A New Strategy for Kurdistan’s Oil and Gas

Rebwar Reshid

By Rebwar Rashed:

Kurdish Oil and Gas and JPMorgan Chase & Co.

The so called ‘Resolution process’ which was launched by the Turkish AKP government and was announced by then Turkish Prime minister Mr. Erdogan on 28 December 2012, has up to the present day not resulted in anything positive for the Kurdish people. The last two years have witnessed too much Turkish violence committed in Kurdistan.

Just in the October protests, in both the Kurdistan and Turkish areas in Turkey, the Turkish military and police have killed at least 50 Kurds, and there are hundreds of injured and many hundreds of detainees. Kurdish protesters were only urging Turkey to stop its military and logistic support to ISIS and asking Turkey, instead of enmity, to have a peaceful stance towards Kurds in Syria/Rojava – a peaceful stance which can reflect Turkey´s claim for ‘Resolution process- at home – but to no avail.

Nevertheless, Turkey´s violence and adverse response to Kurdish people wasn´t only limited to Kurds in Turkey and Syria. Back in August Turkey chose to just watch and see ISIS take over the KRG’s (Kurdistan Regional Government’s) newly-controlled area which historically, culturally and socio-linguistically belongs to Kurdistan. ISIS’s harsh and sudden attack on the KRG didn´t give Turkey much credit especially when Turkey boasts of its good trade and economic relations with the KRG. Turkey wins billions of dollars annually from Kurdish oil and its exports to the KRG.

Turkey´s answer to the International Community, the US, the West and the coalition against ISIS was negative too. Given previous Turkish decisions in the post-Gulf war period, it was an expected stance because Turkey has not been cooperative and supportive since 2003. Lately three U.S. Navy sailors were assaulted and had bags placed over their heads during a stop in Istanbul (1) in an organized attack, probably as an answer to the so called “The Hood Event”. The Hood Event was an incident (2) which occurred on July 4 200 (3), when a group of Turkish high-ranking army officers operating in the Sulaymani area of Kurdistan (Iraq) were captured, led away with hoods over their heads, and interrogated by US soldiers. (4)

The reasons behind Turkish complacency and arrogance in not supporting peace and mutually beneficial relationships but rather practicing violence and aggression are various and many. Turkey easily took over important Kurdish oil contracts and has been getting too much undeserved support for the last 60 years from the US, NATO and the West as a bloc.

Now, mainly with Kurdish oil, Turkey has plans to make itself to an international oil-hub and it has already started to build a hub-complex for Kurdish oil in Izmir and in other places. There is already an oil flow through a pipeline that the KRG has nearly completed and which will connect with Turkey’s infrastructure, mainly with Ceyhan.

Turkish control of Kurdish oil can have devastating results for Kurdistan, the Middle East and the international market, especially with a growing expansionistic aggressive Islam and a Turkish ultra-nationalism which is famous for its aggressive and violent mentality, not only against Kurds, but also against others. In addition, there will be other expenses which cannot have positive effects on oil and gas prices in the international market.

There are major economic reasons why Turkey doesn’t want to solve the Kurdish issue. By not solving the Kurdish issue, Turkey can remain the only oil and gas hub in the Middle East, at the expense of other countries in the area. “Turkey has fielded pipeline offers not just from the South Caucasus, but from Cyprus, Israel, and Iraq. The TAP is, of course, just one pipeline project in a series of such proposals that will cut through Turkey en route to Europe. Plans for the Trans-Adriatic Pipeline (TAP), and the subsequent blossoming of further pipeline plans pumping gas out of Turkmenistan, Kazakhstan, Egypt and Iraq to Europe, raise Turkey’s stature as a major energy transit country. Others include the Arab Gas Pipeline and the Iraq-Turkey Gas Pipeline.” (5)

In the last year Kurdish oil and gas revenue have poured into the Halkbank (6) of Turkey. The same bank which was a link in the chain to finance Iranian petroleum interests in the wake of U.S.-led nuclear sanctions (7) and which has been a source of various finance corruptions. The sons of Economy Minister Zafer Caglayan and Interior Minister Muammer Guler were among dozens of others who were engaged in finance criminal activity.(8) There is an unannounced Turkish gang-war for Kurdish oil and gas. It seemed more likely that Turkey Prime Minister Erdogan could govern the future of Kurdish oil. (9) Right now the Genel Energy is the largest independent oil producer and the largest holder of reserves in the Kurdistan Region of Iraq.(10)

The below image shows today’s oil infrastructure via Turkey.

infrastructure

But this can be changed.

