The Iraqi crisis: between energy disputes and political stalemate

Tigris River, near Al-Mutanabah Street, Baghdad, Iraq (Credits: Safa.daneshvar, CC BY-SA 4.0, via Wikimedia Commons)

Geopolitical Report ISSN 2785-2598 Volume 20 Issue 14
Author: Silvia Boltuc

Iraqi Shiite leader Muqtada Al-Sadr surprised political circles and public opinion with his complete withdrawal from the political process after Iraq failed to form a government. The ongoing political crisis is not the only issue affecting Iraq. Fight against terrorism, extreme drought, frequent sandstorms, demonstrations against rampant corruption, and a dispute with Iraqi Kurdistan to manage the hydrocarbon fields in the north are challenging the central Government of Baghdad.

In recent months, Moqtada al-Sadr has proposed two initiatives aimed at leaders of other Shiite parties and independent deputies to form a government.[1] Al-Sadr’s opponents insisted on forming a government of national accord with the participation of all political forces represented in parliament. At the same time, al-Sadr supported creating a majority government in alliance with the largest Sunni bloc and the Kurdistan Democratic Party.

Officially, Al-Sadr’s decision was defined as a “sacrifice for the fatherland” not to be the reason for the deadlock in parliament and thus allow other independent parties and parliamentarians to form a cabinet.[2]

The unexpected gesture threw a veil of uncertainty over the future of the Iraqi government and political class, leaving many questions about the real reason behind the decision that, according to the opposition, could be “an ambush”. Forming a government without the blockade of Moqtada Al-Sadr, the largest in the legislative assembly, might be a dangerous trap and trigger riots, which could be the real purpose behind the withdrawal.

The main rival of the Al-Sayrun coalition (of which al-Sadr is a part), the Shia Fatah alliance led by Hadi al-Amiri, has lost two-thirds of its seats and only managed to win 17.[3] Fatah is the political wing of Al-Hashd al-Shaabi (Popular Mobilization Forces – PMF), a coalition of paramilitary militias born in the context of the Iraqi civil war in response to Ayatollah Ali al-Sistani’s 2014 call to lead the Jihad against the Islamic State, who had conquered the city of Mosul.[4] The militias were created with the support of Iran’s Islamic Revolutionary Guard Corps (IRGC). The PMF were formed by the union of paramilitary groups already active in the insurgency against the American occupation forces, considered by the Iraqi government criminal organisations.

Since none of the parties managed to win a majority of seats in parliament, the formation of blocs and coalitions was necessary to form the government. The main problem in this process is the lack of consensus among the key political forces, mainly the Shia ones.[5] With the resignation of Sadrist politicians, Iranian-backed groups should now hold a majority in parliament. Under Iraqi law, if a seat in parliament becomes vacant, the candidate with the second-highest number of votes in their constituency replaces it. In this case, they would be al-Sadr’s opponents led by Iranian-backed Shiite parties and their allies.

Disputes over hydrocarbon fields in northern Iraq and international interests

Iraq is a country rich in hydrocarbon deposits, vital for the growth of the Iraqi economy. Recently, a dispute has reignited between Baghdad and Erbil that dates back to the formation of the new government in Iraq in 2003. The Kurdistan Regional Government (KRG) was supposed to export a specific volume of oil from its fields and Kirkuk via the State Organization for Marketing of Oil (SOMO) and would not independently sell oil from fields on international markets. In return, Baghdad would pay funds to the KRG from the central federal budget. In the following years, there have been continuous violations of this agreement by both state entities, in a rebound of responsibility.[6] In 2017, Russia entered these dynamics. Rosneft took control of oil infrastructure in the Kurdistan region, initially providing the regional government with 1.5 billion dollars in funding through oil sales and providing technology and equipment assistance.[7] Russian state-owned oil giant signed a production-sharing agreement with Iraq’s autonomous Kurdistan region worth up to 400 million dollars.[8] Moreover, it established 60% ownership of the KRG-Turkey pipeline.[9] Moscow has also concluded new oil and gas exploration and development agreements with the central government in Baghdad.

Recently, two court rulings by the Supreme Court of the Iraqi Federal Government and the Iraqi Oil Ministry’s proposal to create a Kurdistan National Oil Company under federal ownership of the southern government marked a tightening of the dispute.[10] The KRG would lose any authority over its Russian-dominated oil industry and make all contracts between KRG and oil companies over the past 18 years (and the resulting revenues) subject to review. On the other hand, it is essential to underline that Baghdad must import gas and electricity from Iran to meet its internal demand.

