American Contractor

It is most likely that if the KRG wish to see the referendum go forward they most likely would have to fund it themselves. No problem there with the several oil contracts the KRG has signed in the last year with other small foreign oil companies that are currently drilling for oil in the north, all with disapproval from the central Baghdad government I might add; So much for Iraq unity.

The Kurds have been very vocal that the city of Kirkuk belongs to them and have been positioning them selves by moving to Kirkuk from either within Iraq or outside of Iraq and settling in and around the city so when the census is conducted it will show that the Kurds are the majority. If the Kurds are the majority most likely will have most of the government seats within the city of Kirkuk.

The Kurds would be able to control decisions made within city government and most importantly the money, either from taxes and or oil sales from the largest oil field just outside of Kirkuk; Which by the way is the largest known oil field inside Iraq. Remember, 10 percent of Iraq has only been explored for oil deposits and this was several years ago most likely post sanction. Maybe perhaps there is another undiscovered large oil field in Iraq waiting to be discovered.

Kirkuk will be the major political and economic showdown the central Baghdad government will have to face and maybe don’t want to deal with it at this time. There are more important issues such as disarming the militias, de-baathification, investment projects, amendments to the Iraqi constitution, Oil Investment Law, Foreign Investment Law and most importantly the rules to this law of which investors play by, and so on and so on.

As central government Baghdad is dealing with all these issues and being in the world spotlight and I did forget one more thing and that is Security. Meanwhile, as the central government in Baghdad is dealing with these issues the KRG is positioning themselves to seize the disputed territories in the North, mainly, the city of Kirkuk.

Baghdad is not the only one concerned about the richest city in Iraq. The Turkish government is also deeply concerned about the future prospects of the KRG being led by Masud Barzani, who proclaims to be the Kurdistan Regional President.

Just recently a report was written by the Turkish Intelligence Agency describing the plans of Masud Barzani who is going forward with plans to bring the city of Kirkuk into the fold of the KRG.

The report went on to say that the goal of the KRG is to establish domination over the petroleum and natural resources in Northern Iraq and in this case specifically the city of Kirkuk.

The report was sent to different cabinet members inside the Turkish government and warned the condition has matured for Kirkuk to join the KRG led by Masud Barzani. Something the Turkish officials and the intelligent community to include the military are not too happy about.

There is another government that is concerned about the future plans of for Kurdish lands and the increase of economic strength of what that territory represents.

It would be reasonable to expect that agreements have been made between Iran and Turkey in regards to carving up the Kurdish region. The Iranians would not sit idle by and watch Turkey start a military operations in Iraq. To counter what the KRG is doing Iran would likely conduct there own military operations in the north to protect their own interests.

Recently the Iranian military has fired artillery shells inside northern Iraq battling rebels who the Iranian government believes are against the Iranian government interests.

The Turkish report talks about the Kurdish Region Draft Petroleum Law that is currently being drawn up by the Kurdish administration.

Noticing the Kurdish Regional Government “has come to the point of acting like an independent state by leaving the Iraqi central government out of the loop”

In the proposed Kurdish Petroleum Law the KRG will be able to enter petroleum agreements with third countries, and would be able to assume total control over the northern Iraq region to include the Kirkuk-to-Yumurtalik oil pipeline.

According to the new petroleum law the residents of Kirkuk will be joined to the Kurdish Region even before the constitutional referendum in December 2007 and could enter into oil contracts before then like they have been within the last 12-18 months.

The Iraqi Kurdish Region Draft Petroleum Law, which will be sent very soon to the Kurdish Parliament, refers to “existing oil field” and “future oil field.”

The new law goes as far as defining what is an existing, a future oil field and includes the “disputed territories” such as the city of Kirkuk.

The draft proposal makes the Kurdish Regional Government as the sole authority in petroleum operations to include the disputed areas as Kirkuk and in future fields.

The oil fields that have been in production prior to 22 August 2005 and produced 20,000 barrels of oil per day for 12 months are considered an “existing oil Field” and the other potential fields are “future oil fields.”

