L-R Jason McCartney MP, chairman of the APPG, Karwan Jamal Tahir, UK High Representative of the KRG, and the author. Image: Gary Kent. All rights reserved.

The Queen's Birthday Party at the poolside of a classy hotel in the simmering summer heat attracted business and political leaders as well as Arab, Iranian, European and American diplomats. What made it different was we were in Erbil, the capital of the autonomous region of Iraqi Kurdistan and just 25 miles from fierce fighting between the Islamic State and the Peshmerga.

A diplomat at another such party once accidentally toasted the President of the Kurdish Republic but that slip of the tongue may prove prescient. Nearly a century after failing to achieve nationhood in the post-Versailles period, the Kurds are now on the move. A greater Kurdistani nation-state taken from the four countries where Kurds are minorities is improbable, although greater autonomy is growing within Turkey and Syria if not Iran, and an independent Iraqi Kurdistan is becoming more likely by the day.

The advance of the Kurds has taken many years. When I started visiting Kurdistan in 2006 most people had never heard of it. They would ask if I meant Kazakhstan or Kyrgyzstan but shake their heads and wish me luck when I mentioned Iraq. Two years ago my family and I toured mountain resorts, randomly stopped at roadside cafes for kebabs and walked without fear in a lively cosmopolitan city. There had been just seven jihadist attacks in Kurdistan in ten years with under 200 killed and most on one terrible day in 2004.

Facing ISIS

But things began to change in late 2013 when Kurdish leaders began to issue urgent warnings about a then little known group called ISIS. Last June the sum of all their fears became real as a small convoy of ISIS fighters captured Mosul, the second biggest city in Iraq.

The onslaught was like a knife cutting through butter—and flesh. The fear of their barbarism spread like wildfire. Shia soldiers with no dog in the game in Sunni areas fled, leaving the keys in 1500 American armoured Humvees, while Sunnis who had been persecuted by a sectarian government in Iraq chose ISIS over Baghdad or fled to Iraqi Kurdistan.

This was also a high point of Kurdistani nationalism. The army of Iraq—I Ran Away Quickly—was unfavourably compared to the Peshmerga, now facing ISIS along a 1,000 km border. The historic Kurdistani city of Kirkuk was reinforced overnight when the Iraqi Army 'disappeared in a puff of smoke' as the governor told me last June. Violence in the ethnically mixed Kirkuk province has since dropped dramatically and tight security in the rest of Kurdistan means there have been just three ISIS suicide bombs in Erbil in the past 18 months.

The common assumption that ISIS would ignore Kurdistan was wrong, however, and they turned on the Kurds in August. ISIS came within artillery range of Erbil but the Americans stepped in and air strikes saved the city. The traditional mountain Peshmerga fighters' extended supply lines and insufficient weapons, ammunition and experience in facing a frontal assault on the plains forced a temporary retreat.

The Peshmerga also needs modern weapons, including tanks, APCs and helicopters. Most of the 1300 Peshmerga fatalities are because their AK47s cannot stop heavily armoured Mad Max suicide vehicle bombs barreling towards their lines, or because they cannot counter IEDs with which ISIS seeds villages they leave after massacring everyone. Battlefield medical care is inadequate and they lack basics such as night vision goggles and body armour.

Many countries have armed the Kurds. Britain provided 40 heavy machine guns while Germany broke its taboo on exporting many more weapons and their Milan anti-armour guns stop truck bombs at distance. The need for more arms was raised directly with President Obama by a KRG delegation led by President Barzani, whose Chief of Staff and a participant in the talks, Dr Fuad Hussein told me in Erbil:

“We said we would be happy to receive arms directly. But some countries have difficulties because we are not yet independent. But anyhow we [told the Americans] that the main question is do we need these weapons—yes or no, of course we do. Can we get them from you? If you send them to us we will be happy. If Iraq delays, you are responsible so you can talk to them. We understood from the American side that until now Iraq has not rejected weapons so let's continue but [the Americans say] ‘you will get the right weapons.’ Now that the British election is over it is time for the British to do more to support the Kurds.”

