Oil Agreement Central To Iraq's Unity In ISIS Fight May Be Crumbling

WASHINGTON -- A December 2014 oil agreement struck between Iraq's central government and the country's autonomous Kurdish region is in jeopardy and could soon need to be renegotiated -- only adding to Iraq's difficulties as the country attempts to push back well-armed militants tied to the extremist Islamic State group.

When Baghdad and the Iraqi Kurds concluded the agreement, it was seen as a major positive development for the effort to push the Islamic State out of Iraq. The U.S. said the deal would aid both the Iraqi military and the Kurdish forces tackling the Islamic State, or ISIS.

But six months later, the Kurds say they are being short-changed by the Iraqi government, and the Kurdish representative to Washington has told The Huffington Post her region's president, Massoud Barzani, has raised his concerns with the Obama administration. The Kurds' specific allegation is that though they are shipping out a quantity of oil close to what they promised in the deal -- 550,000 barrels per day -- they are receiving significantly less than the proportion of the Iraqi budget they were expecting, 17 percent. Baghdad argues the Kurds are not exporting the amount they had pledged.

"If you look at it from our point of view, we are fighting a war against the most heavily armed and brutal terrorist organization in the world, we are carrying the burden of looking after 1.6 million displaced Iraqis and Syrian refugees, [and] at the same time we are not receiving our fair share of the budget," Bayan Sami Abdul Rahman, Iraqi Kurdistan's top diplomat in the U.S., said in a May 15 interview with The Huffington Post. "This is unsustainable and we need to do something. Our people deserve better than this."

Rahman argued that Kurdistan has taken pains to honor the agreement. "There were times when we weren't able to export 550,000 barrels a day. This was for technical reasons. I think at one time there was an issue in Turkey with a pipeline or a pumping station -- nothing that we could control. But we certainly have stuck to the spirit of the agreement and production has increased and increased."

On June 3, two shipping sources told Reuters Kurdistan had not yet made any oil transfers to the central Iraqi oil ministry for the month of June -- though a Kurdish official told the news agency the suspension did not indicate the death of the December deal.

Nechirvan Barzani, the prime minister of the Kurdistan region, said on May 10 that the Kurds would like to negotiate a new deal with Baghdad. The comment came days after Massoud Barzani, the president, met with President Barack Obama and other U.S. officials in Washington and flagged the oil issue.

The unspoken question is whether the Kurds once again might attempt to sell oil from their region on their own through a Turkish port, without Baghdad's permission. Their last effort to do so prompted the government of controversial former Iraqi Prime Minister Nouri al-Maliki to take the unprecedented step of cutting off Kurdistan's budget in January 2014. This left thousands of public employees in the region, from bureaucrats to peshmerga fighters, without salaries.

The U.S. has consistently opposed Kurdish attempts to sell oil independently, for legal reasons and because of its commitment to a unified Iraq. A State Department official confirmed to HuffPost in a Tuesday email that the administration's position had not changed despite the public squabble. "Iraqs energy resources belong to all of the Iraqi people and that the export or sale of oil absent the appropriate approval of the federal Iraqi government exposes those involved in such activity to potentially serious legal risks," the official wrote.

"On the budget payments, we are encouraged that both Baghdad and Erbil remain committed to seeking implementation of the deal that is enshrined in the budget law. We continue to urge both sides to work together toward resolution of the payments issue and full implementation of the Agreement reached last December."

U.S. officials are understood to be playing a role in diffusing tensions and ironing out misunderstandings between the two sides about how to calculate payments for the Kurdish oil.

In her HuffPost interview, Rahman, the Kurdistan representative, did not endorse independent Kurdish oil sales. Instead, she said it was necessary to hear more from Baghdad about the payment issue.

"If there is a problem in Baghdad that we don't know about, then let's hear about it," she said. "We need to be sure that Baghdad will honor its part of the agreement. Otherwise, yes, we do need to rethink."

Rahman added that she hoped the U.S. would sympathize with Kurdish concerns, given the ongoing difficulties -- from attacks, to providing for refugees -- that the Kurdistan region faces.

"Our population has increased by almost 30 percent, without the services increasing by 30 percent, without our budget even being normal -- let alone increasing by 30 percent," she said. "So it's not a sustainable position, and we certainly hope that our friends in America will understand that and will play a positive role as they have in the past."

Clarification: Language has been amended to clarify that it was Massoud Barzani who met with Obama, not Nechirvan Barzani.

This is from the first installment in The Huffington Post's new "Ambassadors Unplugged" series, which will interview prominent diplomats on important global issues. Previous articles from this installment can be found here , here and here .

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