A direct Kurdish sale of oil and gas to the international market will be more secure, faster and cheaper to the international buyers and, in reality, the idea is easy to enforce. Foreign oil companies will have co-equal opportunity to build, to invest and to carry out development projects. We have to bear in mind that Rojava/Kurdistan in Syria has its own oil and gas too.

A future Kurdish oil and gas pipeline infrastructure can go through the Rojava/ Kurdistan in Syria directly to the Mediterranean. With its secular, democratic and progressive nature Rojawa is a reliable and stable entity. Kurds can guarantee the security of the pipeline which is probably a key issue. The idea of transporting Kurdish oil directly to the Mediterranean through Iraq-Syrian Kurdistan can easily be a reality when Mr. Ben Cohen´s suggestion is put into practice, namely “to partition Syria into separate states.”(11) A democratic confederation in Syria between Rojava, Alawites and Sunnis can also solve the problem, at least in the short term.

My suggestion for a new strategy is as below; the red line.

Proposed new strategy

Proposed new strategy

There are two kinds of agreements concerning oil in Kurdistan. The first one is the Production Sharing Agreement (PSA) which is based on the specific regulations established between the KRG and the International Oil Companies that have secured licenses in this region. The second one is the Technical Service Contract (TSC) which is based on the specific terms established by the Iraq Central Authorities and the International Oil Companies that have secured service contracts in this region.

According to various sources there could be an estimated 40-45 billion barrels of oil, as well as 6-7 trillion cubic feet of natural gas, in reserves in Bashur’s (KRG’s) present territory. Turkey is eager to take over those resources in order to strengthen the Turkish banks, the Turkish currency and its economy as a whole. The money is not just from ‘trading’, there will also be refineries, different oil products, energy output and above all political control of the energy sources. Without having oil of its own, today’s control gives Turkey potential to become a leading player in the world energy markets. This Turkish achievement is seriously a dangerous tool, because the Turks can use it against the Kurdish people for a long time.

The announcement by Turkish officials in late May 2014 that millions of barrels of oil from the KRG/ Iraqi Kurdistan had been exported to international markets through Turkey’s pipeline infrastructure was not such good news for at least two reasons. First, it gives Turkey an upper hand on controlling Kurdish resources; second, the revenue ends up in the Turkish Halkbank and thus in the Turkish economy.

According to previous agreement the revenues of the sale of Kurdistan oil were to be deposited in a Development Fund of Iraq (DFI) account (12). The DFI account had been created in 2003 at U.S. insistence and was thought to be managed by JPMorgan Chase in New York. The idea was good as a start, but not that good.

To put funds received through the sale of Kurdistan oil and gas in a separate account at JPMorgan Chase – the DFI model – cannot solve any problems. The reason is that Iraq always sees all Kurdistan´s revenues as Iraq´s national revenue. Kurds see the Iraqi state as a source of suppression, not partnership.

In order to understand the failure behind DFI we have to understand the history of Kurds’ agony in Iraq.

The Iraqi state has never been a state of partnership for Kurds and no Iraqi government, since establishment of the Iraqi state in 1921, has been able to be inclusive for Kurdish people.

Iraq has rather been the enemy of Kurds, having killed hundreds of thousands of Kurds, displaced and deported Kurds and destroyed Kurdistan. In an effort to Arabize of Iraq, the Arabs have deported, just in Baghdad city, at least a couple of hundred thousand Feili Kurds to Iran. Since 2003, the fall of Saddam and the start of the birth of a Shia state (oddly enough, according to a democratic principle of majority rule), the Baghdad enmity has not softened toward the Kurds.

It is quite clear that a unified secular and progressive Iraq compound of “Sunni-Shiia-Kurd” is impossible. A Shia Iraq has already been seen to work as an ideological and religious union/ axis with Iran, and it is therefore, again, hostile to Kurds.

Keeping this Iraqi failure in mind, the KRG has the right to find a reliable and secure source of income for the Kurdish people. To wait for the approval of the central Iraqi government, be it Sunni or Shia, will never bear any fruit for Kurds.

JPMorgan Chase Bank and DFK

Therefore an account similar to the Iraqi DFI for the Kurds, for instance a Development Fund of Kurdistan (DFK), managed by the JPMorgan Chase bank in New York, can be a much better working alternative. Kurds needs international partners who rightfully and naturally think of profit and interest, but in a mutual relationship of understanding, partnership and cooperation with the Kurdish people.

