Turkiye and Iraq to thrash out oil deal after arbitration ruling ends Kurdish exports

The Iraqi-Turkish pipeline in the district of Zakho, governorate of Dohuk, Kurdistan Region, Iraq, Aug. 28, 2016. (Reuters)
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Updated 30 March 2023
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Turkiye and Iraq to thrash out oil deal after arbitration ruling ends Kurdish exports

  • Arbitration ruling ordered Ankara to pay $1.4 billion to Baghdad for violating contracts by buying directly from the Kurdistan Regional Government
  • Officials from Iraq’s Oil Ministry are expected to travel to Turkiye to negotiate a new method for exporting northern Iraq’s oil

ANKARA: Turkiye is being urged to thrash out a new oil deal with Iraq after a landmark arbitration ruling ordered Ankara to pay $1.4 billion to Baghdad for violating contracts by buying directly from the Kurdistan Regional Government.

Officials from Iraq’s Oil Ministry are expected to travel to Turkiye to negotiate a new method for exporting northern Iraq’s oil after the International Court of Arbitration’s ruling last week in a case stretching back almost a decade. 

The ruling has stopped Iraqi Kurdistan’s 450,000 bpd exports, and raised fears of instability and economic crisis in the semi-autonomous region. Exports must now have the consent of Baghdad and both sides in Iraq must strike a larger agreement before oil production can fully resume. 

Iraq sued Turkiye in 2014 over direct sales from the KRG and asked for $33 billion in compensation. It has maintained that the KRG cannot use national pipelines to sell oil and that Turkey’s deal with the region violated a 1973 pipeline-transit agreement between the two countries. 

Bilgay Duman, coordinator of Iraq studies at the Ankara-based think-tank ORSAM, said that the case reflected the longstanding disagreement between Baghdad and the Kurdish regional administration. 

“Turkiye, which will respect the international arbitration ruling, showed its readiness to fulfill its obligations deriving from the international law and to contribute to the de-escalation of the disagreement between its two regional partners,” he told Arab News. 

He said that Turkiye’s deal with the KRG from 2013 had an indemnity clause that required any compensation to be paid by Irbil. However, he added: “To what extent the compensation that Ankara will pay to Iraq will be indemnified by the Kurdistan Regional Government is still unknown.”

According to Duman, the disagreement also arose from legal loopholes in Iraq about the control of newly discovered oil fields that were being exploited by the KRG.

Experts say that the ruling will hurt the KRG economy, which made $5.7 billion from oil last year.

“Baghdad appears to be ready to accept financial losses to gain sovereignty over oil,” said Yerevan Saeed, a research associate at the Arab Gulf Institute in Washington. “This has real-life consequences for Kurds in the Kurdistan region. The Kurdistan economy is heavily dependent on oil.” 

He said the suspension of oil sales raised both financial and security issues for the KRG. 

“The best way forward is for Ankara to play a constructive role by mediating between Irbil and Baghdad,” he said.

“If Turkiye and Baghdad are going to try to bypass the KRG to reach a state-to-state agreement, this could lead to a resurgence of Kurdish nationalism that will stir instability in the region,” he added.

Turkiye meanwhile would need to look to oil from Russia and Iran to fill the hole left by the loss of KRG oil.  

Rich Outzen, a senior fellow at the Atlantic Council, said the effects of the arbitration ruling would be felt most keenly in the KRG but also Iraq. “It will hurt Iraq too as long as oil is not flowing. Turkiye and Iraq will work a deal that will involve less than the full penalty in my view,” he told Arab News. 

Outzen said that the US, which provides budget support to Baghdad, should press for a quick deal with Ankara and resumption of trade. “Oil costs are affected as world oil prices increase. The latest ruling affects the Iraqi Turkish Pipeline, not trucks, so some may still move by truck,” he said.

Iraqi Prime Minister Mohammed Shia Al-Sudani recently paid an official visit to Turkiye, where he discussed a project to build a land and rail corridor from Basra to the Turkish border.


Thousands of Libyans gather for the funeral of Qaddafi’s son who was shot and killed this week

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Thousands of Libyans gather for the funeral of Qaddafi’s son who was shot and killed this week

  • As the funeral procession got underway and the crowds swelled, a small group of supporters took Seif Al-Islam’s coffin away and later performed the funeral prayers and buried him
  • Authorities said an initial investigation found that he was shot to death but did not provide further details

BANI WALID, Libya: Thousands converged on Friday in northwestern Libya for the funeral of Seif Al-Islam Qaddafi, the son and one-time heir apparent of Libya’s late leader Muammar Qaddafi, who was killed earlier this week when four masked assailants stormed into his home and fatally shot him.
Mourners carried his coffin in the town of Bani Walid, 146 kilometers (91 miles) southeast of the capital, Tripoli, as well as large photographs of both Seif Al-Islam, who was known mostly by his first name, and his father.
The crowd also waved plain green flags, Libya’s official flag from 1977 to 2011 under Qaddafi, who ruled the country for more than 40 years before being toppled in a NATO-backed popular uprising in 2011. Qaddafi was killed later that year in his hometown of Sirte as fighting in Libya escalated into a full-blown civil war.
As the funeral procession got underway and the crowds swelled, a small group of supporters took Seif Al-Islam’s coffin away and later performed the funeral prayers and buried him.
Attackers at his home
Seif Al-Islam, 53, was killed on Tuesday inside his home in the town of Zintan, 136 kilometers (85 miles) southwest of the capital, Tripoli, according to Libyan’s chief prosecutor’s office.
Authorities said an initial investigation found that he was shot to death but did not provide further details. Seif Al-Islam’s political team later released a statement saying “four masked men” had stormed his house and killed him in a “cowardly and treacherous assassination,” after disabling security cameras.
Seif Al-Islam was captured by fighters in Zintan late in 2011 while trying to flee to neighboring Niger. The fighters released him in June 2017, after one of Libya’s rival governments granted him amnesty.
“The pain of loss weighs heavily on my heart, and it intensifies because I can’t bid him farewell from within my homeland — a pain that words can’t ease,” Seif Al-Islam’s brother Mohamed Qaddafi, who lives in exile outside Libya though his current whereabouts are unknown, wrote on Facebook on Friday.
“But my solace lies in the fact that the loyal sons of the nation are fulfilling their duty and will give him a farewell befitting his stature,” the brother wrote.
Since the uprising that toppled Qaddafi, Libya plunged into chaos during which the oil-rich North African country split, with rival administrations now in the east and west, backed by various armed groups and foreign governments.
Qaddafi’s heir-apparent
Seif Al-Islam was Qaddafi’s second-born son and was seen as the reformist face of the Qaddafi regime — someone with diplomatic outreach who had worked to improve Libya’s relations with Western countries up until the 2011 uprising.
The United Nations imposed sanctions on Seif Al-Islam that included a travel ban and an assets freeze for his inflammatory public statements encouraging violence against anti-Qaddafi protesters during the 2011 uprising. The International Criminal Court later charged him with crimes against humanity related to the 2011 uprising.
In July 2021, Seif Al-Islam told the New York Times that he’s considering returning to Libya’s political scene after a decade of absence during which he observed Middle East politics and reportedly reorganized his father’s political supporters.
He condemned the country’s new leaders. “There’s no life here. Go to the gas station — there’s no diesel,″ Seif Al-Islam told the Times.
In November 2021, he announced his candidacy in the country’s presidential election in a controversial move that was met with outcry from anti-Qaddafi political forces in western and eastern Libya.
The country’s High National Elections Committee disqualified him, but the election wasn’t held over disputes between rival administrations and armed groups.