America’s two Iraqi allies in the fight against ISIS, the Iraqi central government in Baghdad and the government of the Kurdish region in the country’s northeast, have started shooting at each other. It’s a major development in a long-running conflict — one that will determine whether Iraq as we know it survives as a country.

The fighting began late Sunday evening, when Iraqi armed forces moved into the oil-rich city of Kirkuk and its surrounding environs, disputed territory that Kurds seized at the height of the ISIS crisis in 2014. Some of the Kurdish military forces, called the peshmerga, confronted the advancing Iraqis, leading to a series of skirmishes and an unknown number of casualties.

By Monday morning, much of the city had been taken by Iraqi government forces; it’s not clear whether or how long fighting in the city will continue. What is clear, though, is that longstanding tensions between Iraq’s central government and the Kurds are becoming unbearable — setting the stage for a major crisis.

“This is the bullet that Baghdad/[Kurdish] relations has been dodging,” writes Michael Knights, a senior fellow at the Washington Institute for Near East Policy. “I hope it fully wakes everyone up.”

Why this fighting is happening

To understand the past day’s fighting, you need to understand a little about the complex relationship between Iraq’s central government and the Kurds.

Kurds are an ethnic minority distinct from Iraq’s Arab majority. There are major Kurdish populations in several Middle Eastern countries, but they are particularly concentrated in three provinces in Iraq’s northeast (Dohuk, Erbil, and Sulaymaniyah), an area widely referred to as Iraqi Kurdistan.

The Kurds were viciously, arguably genocidally repressed under Saddam Hussein’s government, but were granted a massive degree of autonomy under the Iraqi constitution set up after the US invasion. The Kurdish Regional Government (KRG) was given nearly exclusive control over Iraqi Kurdistan, in practice governing it as a quasi-independent state.

Crucially, the constitution did not give the Kurds control over Kirkuk — an ethnically mixed area just south of Kurdistan that just so happens to be home to 40 percent of Iraq’s oil reserves. Yet the Kurds claim it as rightfully theirs nonetheless, a claim fueled partially by historical grievance (Saddam tried to ethnically cleanse Kurds from the Kirkuk region) but mostly because they wanted the money that comes from such huge oil reserves.

The central government maintained uneasy control over Kirkuk until June 2014. That’s when ISIS began sweeping across northwestern Iraq and down toward Baghdad, in a wave that (at the time) seemed unstoppable. Iraqi forces abandoned Kirkuk in an ultimately successful bid to stop the ISIS advance — and Kurdish forces moved in. So between 2014 and now, the Kurds controlled Kirkuk and all of the attendant wealth, though legally speaking it still belonged to the central government.

“This was a bad Rubicon to cross”

Until recently, the Iraqi government and Kurds alike had been too preoccupied by the fight against ISIS to hash out their disagreement over Kirkuk. But the terrorist group has, over the past three years, been pushed out of nearly all of its territory in Iraq. As the ISIS fight began to wane, the nature of the post-ISIS political order became a more pressing concern. That included the status of the KRG and so-called “disputed territories” like Kirkuk.

On September 25, the KRG held a referendum on formal independence from Iraq, which had been the long-term dream of many Kurds. It polled voters in both the three recognized provinces of Iraqi Kurdistan and so-called “disputed” territories that both it and the central government claimed — like, say, Kirkuk. Kirkuk was particularly important to independence because without its oil, Kurdistan would not be an economically viable country.

The referendum, which was opposed as divisive by the United States and most of the international community, passed. This sent an unmistakable signal that the KRG was planning to quit Iraq and trying to take Kirkuk with it, which the Iraqi government could not tolerate. What we saw on Sunday evening — the Iraqi government’s move into Kirkuk — was its direct and predictable response.

“This is why the United States ... told the KRG that this [referendum] was a monumentally bad idea,” says Douglas Ollivant, the former US National Security Council director for Iraq. “Now the Kurds, having gone forward with what we told them was a monumentally bad idea, are finding out that there are some really bad consequences to this.”

It’s not clear what happens next

Neither Ollivant nor Knights expects the clashes we saw on Sunday evening to immediately escalate into a wider conflict.

For one thing, the Iraqi military has gone from the weak force it was a few years to a battle-tested, effective organization; a Kurdish counterattack to retake Kirkuk would be extremely risky. For another, the peshmerga are divided among themselves. There are two main political parties in Iraqi Kurdistan, the Kurdish Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), and the peshmerga’s loyalties are divided between the two of them.

The KDP controls the Kurdish government and was responsible for the referendum; peshmerga loyal to it were the ones responsible for the clashes with Iraqi soldiers. The PUK, by contrast, actually coordinated with the central government — withdrawing some of its forces from Kirkuk in conjunction with the army’s arrival. These divisions make it hard for the Kurds to coordinate any kind of resistance.

It’s “a big transition of power,” Knights tells me, a “defection of part of PUK to Baghdad.”

The even bigger outstanding question is the final status of Kurdistan itself — or, put differently, whether Iraq can remain a united country.

After the success of the referendum, the KRG is under serious political pressure to make moves towards independence. Since control over Kirkuk is more or less a prerequisite for successful independence, it can’t let this issue go in the long run. Yet no Iraqi government will ever willingly let Kurdistan secede with Kirkuk, as it too relies on oil revenue to fund its military and bureaucracy. Unless the KRG abandons independence, which would deal a serious political blow to the KDP, it’s hard to see how this gets resolved in the immediate future.

Perhaps the scariest part, in the long run, is that there’s now precedent for the Iraqi government and the Kurds using serious violence against each other. According to Knights, this was “without doubt the largest clash between peshmerga and Iraqi Security Forces of the post-Saddam period.” While it might not escalate immediately, there’s no telling what will happen in the longer run.

“This was a bad Rubicon to cross,” Ollivant says. “[The referendum] put forces into play that were neither predictable nor, for the most part, controllable.”