Erdogan Cornered

Ankara is greatly worried by the National Self-Defense Forces (NSF). The prospect of having a PKK-lead autonomy right next to Turkey must worry Erdogan. Kurds’ approach to the border segment between Jarablus and Aazaaz which is controlled by ISIS, their capture of the Menagh air base, and participation in the fighting near Aleppo, became worrisome news to Ankara. It is very revealing that the Turkish military is not subjecting the Kurdish forces to aerial bombardment. Aerial operations are prevented by Russia’s S-400 systems in Syria.

Erbil at a crossroads

Syrian Kurds’ efforts against ISIS are supported not only by Moscow but also Washington who is helping them with arms. On February 1, Kobani was visited by an emissary of the US-led coalition Brett MacGurk. The US diplomat’s travels on territory controlled by the Syrian Kurds angered Erdogan. He demanded the US choose between Turkey and “the terrorists from Kobani”. But Erdogan will not risk a breach with the US. Ankara wants to pursue its interests while preserving good relations with Washington.

But what are its objectives in that conflict? And what tactical approaches can be adopted when dealing with such a difficult partner? The US appears to pursue three objectives on the Syria-Turkey theater. First, stabilize the conflict with Russia by acting as an “impartial referee” between Moscow and Ankara. Secondly, finish off ISIS before Obama’s presidency ends which means supporting Syrian Kurds as the most capable force and ignoring Turkey’s objections. Thirdly, US might be interested in removing Erdogan from power. This willful and unpredictable leader who wants to establish Turkey as an independent power broker in the region is causing nothing but irritation in Washington.

In the meantime, Erdogan’s anti-Kurdish policies endanger his relations with Iraqi Kurdistan. The two sides grew closer in 2009, when Erdogan approved investments in the region and allowed oil exports into Turkey. In return, Erbil favored Ankara-based construction and energy firms. That’s when the foundations for Turkish-Kurdish symbiosis were laid and reinforced through oil export at dumping prices. The situation on the global oil market and growing difficulties in exporting “black gold” make that relationship a fragile one. Moreover, Ankara is worried by Barzani’s pro-independence rhetoric. If the autonomy becomes a sovereign state, it will foster separatism in Turkey itself.

Erdogan’s anti-Kurdish theme is aimed at forming Turkish public opinion support for his plan to hold a referendum to transform Turkey into a presidential republic which would him the power to appoint and dismiss ministers, dissolve the parliament, veto laws. But there is no consensus on that score even within his own party. Erdogan therefore made an abrupt shift toward the nationalist portion of the electorate, hoping to rely on it in his quest to transform the constitution.

Destroying the Russian Su-24 was part of that struggle for nationalist hearts and minds, just as the shift away from negotiations with the PKK and toward armed struggle against it was.

Moreover, Erdogan has reduced administrative expenditures on Kurdish provinces and introduced curfews. Mayors of predominantly Kurdish towns are told to use extra-legal counter-terrorism measures, including “death squads” consisting of nationalists. Barzani cannot ignore all that. Prior to the most recent elections, Barzani tacitly authorized consultations with Turkey’s Kurdish clans to persuade them to support Erdogan’s party and not Kurdish parties, which had the desired result. But if Erdogan continues harsh anti-Kurd policies, Barzani will have to make a choice and publicly express it.

Oil escapes to the South

Barzani’s recent statements on his willingness to export oil through Basra on Baghdad’s terms indicate that the Turkish oil export route is now viewed by him as unreliable due to Russian airstrikes, Syrian government forces’ successes on the ground, and Erdogan’s anti-Kurdish policies. Barzani is considering several factors here, including the drop in his own popularity within the autonomy and lack of legal basis for extending his presidency. He’s headed the Kurdish autonomy since 2009. He is due to leave this post in August 2016, and moreover the autonomy is experiencing growing social problems such as salary shortfalls and budget default.

The return into Baghdad’s fold is therefore a forced measure in the hopes that the central Iraqi government will agree to compensate the Kurds for their own economic failures. In any event, Barzani will be in a difficult situation come spring: the powerful Kurdish party Gorran aims at ending the era of his continuous rule. If Gorran achieves its aim, it would mean Erbil would rethink its relations with Ankara concerning such matters as presence of Turkish troops in Iraq and the support of PKK.

