Political tensions have continued to simmer in Baghdad, as the blocs representing Iraq’s Shiite and Sunni Arabs in Prime Minister Nuri al-Maliki’s government maneuver for advantage within the National Assembly. At the same time, a protracted tug-of-war between Baghdad and the Kurdistan Regional Government (KRG) over control of Kurdistan’s oil wealth is heating up, as major oil investors are lining up to sign deals with the regional government, over the objections of officials at the Ministry of Oil.

Tensions between Maliki’s Shiite coalition and the Sunni-backed Iraqi National Movement have remained tense since the latter grudgingly agreed to join the current government in late 2010, and if the Kurdish parties decide that their interests would be better served with someone other than Maliki in control in Baghdad, the prime minister could become very vulnerable.

The Kurds have shown enormous patience on the question of the status of oil-rich Kirkuk, which was transformed into a Sunni-dominated city under the Baath Party government through a program of forced relocation. The Kurds have long claimed Kirkuk as a cultural capital, and have made clear that preserving the integrity of the Iraqi state hinges on Baghdad eventually transferring political control of the region to the KRG.

However, on the issue of Kurdistan’s oil, the patience of the Kurds is clearly wearing thin, and the leverage of the KRG is increasing, as major international oil firms have begun to ink deals with the KRG, while the auctioning of licenses by the national government continues to attract only limited interest.

The basis for a lasting rapprochement between the KRG and Baghdad on the fundamental issues of revenue sharing between central and regional authorities and responsibility for managing the development of oil reserves in the KRG is rapidly narrowing. In fact, the dispute took a worrisome turn in November, when Baghdad proposed establishing a new command center for Iraqi military forces near the southern border of autonomous Kurdistan.

Both sides sent reinforcements to the area, and while neither the KRG nor the central government has an interest in provoking open conflict, tensions will remain high in 2013, and the possibility of skirmishes (or worse) cannot be ruled out.

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The PRS Group
About The Author The PRS Group
The PRS Group is a leading global provider of political and country risk analysis and forecasts, covering 140 countries. Based on proprietary, quantitative risk models, the firm's clientele includes financial institutions, multilateral agencies, and trans-national firms.




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