THE BLOG
11/12/2013 08:08 GMT | Updated 09/02/2014 05:59 GMT

Pipeline Politics and Benefits to Europe and the UK

Last week's large Oil and Gas conference in Erbil, which I attended, marked the probably inexorable progress of the Kurdistan Region to economic independence and better and more reliable relationships with the rest of Iraq and with Turkey.

It was the such third conference which usually showcase a big announcement that confirms Kurdistan's increasing role in the energy considerations of many countries. This year's conference took place amid an initially bewildering and complex process of negotiations between Erbil, Ankara and Baghdad.

The scene was set by KRG Prime Minister Nechirvan Barzani who told delegates that it is 'very difficult to trust anyone who wants to decide our destiny' and that its new energy sector means that 'the door has been opened to the world.'

But observers focused on the words of the energy ministers for Turkey and Kurdistan, Taner Yildiz and Dr Ashti Hawrami. This year Yildiz actually attended the conference. Last year, Baghdad pointedly banned him in a crude display of power which did much to unify the Kurds and the Turks. This year, Yildiz first flew to Baghdad to meet ministers before visiting Erbil.

The evidently good personal chemistry between Yildiz and Hawrami illustrates a long sought-for and radical reshaping of relations between Turkey and Kurdistan. The development of a brand new energy sector has changed the equation. Turkey is seeking to become a world economic giant but has few energy resources itself and needs reliable supplies from its neighbour. Turkey becoming a new hub for secure and diverse energy supplies will also benefit Europe and the UK.

In the past year, Kurdistan has been trucking oil to Turkey. But trucking is not a sustainable export route and a new pipeline has been constructed. It is now ready, tested and tried and will export up to 350,000 barrels of oil per day in the coming year. This could rise to two million bpd in the coming years. The Kurdistan region could become a net contributor to federal coffers in Baghdad and account for a substantial proportion of the much-needed oil revenues of the whole country.

Yet some retain a Baghdad-knows-best approach and chide the Kurds for "smuggling" oil and allegedly acting outside the federal constitution agreed in 2005. They claim that the Kurds will transform economic into political independence.

The Kurds feel they have waited long enough to see the fruits of their natural wealth. There are huge pent-up demands for improved public services and diversifying a more sustainable economic base through developing tourism, agriculture and industry.

The Kurds insist that they have the right to exploit and export energy as they see fit within the Iraqi constitution while all revenues are shared by the Iraqi people. The sticking point is how Turkey pays for energy exports. Do revenues go to Baghdad or to Erbil to be shared out or can they be held in a state account in Turkey until Erbil and Baghdad finally agree a robust and reliable revenue sharing formula? Maximum transparency can reassure the federal government and others that exports are properly measured and monetised.

My initial take on it was that one could apply the old adage to Baghdad concerning how best to boil a frog. If you put a frog into boiling water, it will jump out but if you put it into cold water and gradually heat the water it will succumb. On reflection, I think this is too graphic and crude. It is not that Ankara and Erbil are making Baghdad an offer it cannot refuse as much as an offer that is too good to refuse.

American opposition to the deal is unfortunate but American influence is not what it used to be and its position can be finessed. Other countries such as the UK can encourage a settlement. An amicable resolution between the key players - Erbil and Baghdad, supported by Ankara - is eminently achievable without anyone losing face.

Maybe Iraq will finally accept that it is a binational, federal country and that all gain from the success of the Kurds and their links with Turkey. It is a win-win position now moving towards its finale. Inshallah.