The period 2003–08 represented the zenith of Kurdish power in Baghdad. With the rest of Iraq mired in civil war and institutional confusion, non-Kurdish leaders, Islamist Shia ones included, had little capacity to present a coherent alternative vision or to find a counterbalance to Kurdish demands. At the same time, US power in the country was at its apex, and Erbil benefited from a benevolent US that was willing to pressure Baghdad to acquiesce to legislation that would reinforce a Kurdish vision of federalism.
However, this imbalance led to Kurdish overreach as Erbil pursued a maximalist agenda designed to enhance their autonomy, expand their control in disputed territories, and create the foundations for eventual independence if the opportunity presented itself. Faced with Arab-Iraqi partners who for the most part rejected the establishment of an ethno-sectarian-based confederal system in Iraq with a weak federal capital, Kurdish leaders refused to budge. They rejected any proposed amendments to the constitution or legislation that would alter the federalism formula, insisting instead on its literal interpretation and legislative proposals designed to reduce significantly Baghdad’s fiscal and legal powers. Erbil also pushed ahead with controversial efforts to develop independently Kurdistan’s oil and gas sector despite vociferous objections from Baghdad. But in doing so, Kurdish leaders fuelled antagonism and fear among the Islamist Shia parties, especially the Dawa party, which came to dominate the government in Baghdad and which increasingly supported a pre-eminent federal government role. With SCIRI’s power in demise as a result of opposition to its political vision and Washington’s waning ability to dictate policy in Iraq, the prospects of federal-related legislation being passed in the CoR were effectively scuppered as no broad consensus could be reached in support of it.
The result has been essentially a stalemate since 2008, as the Kurds have gradually lost their upper hand in the face of a more effective and coherent Shia-dominated federal government, which is determined to preserve its power and authority. With the exception of a brief period just after the offensive by Islamic State of Iraq and Syria (ISIS) into northwest Iraq in 2014, Baghdad has been able to resist repeated Kurdish efforts to force it to cede competent authority in line with the constitution. The KRG has managed to protect the additional autonomy that it gained in the years immediately after the fall of Saddam Hussein, allowing it to govern the Kurdistan region independently and to build on earlier momentum to expand its autonomous authority over areas such as the local oil and gas sector. But Erbil has not been able to force Baghdad to make meaningful concessions on federalism, such as allowing the creation of new regions, or to pass federalism-related legislation on revenue-sharing and hydrocarbon management through the CoR.
The shifting balance of power in Baghdad’s favour has meant that, over time, the prospects of constraining the federal government’s authority in line with constitutional strictures have faded. This fact has not stopped the KRG from insisting that the constitution remains the only basis for resolving the myriad of disputes that it has with Baghdad. But this intransigence, combined with Erbil’s proclivity to enhance its autonomy at the federal government’s expense at every opportunity, has had significant political repercussions for Iraqi stability and the Kurdistan region’s long-term interests.
These have been particularly evident in three key areas: national power-sharing; national revenue-sharing; and territorial control. Over the years since Saddam Hussein’s ouster, the KRG has established a state within a state in Iraq that denies Baghdad’s authority, and which claims a degree of autonomy in some areas, such as financial management and foreign relations, that exceeds the mandate of the constitution. In the process, the KRG has made the debate over federalism less about the best form of governance in Iraq and more about its own attempts to enhance its autonomy at Baghdad’s expense, and to create the foundations for eventual independence if the opportunity arises. But in doing so, the Kurdish parties, individually and collectively, have gradually sacrificed their influence at a federal government level. Growing divisions between the main Kurdish factions have undermined their collective influence. They have gone from being perennial kingmakers to more marginal players in federal affairs, with their political and legislative preferences – including on issues as vital as the federal budget – being increasingly ignored by other factions. As was demonstrated during the efforts to form a government in the spring of 2020, Erbil can still influence the political process when it is given an opportunity to do so. However, the effective veto once enjoyed by Kurdish factions in Baghdad no longer applies. Meanwhile, staunch Kurdish support for the ethno-sectarian system that has shaped post-war Iraqi politics has put the Kurdish parties and the KRG at odds with much popular sentiment outside Kurdistan, and with the more issue-based alliances and concerns that have characterized the CoR and the politics outside the Kurdistan region over the past few years. A recent 2020 Chatham House opinion poll of more than 1,200 Iraqis in 10 provinces found that a significant majority of Iraqis outside of the KRG support federal control over hydrocarbons, budgets, security and foreign affairs.
