Jun 13, 2014

The swift attack on Mosul by the Islamic State of Iraq and al-Sham (ISIS) and relatively bloodless withdrawal of US-trained Iraqi security forces has further weakened Baghdad’s influence over northern territories. The political vacuum has enabled the Kurds to expand their land claims and leverage Iraqi Prime Minister Nouri al-Maliki for concessions on their oil exports. Yet, the role of radical Baathist military officials in the Mosul coup and their links to ISIS also exposes the Kurdistan Regional Government (KRG) to important security and political challenges. The KRG will not only have to secure greater territories and populations from extremist groups on its borders, but also maneuver its nationalist agenda through radicalized Sunni Arab populations that may be even more resistant than Maliki and Shiite groups.

In some ways, the Mosul attack is a coup for the Kurds. It occurred just as the KRG was locked in another battle with Maliki over oil exports and revenues, and as its Turkish energy partner was subjected to international litigation. The ISIS attack shifted media attention, at least temporarily, from an embarrassing situation of a wandering ship unable to offload contentious Kurdish crude to a scenario of KRG strength; assisting refugees, securing borders, and taking Kirkuk in the midst of a serious political crisis.

The attack has also gained the KRG time in its energy gamble with Baghdad. The instability caused by the Mosul attack has prevented the Iraqi government from moving forward with planned repairs on the Iraqi-Turkish Pipeline (ITP) on the Mosul side. This delay technically enables the KRG to continue exporting its crude through the part of the line it has taken over since January 2014. Although Kurdish pipeline exports are still small-scale and subject to international litigation if sold, local and Turkish buyers of trucked Kurdish crude can at least benefit from a rise in international oil prices — now at about $106 per barrel — that followed the Mosul crisis.

The KRG also has benefited from Maliki’s political blunders and the Iraqi military’s weakness. The rapid withdrawal of Iraqi forces has given the Kurdish peshmerga the opportunity to take even more swaths of disputed territories and create a larger buffer zone, including the city of Kirkuk. Kurds across the political spectrum are jubilant and insist that the peshmerga remain in their new positions. Others regard this territorial expansion as a precursor to Kurdish statehood, and one that will include Kirkuk and parts of Ninevah, and their oil fields.

Yet the very nature of the Mosul attack and its political fallout poses important challenges for the KRG. An extended frontline and hundreds of thousands of refugees in the Kurdistan Region increases the risks of instability. While the Kurdish controlled east bank of Mosul remains relatively secure it borders a radicalized Sunni Arab populated west bank now controlled by ISIS, Saddam Hussein’s Baathist military officers, and extremist Islamic groups. These developments have raised concerns of investors and IOCs and if not controlled, could jeopardize future investments, at least in the disputed areas.