oilforsoiltowardagrandbargain.docVIP

Oil for soil: toward a grand bargain on Iraq and the Kurds Middle East Report N°80 – 28 October 2008 TABLE OF CONTENTS EXECUTIVE SUMMARY AND RECOMMENDATIONS i I. Introduction 1 II. The Disputed Territories Conundrum 5 A. Territories in Dispute 5 B. A New UN Role 7 C. Responses to UNAMI’s Proposals 11 III. Escalating Conflict over Oil 14 A. Developing Kurdistan’s Oil Wealth 15 B. Oil in Kirkuk and Other Disputed Territories 19 C. The Battle Over the Hydrocarbons Law 23 IV. Possible compromise solutions 26 A. A Territorial Compromise 26 B. A Grand Bargain 27 V. Conclusion 32 APPENDICES Map of Iraq 34 Map of Disputed Territories Claimed by the KRG 35 Map of Oil and Gas Concessions in the Kurdistan Region 36 Map of Oil and Gas Resources in the Kurdistan Region and Disputed Territories 37 Map of Governorates and Districts 38 About the International Crisis Group 39 Crisis Group Reports and Briefings on the Middle East and North Africa 40 Crisis Group Board of Trustees 42  Middle East Report N°80 28 October 2008 oil for soil: Toward a Grand Bargain on iraq and the kurds Executive Summary and recommendationsA long-festering conflict over Kirkuk and other disputed territories is threatening to disrupt the current fragile relative peace in Iraq by blocking legislative progress and political accommodation. Two events in particular stand out: a two-month stalemate in July-September in negotiations over a provincial elections law in which Kirkuk’s unresolved status was the principal obstacle and, during this period, a campaign by the Iraqi army in and around the Kurdish-controlled disputed district of Khanaqin. To avoid a breakdown over the issue of Kirkuk, the current piecemeal approach should be discarded in favour of a grand bargain involving all core issues: Kirkuk and other disputed territories, revenue sharing and the hydrocarbons law, as well as federalism and constitutional revisions. Despite some progress, Iraq’s legislative agenda, promoted by the U.S. in or