Oil-Rich Kurdistan Capitalizes on Iraqi Chaos

In the rapidly unfolding events and chaos in Iraq, leaders of the semi-autonomous region of Kurdistan have capitalized on the situation to gain further leverage over the central government in Baghdad.

Jun 16, 2014 at 3:56PM

This article was written by Oilprice.com -- the leading provider of energy news in the world. Also check out this recent article:

In the rapidly unfolding events and chaos in Iraq, leaders of the semi-autonomous region of Kurdistan have capitalized on the situation to gain further leverage over the central government in Baghdad. As the militant Sunni group ISIS rolled up towns and cities and moved south toward the capital, the Kurdish Regional Government (KRG) seized Kirkuk, an oil-rich city whose control has long been in dispute between Kurds and the Iraqi government.

ISIS fighters, within a week, have pushed Iraq to the precipice. First was the fall of Mosul. Then, in quick fashion, ISIS moved south in pickup trucks and took Tikrit. Now, threatening Baghdad, the security situation is taking a turn for the worse. On June 13, the Grand Ayatollah Ali Sistani, Iraq's highest Shiite cleric, issued a decree calling on his followers to take up arms against the Sunni ISIS.

This portends a violent struggle of an increasingly sectarian nature. As people are forced to choose sides, Iraqi Sunni and Shiite civilians will likely get swept up in the fight.

Meanwhile, Kurdistan has seized Kirkuk and other areas surrounding it; occupation now goes beyond the KRG's official administrative area. In Kirkuk, with Iraqi security forces having abandoned their post, looters seized equipment and weapons from an Iraqi base.

The KRG insists that it sent the Peshmerga -- Kurdish security forces -- to Kirkuk in order to protect the city from ISIS fighters. While that is surely true to a certain degree, the ramifications of the Kurdish move to occupy disputed territory will reverberate more broadly.

In a press statement, the KRG assailed the Iraqi security forces and the Maliki government for incompetence and unwillingness to address militants. Lieutenant General Jabbar Yawar, spokesperson of the Peshmerga, said that for quite some time Kurdistan has pressured Baghdad to do more. "Especially in Ninewa, Salahaddin and Anbar governorates, the Iraqi security agencies and ministries have been incapable and soldiers and employees were only interested in collecting their salaries," he said, adding, "Baghdad did not heed the KRG's warnings and now, unfortunately, our predictions have come to pass."

Earlier, Iraq's foreign minister, Hoshyar Zebari, said Iraq was facing a "mortal threat" and that there would be "closer cooperation between Baghdad and the Kurdistan regional government to work together and try to flush out these foreign fighters."

But the hostile language directed at Baghdad by the KRG suggests that cooperation may not be at the top of the agenda for the Kurds at this stage. The KRG may be trying to shore up defenses against ISIS, but they are also likely eyeing the longer game.

The seizure of Kirkuk would have been unthinkable before this week, but with Iraqi security forces not only displaying its inability to control large population centers from ISIS fighters, they have little appetite to confront Peshmerga forces – who are considered the best trained and most disciplined soldiers in Iraq – from consolidating territory beyond the Kurdish borders. When the smoke clears, the result could be a permanent territorial gain for Kurdistan.

The developments will impact Kurdistan's oil prospects in that the violence and political upheaval could bring investment in Iraq's oil sector to a standstill. "All the oil companies are on alert," Daniel Yergin, an oil historian, told The New York Times. "They are going to worry about the security of their people and installations. Obviously, no one is going to do anything new. Confidence about the growth of Iraqi oil output becoming a key element of stability in the world oil market is now in question."

Moreover, the violence will delay oil exports from Kurdistan. A major pipeline that carries Kurdish oil to Turkey has been offline due to an act of sabotage that preceded ISIS's gains last week. But the violence will doom attempts to repair the pipeline anytime soon, delaying major Kurdish oil exports.

Still, Kurdistan has clearly strengthened its hand vis-à-vis Baghdad. Up until now, Maliki's government has hampered Kurdistan's efforts to directly export oil while the two sides argue over oil governance.

But Kurdistan has strengthened its hand by occupying territory, a move that Baghdad is obviously unable to roll back. And as the Maliki government grows more desperate, it may be willing to make significant concessions to the KRG over oil exports for its cooperation against ISIS.

Finally, Kurdistan's aggressive moves in the face of Maliki's weakness could bring the goal of Kurdish independence much closer. It has long had enough oil to build an independent economy, but the KRG has now demonstrated it has enough political and military strength to defy Baghdad.

OPEC is absolutely terrified of this game-changer
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour (That's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable landslide of profits!

 

Written by Nick Cunningham at Oilprice.com.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers