
Other districts will apparently follow suit, which on one hand responds to public sentiment among Kurdish residents, but it also puts a halt to essential economic development. What remains to be seen is just whether the Western countries, which are concerned about flagging strength of the Kurds as they face ISIS, will attempt to rescue this important enclave from the hole that it has dug for itself.