The sudden Isis advance was also a wake-up call for the Peshmerga to up its game and become a national institution answerable to the state rather, as do most of its soldiers, to the two historic parties. Dlawer al Alaadin, a former Kurdistan Regional Government (KRG) Higher Education minister who now heads Kurdistan's major independent think-tank, the Middle East Research Institute, told me that his organisation is “a bridge between external expertise and the Peshmerga in finding a home made solution.”

He concedes that reform should have been undertaken earlier and “Kurdistan is beginning to make the most of its international support but the Kurds need to be more efficient in putting our own house in order.” He argues that the reason for the political division of the Peshmerga—mutual suspicion between the two main parties—no longer holds with young people.

Wider reform is needed. It sometimes seems to me that the Kurds have no word with the urgency of mañana but they have managed major changes. Back in 2006, there was no oil and gas industry and 100,000 Turkish troops were poised to invade.

The energy sector became the world's final frontier and oil production could reach a million barrels per day next year. Kurdistani oil is piped to Turkey, which is becoming a significant energy hub and needs Kurdistani energy. The Turkish invasion took the form of 100,000 businessmen and workers in Kurdistan making Turkey the single biggest trading partner for Iraqi Kurdistan.

The Kurds have been extraordinarily generous but the strain on services is immense.

Yet the Kurds now face new crises. The Syrian war sent 250,000 mainly Kurdish refugees into Kurdistan in 2013 but they were welcomed warmly and there was then plenty of work for them. The capture of Mosul propelled over a million displaced people, mainly Arab Iraqis and Christians, into Kurdistan. The Kurds, who have often been refugees themselves, have been extraordinarily generous but the strain on services is immense.

Baghdad, which is the responsible government, is less than helpful. Nearly 200,000 people who fled when Ramadi was captured by ISIS were refused entry to Baghdad and cynically directed to Erbil. Iraqi civil servants from Mosul are paid salaries by Baghdad via Kurdistani civil servants who have not been paid for the last three months.

Even if Ramadi or Mosul were taken back now, many Arabs would stay in Kurdistan. Of the thousands who fled when ISIS took Tikrit, just twelve families have returned since its liberation. The 20,000 strong Kurdish resort town of Shaqlava now hosts 30,000 Arabs and has been dubbed Shaqllujah. The Kurds are very wary of Arabisation and permanent changes in the ethnic mix will cause major problems.

Problems with Baghdad

Having repaired relations with Erdogan's erratic Turkey and enjoying correct relations with Iran, its second biggest trading partner, the main problem is relations with Baghdad, which are based on mutual suspicion and loathing. Many Shia politicians never accepted the Iraqi constitution's enshrining of federalism, and autonomy in energy matters to Kurdistan. The Kurds have never received their full share of the Iraqi budget—set at 17 percent to reflect the population and the economic effects of genocide including the destruction of thousands of villages.

The Peshmerga, a recognised national defence force, were never paid, let alone armed or trained, by Baghdad. Maliki cut all budget payments at the behest, it is said, of the then Chairman of the parliamentary Finance Committee, Haider al Abadi. But when Abadi became Prime Minister, he became a more emollient figure who concluded an interim agreement last December on Kurdistani energy exports in return for that 17 percent plus a billion a year to the Peshmerga. The overall budget had fallen by a third in line with lower oil prices but payments to the KRG have fallen even further because Baghdad is finding excuses to keep the Kurds on a short leash. Hawrami estimates that they received one third of their entitlement in the past five months.

The result has been catastrophic given war—private companies are charitably providing daily meals to the Peshmerga, some of whom have to buy their own weapons and ammo—and the cost of caring for about 1.6 million guests. Double digit growth has nosedived with hundreds of public investment projects suspended and little is moving at construction sites that dot the capital although a major British company is about to announce a major water project. Kurds are surviving on handouts from their families or from savings. Some cite an increased suicide rate and poverty and unemployment have doubled while international flights to Kurdistan are emptier, office rents have halved and housing costs have soared.

