Oil and the Iraqi curse

The contentious issue of oil sharing continues to highlight the crux of Iraqi discord.

Perhaps the greatest paradox of the Mesopotamian plains is the curse of the great treasure in those lands. With the third-highest proven reserves in the world of “black gold” (115 billion barrels of oil), Iraq has the potential to provide for one of the strongest and most flourishing economies in the world along with a great standard of living for its people.

However, almost exclusively by successive regimes, the wealth from oil has been hoarded by the central government and spent on expensive military adventures; and under Saddam Hussein used to rule and repress the people. Under Saddam, the Sunni elite were the masters of oil, and so assumed the huge wealth of the country. However, in Iraqi Kurdistan, it is evident that if even 2 per cent of the Iraqi oil was spent in the region every year, for social services other than oppression, the infrastructure would be so much better.

The Kurds and Shiites now have a second chance in the post-liberation age and it is understandable they finally want a share of the riches they have long been denied, much to the dismay of the now disenchanted and marginalised Sunni population. Post-liberation Iraq may be riddled with a poor economy, political wrangling, and a brewing civil war, but arguably, the most significant of the contentious issues is the division of the oil wealth among the warring population.

The resolution of the oil issue may determine how many of the other key issues are resolved. For example, the crucial sticking point in the system of federalism - of which the Kurds are major advocates and biggest benefactors to date - is the ultimate power and autonomy granted to federal entities in fiscal matters and in the control of natural resources.

Clearly, the biggest issue in Iraq and the fuel for the rampant and relentless Sunni-led insurgency in Iraq, which claims thousands of lives and creates an atmosphere of fear and havoc, is the strength of the Shiites and the prominence of the Kurds in the post-Saddam era. With the Shiites forming an overall majority of the population, it is unsurprising that they will naturally dominate any subsequent government. However, coupled with the Kurds, the king makers of the new Iraq, they at least in theory form a formidable alliance.

Both groups were heavily repressed under Sunni rule and both are overly keen to rectify the wrongs of the past. Kurds and Shiites will not easily forget their merciless injustice under Saddam.

On the other hand, the Sunnis will hardly find it difficult to realise that they are in for a tough future under the current Iraqi framework and essentially now have to play second fiddle in Iraq. As a result of their fall from power and stronghold on society, Sunnis naturally view the Kurds and Shiites with much suspicion. One wonders why the current insurgency is such a huge surprise as it forms a last Sunni stand before they lose grip of the country altogether. The Sunnis want to be heard and want a stake in the future. For them, using threats and anarchy is a better way of being taken seriously than any vote in government where they may ultimately hold little sway because of their minority status.

Furthermore, Sunnis despise federalism because power is distributed to the regions. Given the fact that the oil wealth of the country is ironically concentrated in the Kurdish north and Shiite south, Sunnis fear a rough bargain with only barren, impoverished lands in the middle areas where they dominate.

Perhaps one of the biggest stumbling blocks to common agreement has been the Kurds who are suspicious of being at the mercy of a central government once more. While the Kurds have been signing oil exploration contracts in unison and rebuilding their area at a remarkable rate, this has caused much dismay further south, where it has been repeatedly stated that contracts with the Kurdistan Regional Government are void without their stamp of approval.

The Iraqi Constitution seemed to highlight the way ahead in terms of the distribution of oil wealth, stipulating the rights of regional governments to explore new oil fields while the existing oil fields would remain under central control. With the Kurdish north, hardly the favoured lands of Iraqi regimes, exploration almost starts with a blank page. In other words, other than the contentious issue of Kirkuk, a long-established and coveted oil centre that they will likely assume anyway in a referendum later this year, the Kurds could enjoy the fact that almost all oil under their jurisdiction would ultimately remain under their control as part of the Constitution.

However, just like much of the political gains of the past four years, laws and agreements have often been rushed through - under pressure from the impatient US administration - and subsequently many of the major issues have been swept under the political rug.