The erosion of Kurdish influence at the federal level has had material consequences – seen not least in the struggle that Erbil has faced since 2013 to secure the disbursement of federal revenue to the region. The KRG’s repeated insistence on a long-term revenue-sharing formula that deprives Baghdad of any effective fiscal and monetary authority, and instead makes the federal government little more than a distributive node, has effectively stymied any meaningful progress towards a revenue-sharing deal or passage of revenue-sharing legislation. For a majority of the other factions in the federal government, including the Islamist Shia parties that dominate it, this formula is a non-starter. The KRG’s determination to develop the region’s hydrocarbon resources as an independent source of revenue has further reduced the appetite at a federal level for a compromise. To leaders in Baghdad, Erbil’s persistent unwillingness to honour the terms of oil-for-revenue deals in successive budgets since 2015 by instead prioritizing Kurdistan’s own revenue needs and autonomy concerns points to a ‘what’s mine is mine; what’s yours is mine’ mentality, and betrays a wilful ignorance on the part of the Kurds to the political implications of any revenue deal that appears to reward one part of Iraq more than others.
The erosion of Kurdish influence at the federal level has had material consequences – seen not least in the struggle that Erbil has faced since 2013 to secure the disbursement of federal revenue to the region.
But the failure to find a workable compromise has come at a heavy financial price for Kurdistan. It is not simply that Baghdad has, due to ongoing disputes over oil sector management and export mandates, refused to disburse revenue on repeated occasions, even when federal coffers have benefited from higher oil prices. (This was the case in 2014, when no budget was passed and no transfers were made to the KRG, and there have been repeated disruptions subsequently due to political disputes.) The Kurds have also been forced to offer more onerous contractual terms than the rest of Iraq to entice investors, and the oil that the Kurdistan region has exported has often been sold at a discount, due to buyer reservations over sovereign title and the need to pay intermediary parties, including Turkey. The lack of a long-term revenue-sharing deal has also prevented the KRG from accessing international credit markets through Baghdad, forcing it to assume much higher borrowing costs for an ever-increasing debt stock. All of these factors have arguably bolstered the KRG’s fiscal independence, but they have also meant billions of dollars in lost revenue over the years, which has restricted the KRG’s ability to pay public sector salaries, and, as a result, undermined its domestic legitimacy.
Less directly related to federalism, but nonetheless illustrative of the problems associated with taking maximalist approaches to resolving disputes, is the issue of rival territorial claims between Baghdad and Erbil, including over Kirkuk. The legacies of land and property seizures, enforced migration and genocide during Saddam Hussein’s regime have understandably made the issue an emotive one for the Kurds. Nonetheless, Kurdish leaders’ insistence on maximalist territorial demands founded on the notion that all disputed territory was de facto Kurdish, and that areas with Kurdish majorities must be governed by the KRG, has severely limited the room for negotiations with a Baghdad government that itself has not been shy about pushing back KRG control whenever and wherever possible. By using a very fluid and expansive concept of ethnicity as the basis for borders, Erbil has eschewed compromise arrangements that could have offered innovative solutions to the territorial dispute (such as the UN recommendations in 2009). The federal government might have accepted these, and, at the very least, this may have de-escalated local tensions in the disputed territories. Instead, both Baghdad and the KRG have taken every opportunity to extend their territorial control at the expense of the other. The starkest illustration of this was the initial expansion by the KRG at the onset of the ISIS offensive in 2014 (when the Kurdistan government increased the area under its direct control by 40 per cent), and the subsequent loss of various places, including Kirkuk, to Iraqi federal forces in 2017.