Below are some of the points of interest that are in the Kurdish Region Draft Petroleum Law. Again this is just a draft proposal.

a) The Kirkuk referendum: The draft entails that, in the event of the Kurdish Regional Government's concluding that people living in disputed territories, and especially Kirkuk, will decide in a referendum that these territories be linked with the Kurdish region, it will be able to enter into the petroleum contracts that it wishes in disputed territories, including Kirkuk, even before the referendum is held.

b) Petroleum operations independent of the Iraqi government: It is stated in the draft that the Kurdish Regional Government has the right to enter into agreements with neighboring countries independently of the Iraqi government, and that no legal or administrative arrangements of the Iraqi government will be valid in petroleum operations in the Kurdish region or the disputed territories.

c) Pipelines: Control over all the existing petroleum operations in the Kurdish Region, as well as over all related infrastructure, such as pipelines and refineries, is left to the Kurdish Regional Government.

d) Share of petroleum: The draft also calls for the Iraqi Central Government to give a share of the petroleum income from the country as a whole to the Kurdish Regional Government. Otherwise, it provides for the Kurdish Regional Government's being able to sell directly the petroleum produced in its own region and in disputed territories.
The draft also seeks to guarantee not only the future, but the past as well. The draft, which notes the petroleum revenues that the Kurds had not been able to benefit from in the past, calls for payments to be made, for a certain period, based on this past income.

e) Agreements: The draft stresses that all the agreements that have been made in the Kurdish Region are valid. It provides for the Kurdish Regional Government to intervene in all agreements that the Iraqi government has made in the Kurdish Region and in Kirkuk until the date on which this law goes into effect. And it stipulates that the approval of the Kurdish Regional Government be obtained for all agreements that will be made following the law's entering into effect.

After reading the draft proposal you would have to ask yourself why is the KRG willing to alienate them from the central Baghdad government? The KRG wants to control everything that has anything to do with the petroleum and natural resources of northern Iraq. If the draft becomes law the Turkish report goes on to say

"It is evaluated that they will take into their direct control those fields in disputed areas, and particularly Kirkuk, which have been understood to contain petroleum by means of exploration carried out by Iraqi administrations in the past, but in which production has not yet begun; that they may bring under their control all the petroleum infrastructure in Kirkuk, as well as the Kirkuk-Yumurtalik Oil Pipeline; that they may, before the referendum is held, enter into petroleum agreements involving all the disputed territories, including Kirkuk, as well as future fields; that they may seize all the fields in disputed areas, including Kirkuk, by using as a pretext the disagreements with the government of Iraq over the distribution of revenues obtained from the existing oilfields; and that they will, by shutting the government of Iraq completely out of petroleum operations, act like an independent state."

In the proposed draft law the KRG mentions about a company called the Iraqi State Oil Trust Organization (SOTO) that does not currently exist and does not go into any details of what this institution will be doing. Maybe managing all the oil revenues through them instead of the National Oil Company based out of central Baghdad government.

This draft proposal would like to cut out the central Baghdad government out of any authority dealing with the oil resources the Kurdish Regional Government has control over. According to the draft law they would like to arrange agreements involving the Kirkuk oil fields even though the Kirkuk referendum has not been completed. The KRG is already thinking that Kirkuk belongs to the Kurds and no one else.

The Kurdish Parliament has created a new Ministry called the Ministry of Peshmerga in which the irregular fighters approximately 180,000 report to Masud Barzani. This would be something the central Baghdad would have to consider when dealing with the Kurds. Kurdish interest are defended by an irregular army of almost 180,000 strong. This is a powerful bargaining chip that can be used to sway or get what the Kurds want by using the irregular Peshmerga forces as a political weapon should the Central Baghdad Government balk at what the KRG is trying to push onto Baghdad.

Time will tell what will happen between Baghdad central and the KRG in regards to Kirkuk. I am sure it is on the back of Central Baghdad minds. However, with so many other important issues confronting the Central Baghdad Government Kirkuk will have to wait for now until a time at which Baghdad can lessen there work load.

Let me put this in perspective for you in regards to militias and irregular army forces. The Firebrand Cleric/Commander Moqtadar Al-Sadr controls about 10-12 thousand militia fighters in and around Sadr City, 30 Iraqi Parliament seats, 6 Cabinet posts of the current new Iraqi government administration.

Masud Barzani, Kurdistan Regional President, along with 180,000 Peshmerga Forces which is larger then the US Military has in the entire country of Iraq, refuses to fly the National Iraqi Flag in Northern Iraq, is replacing the Iraqi National Anthem with a Kurdish anthem, drafting a petroleum law and financial investment law ahead of the Central Baghdad Government.

I will let you think that over for a second.

The KRG just like the central Baghdad government is not immune to internal problems and government infighting, they also have their own problems. It doesn’t get the media attention that Baghdad Central government receives.

Media reports coming out of Baghdad and Iraq go in cycles, sometimes a lot of information is being released and at times there is none to be read that we haven’t and read over and over such as IED’s and our US Military being killed and wounded.

It is going to be interesting 2007.