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Top US diplomat warns court ruling on oil risks deepening crisis in Iraq

Erbil and Baghdad are enmeshed in an escalating row over oil rights, with US warning dispute could exacerbate country’s economic woes

Middle East Eye

The US has urged Baghdad not to implement a court ruling forcing its semi-autonomous Kurdistan region to hand over oil extracted from its territories to federal authorities, warning it risks “a widening kind of economic crisis” in Iraq.

“Washington is quite concerned - that rushing forward and implementing this decision risks driving US firms out of Iraq, other firms out of Iraq,” Barbara Leaf, the State Department’s top Middle East diplomat, told reporters on Wednesday. […]

Leaf said she shared US concerns with leaders in Baghdad and Erbil, the capital of the Kurdish region, officially recognised as an autonomous region of Iraq since 2005, that following through on the court ruling would exacerbate the country’s economic woes at a time when it is already dealing with a political crisis.

The Kurdistan Regional Government (KRG) has for decades been developing its oil and gas resources independently of the federal Iraqi government, passing its own oil law in 2007 to administer control of resources in its territory.

In February, Iraq’s federal court ruled that the KRG’s oil and gas law was unconstitutional and demanded that Kurdish authorities hand over their crude products. […]

Leaf said she shared US concerns with leaders in Baghdad and Erbil, the capital of the Kurdish region, officially recognised as an autonomous region of Iraq since 2005, that following through on the court ruling would exacerbate the country’s economic woes at a time when it is already dealing with a political crisis.

The Kurdistan Regional Government (KRG) has for decades been developing its oil and gas resources independently of the federal Iraqi government, passing its own oil law in 2007 to administer control of resources in its territory.

In February, Iraq’s federal court ruled that the KRG’s oil and gas law was unconstitutional and demanded that Kurdish authorities hand over their crude products.  […]

Besides irking Kurdish officials, the ruling has also unnerved energy majors and drawn the attention of US lawmakers.

In a letter sent to US Secretary of State Antony Blinken in August, senators James Risch and Bob Menendez, the ranking member and chairman of the Senate Foreign Relations Committee,  said “certain US companies” were being targeted by Baghdad’s application of the law.

“We urgently ask the administration to engage the KRG and the Iraqi government at the highest levels to allow for continued energy work in the KRI [Kurdistan Region of Iraq], which is integral to Iraq’s stability and prosperity, and to furthering Iraq’s energy independence,” the lawmakers wrote. […]

The country uses revenue from its oil reserves to fund 90 percent of the federal government’s budget.

14 Sep 22