IHS Global Insight Perspective | |
Significance | The relative success of the opposition Goran (Change) list in the Iraqi Kurdistan regional elections weakened one of the region's two allied parties significantly, producing some potential re-alignments and reducing room for compromise on oil and territorial issues, while the upcoming Iraqi elections are likely to reward the strongest nationalist agenda, making fiery rhetoric a near-certainty. |
Implications | The expected intensification of nationalist rhetoric will not be conducive to compromises over the extent of Iraqi Kurdistan's powers over its oil reserves—or over disputed territory—rendering further legislative progress on creating an Iraqi National Oil Company uncertain if the Kurds again use their blocking powers in parliament. Nevertheless, Iraqi Prime Minister Nuri al-Maliki might be tempted to try exploiting the potentially weakened political cohesion among the Kurds. |
Outlook | The second half of the year looks likely to see sharpened political differences between the main Shi'a and Kurdish factions in Iraq, with oil, gas, and territorial issues coming to the fore, while Sunni factions remain relatively obscure—but still courted—until their new strength can be electorally assessed in the wake of the early 2010 elections. |
Measured Kurdish Change
Presidential and parliamentary elections in the autonomous Iraqi Kurdistan province late last month upset the balance within hitherto stable ruling alliance of the Kurdistan Democratic Party (KDP) and Patriotic Union of Kurdistan (PUK) parties, but failed to jolt their joint Kurdistani List from power. Simultaneously, the region's incumbent president, Masoud Barzani (leader of the KDP) was re-elected with over 70% of support for another term.
The main challenge to the ruling Kurdistani List alliance came from the Goran (Change) List, which was able to field opposition candidates across the region, although its leader Nawshirwan Mustafa—and many of his strongest allies—emerged from a split within the PUK. Their strong criticism against corruption and nepotism within the Kurdistan Regional Government (KRG) gifted them a particularly strong showing in the PUK-dominated east of the region and in the PUK "capital" Sulaimaniyah. The seemingly united Iraqi Kurdistan region has remained relatively split territorially and politically between the two co-operating parties' respective territories, harking back to the pre-2003 time of armed resistance against the Iraqi government and Kurdish infighting. The two governing parties have continued to dominate their respective areas, keeping their own only mildly integrated security and intelligence organisations as well as running their respective areas through institutions relatively independent of each other.
This means that while the KDP/PUK Kurdistani List alliance will continue to govern the autonomous region over the coming four years, backed by a 57.34% majority in the region's parliament, the internal balance between the KDP and the radically weakened PUK might result in increased factionalism and political realignments within the alliance. The relatively more tribal and Barzani-clan dominated KDP might be less inclined to reform its ranks, fight corruption, and increase transparency then PUK, which—with its more centralised governance structure—well be under much more pressure to deliver results in these area in order to retake the over 40% of the traditional PUK electorate lost to the Change List.
According to a pre-agreed deal between the KDP and PUK leaderships, PUK heavyweight Barham Salih—currently serving as deputy prime minister of Iraq—will be brought back by the alliance to serve as the region's new prime minister (PUK's head is Jalal Talabani, Iraq's current president). Salih's reputation from national politics of getting things done and being untainted by corruption allegations will make him a perfect fit for the alliance at this time; however, the haemorrhaging of his parties' electoral base might weaken him significantly when having to press his allied KDP leaders to deliver on the anti-corruption measures currently getting so much rhetorical support and actually sever much of the patronage structures existing on all levels within both parties.
Iraqi Awakening
Meanwhile, the rhetoric of national-level politics is set to build for the upcoming parliamentary elections in early 2010. While actual campaigning might just get under way around December-January, Prime Minister Nuri al-Maliki and his Shi'a alliance are likely to want to deliver a swathe of political results during the coming six months to preserve their relatively high popularity rates, stemming from perceived success in calming tensions in Iraq and strengthening the central government's ability to project physical and political power. With corruption still rife, and with the government's ability to ease popular grievances such as the constant lack of sufficient electricity supplies limited, problem-solving strategies might look too risky—heated nationalistic rhetoric agenda could be preferred to strengthen the central government's powers and popularity. Al-Maliki will also have to make sure that other political factions—especially within the Shi'a community, Iraq's largest—find no room to wield nationalistic rhetoric more successfully than him, given the fertile soil for such talk among an Iraqi population longing for stability and an end to sectarian and ethnic factionalism holding up political decisions in parliament.
Hence, al-Maliki is unlikely to be able to enter into compromises with the KRG over the two hottest topics needing some kind of resolution: the extent of the region's control over its oil reserves and production; and the fate of the disputed territory between Iraqi Kurdistan and the national government, including the oil-rich Kirkuk governorate. Knowing this from the outset, he is likely instead to be forced to take a much less diplomatic route, hoping to exploit possible cracks in the KDP/PUK alliance going forward.
The Hydrocarbon Dimension
With the Iraqi political scene set, with little incentive for compromise and co-operation on the national level until the early 2010 elections, legislation necessary to kick-start Iraqi oil and gas development is likely to continue lagging behind. The oil law draft has been held up by the Kurds in parliament for over two years in an attempt to force more of the region's powers over its resources to be recognised, but hopes are now being pinned on a draft law passed by the cabinet for the re-creation of the Iraqi National Oil Company (INOC) and the depoliticisation of Iraq's oil industry. If the political debate between the KRG and al-Maliki's Shi'a factions deteriorate, however, the Kurds are again likely to use their current parliamentary position to block the draft, especially if the draft calls for an interpretation of what fields the new NOC should administrate—a factor that may impinge on the KRG's hard-won autonomy.
With the centralisation/federalism debate running the risk of degenerating into mudslinging, conditions will also look less than favourable for Iraq's second upstream licensing round. The recent first round ended in only one contract being signed, so Iraq is desperate for some success, as decades of brain-drain and huge investment needs throughout the whole economy make it impossible for the country to undertake any comprehensive development programme autonomously. Prospective bidders—already somewhat put out by Iraq's very tight financial terms that fail to compensate for the immense political and physical risks—are unlikely to feel any more enthusiastic about bidding in the second bidding round given the rising political uncertainty about the country's directions after the upcoming election.
Outlook and Implications
While al-Maliki might be tempted to try to exploit the potential of weakened KRG cohesion, the irony is that Iraqi Kurdistan's Change List campaigned in favour of a less pragmatic route on solving the Kirkuk territorial dispute and defining the extent of the region's autonomy. Hence, the ruling alliance—and especially the pressured PUK—is likely to feel the need to step up its efforts and Kurdish-nationalist rhetoric and drop any advocacy against reaching a non-maximalist solution to its territorial claims. With the pressure likely to be ratcheted up on the region by the Iraqi prime minister, as demanded by his own constituency, this is likely to further cement the political deadlock in the Iraqi parliament in turn, forcing the prime minister to take an even more belligerent nationalist stance in order for his own position not to appear weakened before the elections. This is likely then to jolt Iraq's sizeable Sunni factions, which today are weak in parliament given previous years' boycotts, but which are likely to dilute the Shi'a position after the elections. The Kurds might then be in a better position to try to exploit common interests with the Sunni groups, but as with the Shi'a, the match is not perfect.
In the meantime, however, the Iraqi upstream investment climate will not benefit, while the heightened risk of the INOC bill being stuck in parliament might add to a sense of confusion. Iraq has managed to raise its oil production levels slightly and gradually by launching a programme of easy repairs and renovations on its main fields, but lacks the capability to undertake large and complex projects. If the INOC bill gets stuck in limbo, institutional confusion might hamper the growth of domestic Iraqi capabilities that, over the past few months, has at least started to take place.