Referendum in Kurdistan: A Risky Gamble in a Volatile Region

September 28, 2017

Global Risk Insights

Nearly 93% of eligible voters in Kurdistan have cast their ballot in favour of independence. Although technically the referendum is non-binding, it does represent a new and potentially dangerous phase in the relationship between Erbil and Baghdad, bringing with it a risk of civil war. 

 

An economic and strategic necessity

It was pragmatism, rather than ideology, that motivated President Barzani to call a referendum for Kurdistan’s independence. For Barzani, this was both an economic and a strategic necessity, and an opportunity that might not come round again, as GRI has previously argued.

The economic reasons are straightforward: Kurdistan is going through a major economic crisis due to its conflict with Baghdad. The 2005 constitution stipulated that Iraq’s central government would return parts of its Kurdish oil revenues back to Kurdistan’s regional government. However, Baghdad has stopped those payments – which represent around 17% of the national budget – after Erbil’s decision to export its oil directly to international markets. This translated into a 40% decrease in salaries for Kurdish officials, including the salaries of Kurdistan’s armed forces, the Peshmerga. The referendum could be seen as an attempt by Barzani to strengthen his hand in future negotiations with Baghdad, on the assumption that the central government would be prepared to make concessions in exchange for avoiding a secession.

From a strategic perspective, in the war against the Islamic State (ISIS), the refusal of western countries to deploy troops in the ground has allowed the Peshmerga to become a major military force very useful to the coalition. This strengthened Kurdish forces and allowed them to control a large territory while remaining close to the United States. Barzani knows that with the imminent fall of ISIS, and with it the departure of the US army from the region, a rebalancing of influence and power will no longer be to his advantage.  The referendum could be calculated to assure US diplomatic protection to Kurdistan if the conflict with Baghdad leans towards military escalation, as the Peshmerga’s role is still too important in the coalition, and the fight against ISIS is not completely over.

 

 

A game of catch-22 in a volatile region

Although Barzani has gambled that the referendum will lead to economic and strategic gains, there is no sign yet that this will pay off. Iraqi Prime Minister Haider al-Abadi, having declared the referendum illegal, has stated that any talks would be dependent on an annulment of the independence vote, which is politically impossible for Barzani. Abadi has demanded that Kurdistan’s borders and international airports return to Iraqi government control by the end of the week. Meanwhile, Parliament has asked the Prime Minister to order troops to contested regions.

Should hostilities break out, the most likely location will be Kirkuk. Bringing Kirkuk under full control is vital for the Iraqi central government. Iraq is still a divided and failed stateand desperately needs to keep control of the resource-rich area to try and consolidate the country’s unity. On the other hand, Kurdistan also needs Kirkuk, as it cannot achieve real independence without the economic resources to do so. This catch-22 situation could light the spark in a region which is already a powder keg.

Kurdistan is a landlocked territory surrounded by countries fiercely opposed to an independent Kurdish state. Iran has closed its land borders and is banning flights to and from Kurdistan. Turkey, Kurdistan’s main regional economic partner, plans to shut downthe Kirkuk-Ceyhan pipeline, which is the sole international oil exporting pipeline for Kurdistan.

Turkey earns around 7 billion USD  per year from trade with Kurdistan, but Turkey will not hesitate to jeopardise this financial flow rather than risk reinvigorated calls for independence by its own Kurdish minority. An independent Kurdistan could become a diplomatic support for the Kurdish insurgency in  Turkey (the PKK) and a base for its military operations. President Erdogan has already ordered troops to be posted on the border with Kurdistan.

 

On the brink of civil war?

A spike in hostile rhetoric and symbolic measures is to be expected in the immediate aftermath of the referendum, as all sides strive to gain the strongest position. Whether the standoff ends in negotiations or outright military conflict depends on how quickly Erbil and Baghdad can be persuaded to come to the table, most likely through pressure from the US. The longer the state of uncertainty persists, the more likely a conflict becomes.

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Posted in Asia, Politics Risk, Politics Risk