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[size=12.66]Negotiations between Baghdad and the KRG: trying to reach a fair agreement
03/03/2014
On 16 February, the Iraqi Central Government and the Kurdistan Regional Government, "another round of talks on oil exports and revenue sharing, the fifth of its kind since December 25. And with the budget approval was delayed to 2014 because of the talks, all sides have a strong interest in reaching an agreement. Fortunately, such an agreement is a better chance of success than ever before.
Not only about oil
When discussing oil contracts and revenue sharing, often starts with the Iraqi Kurds reported that the conflict with Baghdad, "is not just about money." The Kurds have suffered decades of brutal persecution by the Iraqi Government over the harsh standards of internal repression in the Middle East. Since the 1960s until the fall of Saddam Hussein, many Kurdish areas of destruction, including all villages, where every building has been demolished and displace or kill all the people and livestock in rural areas.
This has eased the deep shock of administrative and financial decentralization process that was included in the 2005 Iraqi Constitution, which provided for the participation of national revenue based on the population distribution and the level of damage to different parts of the country. Based on their interpretation of the Constitution, Kurdish leaders in Irbil since their oil rights in the Kurdistan Regional Government in northern Iraq, oil sales through "Kurdistan oil marketing organization" nascent. It also sought to retain the proceeds of those sales in accounts they control to ensure international contractors on their entitlements, since the "Kurdistan Regional Government" to over 50 production sharing contracts, which are not supported by Baghdad.
The last offer made by Baghdad
Late last year, the culmination of years of independent development of the oil sector, threatened the "Kurdistan Regional Government" to export large amounts of oil through Turkey under Baghdad's participation. The threat has become more credible when it signed a special agreement with Ankara to Erbil in November allows companies backed by Turkey to engage in the oil sector entered Kurdi, a pipeline is created quickly partially operational in December between the oil fields of the "Kurdistan Regional Government" the Turkish Ceyhan export ports. These factors — coupled with the encouragement that the United States and Iran-backed reconciliation between Baghdad and the Kurdistan Regional Government "ahead of elections scheduled in the alara on 30 April-led Maliki government to propose a new mechanism to export oil" Kurdistan Regional Government "and convert it to cash. Important points include:
Marketing: will take the Iraqi oil Marketing Corporation "and" Kurdistan oil marketing organization "joint marketing of crude oil," Kurdistan Regional Government ", a joint higher Committee to agree on the details, including the price and the end users. Although this will be a blow to the ambitions of Erbil in independent marketing, it would involve a few costs significantly.
Revenue management: marketing revenues processed crude oil using traditional accounting methods applicable in the Federal Reserve Bank in New York. And crude oil revenues will enter the "Kurdistan Regional Government" to "receiving oil revenue account", with 5 per cent to Kuwait through the United Nations Compensation Commission "as required by UN Security Council resolution 1511. Baghdad then later convert the remaining funds from the proceeds of the "Kurdistan Regional Government" every month to Erbil through subsidiary account of Iraqi central bank account in the Federal Reserve Bank of New York ", on the basis that Baghdad will deduct this amount from the monthly routine transfers the" Kurdistan Regional Government "(see below). This presentation goes a long way towards fulfilling the requirement of Erbil in the control of oil revenue derived from the "Kurdistan Regional Government", although the process is not entirely under the control of the "Kurdistan Regional Government".
Revenue sharing: the new feature comes in the form of improved revenue sharing. Baghdad suggests the strategy of excluding expenditure reduction $ 15 billion of Federal oil costs incurred in the southern oil fields, thus increasing the value of "share", "Kurdistan Regional Government" 17 per cent of national income, the monthly increase of 1.6 billion dollars this year.
Budget review: draft budget now requires that produces "Kurdistan Regional Government" 400,000 barrels of oil a day for the Federal Government and will be deducted from the monthly transfers. And this condition will be cancelled if the Kurds with the transaction described above.
Implications for u.s. policy
Shame Washington praise on continuing efforts to pressure Baghdad to compromise. Has helped us active engagement to maintain current negotiations on track, the Washington intelligence of its influence as a provider of intelligence, weapons and diplomatic support in the fight against al-Qa'ida. U.s. officials continue to press for access to the current agreement to safety.
That constant pressure level is of vital importance because secure agreement in the short term. The latest proposal was granted the "Kurdistan Regional Government" billions of dollars and a way to reassure international partners from the oil companies, but also Kurdish leaders will have to explain to constituents why they seemed to take a step back from [its strategy of] oil marketing in cooperation with Turkey-which is a symbol of Kurdish Iraq's desire to reach economic independence. In this stage of the negotiations, the major stakeholders from controversy Turks and Kurds against Baghdad, either for economic reasons or narrow because they believe that the "Kurdistan Regional Government" to get a better deal in negotiations to form a Government after the April elections.
In the meantime, the current flexibility was dispelled by the Central Government if the "Kurdistan Regional Government" for a very long time. There is no legal controversy regarding the agreements between Baghdad and the Kurdistan Regional Government or Iraqi laws that can prove if negotiations failed to reach a political agreement: in fact, the ideal sought by the Kurds can be achieved, so they should not leave the solution to become the enemy of the good solution. There are no real shortcomings if they accepted the current proposal as they progress and further implementation. This would ensure monthly allocations for "Kurdistan Regional Government" in the context of the budget for 2014 and avoid a major financial crisis in the Kurdish region. It will be available before the Erbil future opportunities to renegotiate the agreement if it considers it in the best position at a later stage, either during the formation of a Government after the April elections, or during budget negotiations for 2015, or a discussion on a permanent law for revenue sharing.
The United States must continue to reassure the Kurds to accept this interim agreement does not mean the waiver in the long-term issues such as disputed areas or revenue-sharing legislation, initiatives Washington should provide their active support for the efforts to reach a fair agreement. In addition, the u.s. Government should guarantee clearly it will respond strongly that Baghdad had tried to interfere in automatic remittances to "Kurdistan". To delete "of the Kurdistan Democratic Party and the Patriotic Union of Kurdistan (PUK) from the third category of terrorist groups would be another way came in time for the fulfillment of Washington as an old friend and ally.
And more broadly, success in the current negotiations between Baghdad and the Kurdistan Regional Government "can improve the Iraqi scene in many ways. It will allow the approval of the Iraqi budget and will represent the first step toward pumping up to 1 million barrels per day of oil, "Kurdistan Regional Government". He has defused tensions in the run-up to scheduled elections in April and the months it would take to form a Government. As conditions improve in Iraq can turn to be a geopolitical implications are far-reaching: This includes uniting Iraq more against organizations in the orbit of al-Qa'ida and take an intermediate step towards rapprochement between Baghdad and the Kurdistan Regional Government and Turkey, that would moderate the generally negative trends that can be observed throughout the region. This shift for the better under the leadership of the United States will be appreciated and widely welcomed.
Michael Knights is a lever at the Washington Institute, based in Boston.
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03/03/2014
On 16 February, the Iraqi Central Government and the Kurdistan Regional Government, "another round of talks on oil exports and revenue sharing, the fifth of its kind since December 25. And with the budget approval was delayed to 2014 because of the talks, all sides have a strong interest in reaching an agreement. Fortunately, such an agreement is a better chance of success than ever before.
Not only about oil
When discussing oil contracts and revenue sharing, often starts with the Iraqi Kurds reported that the conflict with Baghdad, "is not just about money." The Kurds have suffered decades of brutal persecution by the Iraqi Government over the harsh standards of internal repression in the Middle East. Since the 1960s until the fall of Saddam Hussein, many Kurdish areas of destruction, including all villages, where every building has been demolished and displace or kill all the people and livestock in rural areas.
This has eased the deep shock of administrative and financial decentralization process that was included in the 2005 Iraqi Constitution, which provided for the participation of national revenue based on the population distribution and the level of damage to different parts of the country. Based on their interpretation of the Constitution, Kurdish leaders in Irbil since their oil rights in the Kurdistan Regional Government in northern Iraq, oil sales through "Kurdistan oil marketing organization" nascent. It also sought to retain the proceeds of those sales in accounts they control to ensure international contractors on their entitlements, since the "Kurdistan Regional Government" to over 50 production sharing contracts, which are not supported by Baghdad.
The last offer made by Baghdad
Late last year, the culmination of years of independent development of the oil sector, threatened the "Kurdistan Regional Government" to export large amounts of oil through Turkey under Baghdad's participation. The threat has become more credible when it signed a special agreement with Ankara to Erbil in November allows companies backed by Turkey to engage in the oil sector entered Kurdi, a pipeline is created quickly partially operational in December between the oil fields of the "Kurdistan Regional Government" the Turkish Ceyhan export ports. These factors — coupled with the encouragement that the United States and Iran-backed reconciliation between Baghdad and the Kurdistan Regional Government "ahead of elections scheduled in the alara on 30 April-led Maliki government to propose a new mechanism to export oil" Kurdistan Regional Government "and convert it to cash. Important points include:
Marketing: will take the Iraqi oil Marketing Corporation "and" Kurdistan oil marketing organization "joint marketing of crude oil," Kurdistan Regional Government ", a joint higher Committee to agree on the details, including the price and the end users. Although this will be a blow to the ambitions of Erbil in independent marketing, it would involve a few costs significantly.
Revenue management: marketing revenues processed crude oil using traditional accounting methods applicable in the Federal Reserve Bank in New York. And crude oil revenues will enter the "Kurdistan Regional Government" to "receiving oil revenue account", with 5 per cent to Kuwait through the United Nations Compensation Commission "as required by UN Security Council resolution 1511. Baghdad then later convert the remaining funds from the proceeds of the "Kurdistan Regional Government" every month to Erbil through subsidiary account of Iraqi central bank account in the Federal Reserve Bank of New York ", on the basis that Baghdad will deduct this amount from the monthly routine transfers the" Kurdistan Regional Government "(see below). This presentation goes a long way towards fulfilling the requirement of Erbil in the control of oil revenue derived from the "Kurdistan Regional Government", although the process is not entirely under the control of the "Kurdistan Regional Government".
Revenue sharing: the new feature comes in the form of improved revenue sharing. Baghdad suggests the strategy of excluding expenditure reduction $ 15 billion of Federal oil costs incurred in the southern oil fields, thus increasing the value of "share", "Kurdistan Regional Government" 17 per cent of national income, the monthly increase of 1.6 billion dollars this year.
Budget review: draft budget now requires that produces "Kurdistan Regional Government" 400,000 barrels of oil a day for the Federal Government and will be deducted from the monthly transfers. And this condition will be cancelled if the Kurds with the transaction described above.
Implications for u.s. policy
Shame Washington praise on continuing efforts to pressure Baghdad to compromise. Has helped us active engagement to maintain current negotiations on track, the Washington intelligence of its influence as a provider of intelligence, weapons and diplomatic support in the fight against al-Qa'ida. U.s. officials continue to press for access to the current agreement to safety.
That constant pressure level is of vital importance because secure agreement in the short term. The latest proposal was granted the "Kurdistan Regional Government" billions of dollars and a way to reassure international partners from the oil companies, but also Kurdish leaders will have to explain to constituents why they seemed to take a step back from [its strategy of] oil marketing in cooperation with Turkey-which is a symbol of Kurdish Iraq's desire to reach economic independence. In this stage of the negotiations, the major stakeholders from controversy Turks and Kurds against Baghdad, either for economic reasons or narrow because they believe that the "Kurdistan Regional Government" to get a better deal in negotiations to form a Government after the April elections.
In the meantime, the current flexibility was dispelled by the Central Government if the "Kurdistan Regional Government" for a very long time. There is no legal controversy regarding the agreements between Baghdad and the Kurdistan Regional Government or Iraqi laws that can prove if negotiations failed to reach a political agreement: in fact, the ideal sought by the Kurds can be achieved, so they should not leave the solution to become the enemy of the good solution. There are no real shortcomings if they accepted the current proposal as they progress and further implementation. This would ensure monthly allocations for "Kurdistan Regional Government" in the context of the budget for 2014 and avoid a major financial crisis in the Kurdish region. It will be available before the Erbil future opportunities to renegotiate the agreement if it considers it in the best position at a later stage, either during the formation of a Government after the April elections, or during budget negotiations for 2015, or a discussion on a permanent law for revenue sharing.
The United States must continue to reassure the Kurds to accept this interim agreement does not mean the waiver in the long-term issues such as disputed areas or revenue-sharing legislation, initiatives Washington should provide their active support for the efforts to reach a fair agreement. In addition, the u.s. Government should guarantee clearly it will respond strongly that Baghdad had tried to interfere in automatic remittances to "Kurdistan". To delete "of the Kurdistan Democratic Party and the Patriotic Union of Kurdistan (PUK) from the third category of terrorist groups would be another way came in time for the fulfillment of Washington as an old friend and ally.
And more broadly, success in the current negotiations between Baghdad and the Kurdistan Regional Government "can improve the Iraqi scene in many ways. It will allow the approval of the Iraqi budget and will represent the first step toward pumping up to 1 million barrels per day of oil, "Kurdistan Regional Government". He has defused tensions in the run-up to scheduled elections in April and the months it would take to form a Government. As conditions improve in Iraq can turn to be a geopolitical implications are far-reaching: This includes uniting Iraq more against organizations in the orbit of al-Qa'ida and take an intermediate step towards rapprochement between Baghdad and the Kurdistan Regional Government and Turkey, that would moderate the generally negative trends that can be observed throughout the region. This shift for the better under the leadership of the United States will be appreciated and widely welcomed.
Michael Knights is a lever at the Washington Institute, based in Boston.
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