Baghdad's belligerence is counter-productive. The world knows that the Peshmerga are fighting ISIS with increasing efficiency, certainly compared to the shambles that is the Iraqi Army. Despite this, the Kurds were excluded from two recent international meetings of the coalition against ISIS in London and Paris. Dr Hussein expressed disappointment:

“It would have been better if [Abadi] had taken representatives from the Kurdistan Region to show he could be proud of what the Peshmerga have done against ISIS. I think it would have been better to also have somebody from the Sunni community with him. He blamed the whole world about Ramadi but didn't blame himself or his government. But people are not stupid and know what's going on.”

Baghdad's obstinacy is also driving independence but Kurdistan is landlocked and many are wary of putting all their eggs in the Turkish basket, which once prompted former KRG Prime Minister Barham Salih to argue for three export routes through Iraq, Turkey and Iran (and, conceivably, Syria one day.) A unilateral declaration of independence could cut off imports, exports, passports, and airports. Independence would have to be negotiated with Baghdad through complex agreements on assets and liabilities, water, energy and security. Crucially, the KRG's southern boundaries including Kirkuk must to be finalised to avoid the province becoming a flashpoint for Arab revanchism for decades to come.

The commonsense view is that ISIS should first be defeated before independence but given, as a senior security adviser told me, “Humpty Dumpty fell off the wall and definitely won't be put back together,” maybe the way to defeat ISIS is to recognise that Sunnis and Kurds will never again accept unalloyed Baghdad rule.

Before ISIS, Sunni provinces neighbouring Kurdistan had begun to think that the dynamic Kurds could assist their economic salvation, especially in reliable electricity supplies. Shia Basra in the south, about the same size, population and economic weight as Kurdistan but with much more oil, had been champing at the bit for greater decentralisation. A much looser arrangement, perhaps one day a confederation, could be a bigger incentive for Sunnis to overthrow ISIS in Sunnistan than centralised and sectarian Shia rule from Baghdad. Every day that ISIS keeps Mosul makes it harder to reinstate the old Iraq.

Internal issues

Kurdistan has to be match fit for any possibility including independence and escape the sovietesque legacy of the old Iraq. The state employs most people, which suffocates the private sector and also undermines citizenship because, as one senior party official told me, “people who are employed by the state have to listen to the state.”

The rentier economy is almost wholly dependent on energy although the Kurdistan parliament has just passed a law allowing the KRG to borrow on international markets and is establishing a sovereign wealth fund for when energy revenues dry up. A mineral extraction law is also before Parliament and minerals could become a major money-spinner. Once the bread basket of Iraq, Kurdistan could achieve food self-sufficiency and export surplus wheat, apples and pomegranates.

Tourism is another potential boon. Erbil won the Arab capital of tourism before ISIS rained on everyone's parade and thousands of archaeological sites, the 6,000 or possibly 8,000 year old Citadel in Erbil (the longest continually inhabited settlement in the world), and battlefield sites as well as canyons, mountains, waterfalls, vast plains, solitude and city life could attract western tourists.

Education is the KRG's mantra and involves at least one third of the population but quantity needs to be turned into quality and quickly. Many young Kurds seem more interested in a qualification as a passport to a comfortable office job where very little is done and where indolence and incompetence could persuade skilled Kurds who have returned home as a patriotic duty that it is not worth staying. About 100,000 ghostworkers, in the absence of a wider welfare state and tax base, are being rewarded for past services.

Meritocracy must replace mediocrity and the (sometimes unjustifiable) practice of 'allowing the son to cross the river on his father's boat'.

But meritocracy must replace mediocrity and the (sometimes unjustifiable) practice, to use a common Kurdistani phrase, of allowing the son to cross the river on his father's boat. One regular visitor told me that he had "never seen a minister reading a book or a newspaper" but Kurdistan has some very good strategic thinkers who carry a disproportionate burden. Enterprise needs a kick-start too. Khalid Saleh, Vice-Chancellor of the English-speaking University of Kurdistan-Hewler, told me that “Kurdistan needs a start-up tradition and not just government jobs” and to lose the dependency on foreigners, adding 'why don't we produce our own night vision goggles' for the Peshmerga.

