Trucks full of oil in Iraqi Kurdistan head for Iran. Photo by Dov Zakheim.

There was a time when Kurdistan was the center of U.S. attention. No more. This land of five million people is seen by Washington as something of a distraction, undermining its official "one Iraq" policy. And the Baghdad regime of Nuri al-Maliki, the beneficiary of that policy, is doing all in its power to ensure matters stay that way.

An American who arrives in Kurdistan and plans to remain there for up to two weeks needs no visa. But he or she cannot travel to other parts of Iraq. To do so requires a separate visa application and involves a convoluted process that both underscores the region's de facto separation from the rest of Iraq, while at the same time highlighting Baghdad's efforts to make life as difficult as possible for those who would seek to do business—both in the autonomous region and elsewhere in Iraq.

It is Kurdistan's military that guarantees its autonomy. The region still has its own army, the 50,000 strong Peshmerga. More accurately, the Kurdish Peshmerga consists of two armies, each with its own command structure and uniform. One of these forces is an arm of the Sulaymaniyah-based Patriotic Union of Kurdistan (PUK); the other, commanded out of Erbil, the regional government's capital, is under the control of the Democratic Party of Kurdistan (DPK). These armies-within-an-army are supplemented by militias that do not even try to hide their respective loyalties to the two parties that control Kurdistan's political life.

Still, those parties, which fought a bitter civil war in the 1990s, have buried their differences in the face of what they perceive is an ongoing threat from the Shia-controlled Baghdad government, as well as from central and western Iraq's restive Sunni population. There is no love lost between the Kurds and Iraq's Arabs. Most of Kurdistan's leaders were members of the Peshmerga who fought the Iraqis from the 1960s onwards. Many are the sons of fighters. At least one leader was sent to the same prison where his father had been held years before. The Kurds have long memories.

The Kurds dream of independence, yet they realize that separation would create more problems than it would solve. The Jews may have their state and the Armenians theirs, but neither Turkey nor Iran, both with Kurdish populations of their own, will tolerate a Kurdish state on their borders. The most the Kurds can hope for is to preserve the hard-won autonomy that is now theirs. Kurdish leaders are confident that they can maintain that autonomy, by force if necessary.

Tensions are once again running high between Erbil and Baghdad, because, for the first time since the fall of Saddam, the central government was able to pass a budget without Kurdish support. The Kurds worry that Maliki will renege on his commitment to provide the region's 17 percent share of the Iraqi budget, and that the split with Baghdad will get even wider. No one is prepared to rule out a military clash with the central government's forces, though few expect that will happen. The Kurds are confident that if such a clash does take place, they will hold off the Iraqis.

In contrast to its raw relations with Baghdad, the Kurdistan Regional Government (KRG) has managed to preserve a fine balancing act between its Turkish and Iranian neighbors. Turkey's political and economic influence continues to grow, especially in Erbil, but its economic activity consists mainly of contracted projects, notably construction, rather than investment. At the same time, the Kurds are strong supporters of Turkish Prime Minister Recep Tayyip Erdogan's negotiations with jailed PKK leader Abdullah Ocalan to resolve Turkey's long-standing conflict with that Kurdish rebel group. The Kurds are convinced that a Turkish settlement with the PKK will result in an influx of Turkish investment funds into their region.

For the present, however, the Kurdish economy is primarily driven by oil revenues, notably shipments of crude oil to both Turkey and Iran, much to the consternation of Baghdad. The Maliki government is even more hostile to the notion of a Kurdish pipeline to Turkey. As for sales to Iran, these are taking place despite the KRG's official support of UN sanctions. Fuel tankers can be seen clogging the road from Sulaymaniyah to the Iranian border at all hours of the day. As long as there is no agreement with the central government regarding the KRG's right to enter into its own separate contracts with the major international oil companies, the Kurds will continue to export to Iran.

Despite the friction with Baghdad, and in contrast to the rest of Iraq, Kurdistan is both peaceful and relatively prosperous. It is, in fact, an island of stability. Yet the State Department applies the same travel advisory for Kurdistan as for the rest of Iraq, with the result that many investors have shied away from the region. It is as if Kurdistan is being penalized for sectarian tensions that are constantly flaring up in the rest of Iraq. Washington's bias could not be more obvious.

The Kurds share America's fear of Islamic extremism in Syria and of the impact of radical Syrian Sunni ascendancy on the restive Sunni community in Iraq. They have taken in tens of thousands of refugees from Syria, have clashed militarily with Syrian Islamists, and have armed Syrian Kurds opposed to Bashar Assad. Yet none of this has made the Kurds any more welcome in the Obama administration's corridors of power.

It is indeed puzzling that the administration has turned its back on this doughty people. Washington's support for the increasingly dictatorial Maliki makes little sense. He has backed Assad in Syria, and has positioned his country squarely within Tehran's orbit. It is not clear that he views the United States as much more than a source of arms.

The Kurds have long experience with great-power betrayal. Washington's indifference is just the latest manifestation. Prudence may dictate that Kurdistan not seek independence. At the same time, however, the Kurds are determined never to let any foreign power, including their neighbors to the south, dominate their land again.

With continued stability, careful diplomacy, healthy oil reserves, and a generally pro-Western stance, the Kurds have much to offer the United States. Washington should take a second look at its policy toward Kurdistan. Betting on Maliki at the expense of the Kurds is unlikely to pay off in the long run, or, for that matter, in the short run.

Dov Zakheim served as the undersecretary of defense (comptroller) and chief financial officer for the U.S. Department of Defense from 2001–2004 and as the deputy undersecretary of defense (planning and resources) from 1985-1987. He also served as DoD's civilian coordinator for Afghan reconstruction from 2002–2004. He is a member of The National Interest's advisory council.

Image: Courtesy of Dov Zakheim. Copyright Dov Zakheim, 2013.