On February 15, Iraqi PM Haider al-Abadi offered to pay the salaries of Kurdish officials in return for the autonomy’s oil. This statement hinted at Barzani’s corruption, but Erbil pretended that it interpreted the proposal as an invitation to a renewed dialogue. The situation is different than it was in 2014, when the two sides agreed on a tranche consisting of 17% of Iraq’s national budget in return for a strictly defined quantity of Kurdish oil. This agreement lasted only a few months before Erbil violated its terms. At Ankara’s behest, the Kurdish leaders opted for a more profitable scheme of transporting oil through Syria which also helped camouflage ISIS oil smuggling and, most importantly, made the deliveries absolutely non-transparent. The Syria route deliveries at dumping prices made it possible to steal practically everything. The price structure was not recorded anywhere, and neither was the volume of exported oil. The entire “Kurdish portion” of the profit went directly into Barzani’s pocket, and was then distributed by him among various ministers and agencies. This arrangement not only allowed him to enrich himself, but also provide a means to reward loyal officials in the government and security forces. Therefore Russia airstrikes aimed at oil smuggling made an unexpected but significant contribution to preserving Iraq’s territorial and political integrity…The deal with Baghdad, on the other hand, implies official tranches which can be readily monitored.

How is the likelihood of an Erbil-Baghdad compromise and how lasting will it prove? Kurdistan is now officially exporting 600,000 barrels a day, which yields about $550 million at $30/barrel. Kurdish officials’ February salaries stood at $890 a month (not counting a 25-75% cut). The decision to cut salaries provoked major social unrest and nearly led to Barzani’s dismissal.

If the currently low oil prices hold, Erbil won’t be able to overcome its crisis on its own. On the other hand, Baghdad is also wholly dependent on oil exports and its own budget is buckling under the pressure. Iraq owes the US money for arms deliveries and is in difficult negotiations with the IMF over emergency financial assistance. This might make it more difficult for Baghdad to fulfill its obligations should it enter into an “oil for money” arrangement with Erbil. But the guarantees are not based on Baghdad’s ability to pay the Kurds but on other factors. One way or the other, the Kurdish bureaucracy will have to reduce salaries. Moreover, Erbil has no other export routes available. Foreign firms which extract oil in the Kurdish autonomy want to preserve the old and internationally recognized oil export channels through Basra. The battlefield situation in Syria has changed, and continuing oil smuggling might lead Baghdad to sue the autonomy in international courts. Which means Barzani’s ability to maneuver is reduced.

By the same token, his long-promoted idea of statehood for his region is being put off indefinitely, in spite of the promised referendums which are most likely a means of pressuring Baghdad during the negotiations, an effort to improve own popularity, and a way to grab hold of government resources. But no more than that. That’s the consequences of the global hydrocarbon crisis. While none of the Kurdish parties will renounce independence in theory, in practice it is being deferred until oil prices stabilize. The situation could change due to Syria conflict resolution and renewing exports via Turkey, but that is highly unlikely in the medium-term perspective.

Naturally, it is possible that Tehran will play the “Kurdish card” following its exit from under the sanctions regime by financing opposition to Barzani. But that’s not something that will happen in the near term. IRGC is still at the stage of training Jalal Talabani’s militia. Moreover, Iran is not prepared to sponsor a Kurdish autonomy in principle–Tehran would not benefit from fostering separatism in the backyard of an unruly but nevertheless ally such as al-Abadi. Tehran will continue to pursue the ouster of pro-Turkish Barzani but it does not want to radically change the situation. And since there is no likelihood Kurdistan will gain statehood any time soon, the situation favors a deal between Erbil and Baghdad.

This is bad news for Erdogan, for whom the loss of oil business with Barzani means massive financial losses for his clan and himself personally. Naturally, Kurdistan’s independence and statehood could not help but provoke unrest in Kurdish-populated areas of Turkey, but Kurdistan’s economy was too dependent on Turkey and Barzani too closely tied to Erdogan to “rock the boat” in Turkey. Considering Baghdad’s strong response to Turkish troops’ presence on Iraqi territory, Erdogan has many surprises waiting for him in this region.