It is easy in theory to design an architecture that maximises enterprise, civil society, an independent judiciary, a thoughtful media, evidence-based policy-making and so on. It is harder in practice and hampered by what Hawrami calls the 'geopolitical perfect storm' of financial, humanitarian and political crises. Hawrami, who built the energy sector from scratch, says the Baghdad budget crisis means that international oil companies in Kurdistan have been paid once in 18 months and that this is unsustainable.

Many Kurds look to Dubai for inspiration but others know the opulent facade conceals a soulless society. Kurdistani politics are broadly left of centre, religiously devout but largely secular and moderate while growing inequality and environmental issues motivate many Kurds. Barham Salih speaks of Kurdistani values but moving from statist to market economics is a huge challenge.

Politics can be fractious too. Few Kurds seem to want to change their president in the middle of a war but his term was extended two years ago and there will be an election in August although the parties are divided on whether the presidency is more or less parliamentary. It is likely that Barzani will be elected and that a difficult debate on the succession will take place in four years time.

Independence

The other big question in the next few years is independence. A landmark report from the UK Parliament's Foreign Affairs Committee in March helped break the taboo of the 'One Iraq' policy. MPs acknowledged rational fears about unpredictable consequences of unravelling borders, although the sound of stable doors and fleeing horses comes to mind. They also recognised that it is rational for the Kurds to seek increased self-governance or independence which they judged to be a medium term possibility that should be accepted and respected by the UK and its international partners if done with the consent of Baghdad.

The assumption has been that the neighbours would oppose independence. But Iran could settle for Baghdad being part of their sphere of influence and Kurdistan being an effective buffer between them and ISIS. David L Phillips, the author of The Kurdish Spring: A New Map of the Middle East writes Turkey and the KRG have conducted contingency planning on independence. A senior Turkish adviser privately told a recent meeting in London that he could envisage what he called the 'liberation' of Iraqi Kurdistan. Acquiescence to independence in the right circumstances is possible.

The Kurds see America as the key to that announcement one day in the UN Security Council. A secret CIA dossier concludes that the Kurds are “belligerently independent, distrust the governments over them, and have stubbornly resisted efforts to disarm them or restrict in any way their relative freedom.” That was in 1948.

However, America has doggedly clung to Iraqi territorial integrity but I put it to Hussein that the mood music in DC seems to be changing and moving to a more neutral position after the recent high-profile visit by President Barzani to meet President Obama. Hussein replied:

“The answer is yes, the mood has changed. First, when President Obama came to power he wanted to get rid of Iraqi policy due to the war. Later on, people in Washington started to focus on other parts of the world. The reality was that the current administration did not want to have a lot to do with Iraq. Now, once again, they are involved. Second, as far as the fight against terrorism they are still engaged, they are supporting us and there is a good co-ordination between us. They know what we have achieved and we have kept our promises. They know that the weapons given to us have stayed in our hands. All these elements have meant a positive change towards the Kurds.”

As for western ground troops, Hussein was diplomatic:

“ISIS is an organisation that has the support of groups and individuals from many countries and is an international movement with an international strategy. There must be international support and coordination. As for boots on the ground, the Kurdistani Peshmerga have done the fighting. This organisation has support and can control territory. Is it fair only to leave it to the Kurds? We have the manpower to fight but it is a long fight. We are not the ones who would ask for boots on the ground from other countries. We are realistic. We don't think that the Americans are going to do that now at the end of President's term. Western public opinion opposes ISIS but they still don't see Iraq as their fight. You would need a lot of work to convince western opinion that western countries would send their units to fight. But I don't think so in the near future.”

Hussein displays the steely determination of an increasingly experienced Kurdistani leadership, which has put the place on the map. The Kurds could yet be their own worst enemies with the worst-case scenario being a re-division of the region between Iran-centric and Turkocentric entities. But the Kurds have long survived in the violent vortex of bigger empires. They usually say they have no friends but the mountains but now count many countries as friends. Kurdistan could check the expansion of ISIS, is a willing part of the free world and is anxious to modernise itself. Their success could be a game-changer in the Middle East.