News & Events

ARTICLE: 20 years of failed oil and gas policies lead to new opportunities in Iraq

By Zaid Al-Ali,  April 29, 2023

1001 Iraqi Thoughts: Back in 2003, the Kurdistan Regional Government (KRG) adopted an independent oil policy that was based on weak foundations and self-serving foreign advice. 20 years later, that policy now appears to be unravelling. The balance of forces has now firmly tilted in Baghdad’s favour, and a series of court decisions have undone much of the KRG’s position. Most recently, an arbitral decision issued by the International Chamber of Commerce may very well prevent the KRG from exporting any significant quantities of oil without Baghdad’s explicit approval.

Some elements within the KRG appear to understand that they are facing a new reality and are arguing in favour of a shared federal regime, on the condition that a clear mechanism for distributing revenue equitably is also agreed. The fact that this position is now being aired publicly is a major development, even if it is unlikely to lead to an immediate reversal of the KRG’s position on natural resources. At the very least however, it appears to open the possibility that the struggle over this issue may give way to a period of greater prosperity for Iraq as a whole.

This article places a number of recent developments in historical context to ask whether Iraq’s oil industry is about to begin a new chapter. It does so by placing the KRG’s position in historical context, and argues that the KRG overreached when it first adopted its independent oil policy back in 2003-2005. Secondly, it recounts how that policy has gradually come apart, mainly since 2017, as a result of a number of political and legal developments that were predictable even back in 2003 when the policy was first developed. Finally, the article examines recent statements that have been made by some elements within the KRG that have been calling for a new reconciliatory approach with Baghdad. The paper reaches the conclusion that a new framework that is closer to a more traditional federal system may be within reach and may finally bring more stability to the country as a whole.

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