In the background of the Ukrainian crisis, the European need for alternative gas suppliers to Russia might have pushed Turkey to strengthen its policy toward Iraqi Kurdistan. Ankara launched a military operation in northern Iraq in April. According to official statements, it was to prevent a large-scale attack planned by the Kurdistan Workers’ Party (PKK) against Turkey. But the visit of the Prime Minister of Iraqi Kurdistan, Masrour Barzani, to Dolmabahce three days earlier and then to the United Kingdom suggests that the supplies of natural gas to Europe, through Turkey, might be the real goal. Ankara was likely asked to ensure the territory of PKK militants to preserve the gas field and the pipeline of European interest.[11]

Concerning international interests in Iraq, China might play a significant role. As Washington withdraws from the Middle East, Beijing is poised to expand its influence. Iraq has emerged as China’s number one trading partner in the region and the third-largest oil supplier, right behind Saudi Arabia and Russia. Growing economic relations with Baghdad will likely translate into political influence over time. In 2021, Beijing secured a new construction deal in Iraq worth about 10.5 billion dollars, nearly a sixth of China’s Belt and Road Initiative (BRI) investments that year. Furthermore, Baghdad is estimated to need a whopping 88 billion dollars for its post-Daesh reconstruction needs, and China could use the opportunity to cement its role in the country through investments.[12]

Conclusion

Since the US-led invasion toppled Saddam Hussein two decades ago, recent developments point to an ever-deeper struggle for influence in the rising Shiite community. The intra-Shiite rifts do not turn in favour of Iran and its influence in the country. Instead, they benefit its opponents in the Gulf and the Kurdish factions.

Moqtada al-Sadr, who already participated in the anti-US armed resistance leading the Mahdi Army, is also opposed to Iranian interference, although his stances over the years have been volatile and discontinuous. The recent withdrawal from the political process defined a sacrifice for the homeland could instead be a trap to use the threat of popular uprisings as political leverage. The opponents of Moqtada al-Sadr are well aware of his ability to mobilise street demonstrations.

In addition to the political stalemate, Iraq has to deal with a difficult economic situation, severe droughts and increasing sandstorms. The need to restore the state economy and the West’s recent interest in gas and oil fields in northern Iraq has exacerbated the dispute with Kurdistan Regional Government. The urgency to ensure the gas supplies has increased Turkish military interventions in the north of the country, defined by Baghdad as an unacceptable violation of Iraqi territorial sovereignty. Finally, the fight against terrorism continues incessantly, contributing to regional instability.

Sources

[1] Dler S. Mohammed (2022) Sadr gives independent members of parliament 15 days to form an ‘independent government’, Kurdistan24. Link: https://www.kurdistan24.net/en/story/28233-Sadr-gives-independent-members-of-parliament-15-days-to-form-an-%27independent-government%27.

[2] Shafaq News (2022) Al-Mutayri: al-Sadr’s “sacrifice” is an “eternal altruism”. Link: https://shafaq.com/en/Iraq-News/Al-Mutayri-al-Sadr-s-sacrifice-is-an-eternal-altruism.

[3] Shawn Yuan (2022) Iraq announces final results of October parliament election, Aljazeera. Link: https://www.aljazeera.com/news/2021/11/30/iraq-announces-final-results-of-the-october-legislative-election.

[4] BBC (2022) Iraq conflict: Shia cleric Sistani issues call to arms. Link: https://www.bbc.com/news/world-middle-east-27834462.

[5] Zeidon Alkinani (2022) Iraq’s Government Formation Hindered by Intra-Group Political Competitions, Arab Center Washington DC. Link: https://arabcenterdc.org/resource/iraqs-government-formation-hindered-by-intra-group-political-competitions/.

[6] Production Sharing Contract Block Kurdistan Region Between The Kurdistan Regional Government Of Iraq. Link: https://www.resourcecontracts.org/contract/ocds-591adf-6005604716/download/pdf.

[7] Warsaw Institute (2020) Russia’s Rosneft Paid Exorbitant Amount to Mystery Consultant in Kurdistan. Link: https://warsawinstitute.org/russias-rosneft-paid-exorbitant-amount-mystery-consultant-kurdistan/.

[8] Radio Free Europe (2017) Russian Oil Giant Rosneft Says Signs Production Deal With Iraq’s Kurdistan Region. Link: https://www.rferl.org/a/iraq-rosneft-oil-deal-kurdistan/28802689.html.

[9] CNBC (2017) Russia’s Rosneft to take control of major Kurdish oil pipeline. Link: https://www.cnbc.com/2017/10/19/russias-rosneft-to-take-control-of-major-kurdish-oil-pipeline.html.

[10] Khalid Al Ansary (2022) Iraq Moves to Implement Court Rule on Kurdistan Oil Operations, Bloomberg. Link: https://www.bloomberg.com/news/articles/2022-05-07/iraq-moves-to-implement-court-rule-on-kurdistan-oil-operations.

[11] Silvia Boltuc (2022) Turkey started a military operation in northern Iraq in connection with gas pipelines, SpecialEurasia. Link: https://www.specialeurasia.com/2022/04/21/turkey-iraq-military-operation/.

[12] Mehmet Alaca (2022) China’s Iraq investments and its growing foothold in the Middle East, TRT World. Link: https://www.trtworld.com/opinion/china-s-iraq-investments-and-its-growing-foothold-in-the-middle-east-56150.