A DFK account and an International Trade Bank of Kurdistan will make the future of the oil and gas resources safe and secure, not just for the people of Kurdistan but also for serious international partners and companies. The DFK can be used for both the KRG’s and Rojava’s oil and gas according to specific agreements as needed.

This strategy puts the international partners and the Kurds in a win-win situation and would stabilize the smaller Middle East states politically, economically and socially. The Christians, Assyrians and even Arabs who have originally been settled by the Syrian governments to colonize the area, can live peacefully together in Kurdistan.

Thus Kurds can start to pay for their own protection and defense system and also give financial and logistic support to a moderate, secular opposition in Syria. Right now Turkey is making huge profits and gaining too much political power almost unnoticed while the American taxpayers working hard to pay for it.

References:

(1) http://edition.cnn.com/2014/11/12/politics/turkey-navy-sailors-bags-over-heards/

(2) http://www.middleeastexplorer.com/Turkey/Hood-event

(3) http://www.academia.edu/3599012/The_Hood_Event

(4) http://www.youtube.com/watch?v=msgsnKtSs_8 (This is a Turkish propaganda film accusing Americans for dishonesty and praising themselves for patriotism).

(5) http://www.invest.gov.tr/en-US/infocenter/news/Pages/220513-socar-signs-turkey-refinery-deal.aspx

(6) http://www.halkbank.com.tr/e/index.asp

(7) http://www.theglobeandmail.com/globe-debate/all-that-glitters-is-not-enriched-uranium/article15545454/

(8) http://www.bloomberg.com/news/2013-12-17/halkbank-ceo-turkey-minister-s-son-said-detained-in-graft-probe.html

(9) http://acdemocracy.org/kurdistan-oil-export-a-game-changer/#prettyPhoto

(10) http://www.genelenergy.com/about-us/overview/company-profile.aspx

(11) http://acdemocracy.org/northeastern-syria-the-kurdish-minority-and-the-oil-card/#prettyPhoto

(12) https://www.globalpolicy.org/humanitarian-issues-in-iraq/development-fund-for-iraq.html

Read more:

http://www.iraq-businessnews.com/tag/jp-morgan-chase/

http://www.forbes.com/sites/thebakersinstitute/2014/09/09/kurdish-oil-and-us-leverage-in-iraq/141202

Rebwar Rashed has a Ph.D. degree in Political Science. He has translated several books into Kurdish and also written many articles in Kurdish and English about the Kurdistan National Liberation Movement, human rights, anti-Semitism, equality between the sexes and ethnicities, and the need for a democratic and peaceful struggle.

 

4 Responses to A New Strategy for Kurdistan’s Oil and Gas
  1. Jan Best de Vries
    December 6, 2014 | 10:51

    The thorough analysis of Mr. Rebwar Rashed of the economic situation in West Asia,in which the recently islamic and since 1921 terrorist state Turkey is the only profiteer from the Kurdish oil and gas exports to Europe and America, righty pleads for direct pipelines from semi-autonomous Iraqi Kurdistan through Rojava to the Mediterranean.

    But also for future geopolitics this is a quite wise advice, because in the perspective of our proposal in the forthcoming book On the road to Kurdistan, the members of the West Asian Union will then exist of the meanwhile autonomous states in Kurdistan (these are present Iraqi Kurdistan and Rojava, the to the Mediterranean extended province of Aleppo, a Hezbollah-free Lebanon, Israel, its good neighbor Palestina (consisting of the West Bank and a Hamas-free Gaza with a corridor through Israel), and Jordan. From a military point of view the combined armies of Kurdistan and Israel will prove to be invincible for the Turkish army, Turkey then perhaps still being a NATO member, but preferently not (as the public opinion in The Netherlands wants nowadays, but our country is only a small and the USA with its tax-payers a big one….).

    • Rebwar R
      December 10, 2014 | 16:59

      Yes, indeed, Mr. Jan Best de Vries.
      Thank you for your comment.
      // Rebwar

  2. Ahmad
    December 7, 2014 | 00:39

    Unless Obama’s Adminsteration reverses course and endorse an independent Kurdistan in South, nothing can be guaranteed for both Kurds and American in the region. Perhaps Pentagon should take Kurdish independence more in earnest.

  3. Rebwar R
    December 10, 2014 | 17:03

    Dear Mr. Ahmed
    Kurdish people have been fighting for freedom in many many years. It has nothing to do with others. But it´s of course great if Kurds get more friends and fewer foes.
    Turkey is on a very wrong path right now.
    // Rebwar

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