Why Turkey wants Kurdish oil
There are two types of countries in the world – those in which you get to your email as soon as you turn on your smart phone at the airport and those in which you do not. Arbil’s sleek International Airport in northern Iraq puts its country in the first type. It is part of our civilization. The airport was modernized in 2010, by a Turkish construction company of course. That didn’t mean, however, that Turkey’s energy minister was welcome. Baghdad did not allow his private jet to land, preventing the minister from participating at an oil and gas conference in the city.
The last time I was there about a year ago, I was struck by a new Family Mall close by. Everything in the place – brands, signs, goods – were Turkish. Even at the food court, the restaurant has a menu in Turkish and all the waiters were from Turkey. By Turkey, I am referring to Şırnak province on the border. So all Turkish SMEs have been rather active in northern Iraq since the first government of Nechirvan Barzani. Nowadays, the area of the Kurdistan Regional Government (KRG) has a new meaning for Turkey. Among the plethora of commercial possibilities, however, it is the Kurdish oil that interests us the most these days.
Turkey is heavily dependent on imported oil and natural gas. The country is not a producer of carbon-based fossil fuels. Turkey’s energy bill is around 60 billion Turkish Liras, about half of all imports, and is likely to increase further. That is not good for a country with high current account deficits. But the energy bill is not the reason for imbalance. South Korea is also a net importer of energy but suffers from no related structural problem in its current account balance. In this cooling down period of 2012, Turkey’s growth rate has declined about 70 percent, from 9 percent to 3 percent, while the decline in the current account deficit is only a meager 30 percent from 10 percent to 7.5 percent of GDP.
Look at Turkey’s other energy partners: Iran and Russia. Hardly ideal. Turkey has been paying Iran with gold to circumvent sanctions, but new U.S. legislation will soon make that impossible. That only means that we can expect price hikes on the Russian energy bill. Bad for the already-high current account deficit figure, especially in a period of slow growth. That bodes ill for the sustainability of the current account deficit in 2013.
Diversification is always good, but this regional turbulence makes Turkey even more interested in Kurdish oil and natural gas. It is definitely a nascent supply route to Turkey. Turkey is also important for the KRG to market its own natural resources, now that Syria’s alternative supply route is closed for the coming five years at least. So a win-win situation? Not so, thinks Baghdad’s federal government, putting a ban on the private jet of the Turkish energy minister.
The trouble with Turkey is its schizophrenic attitudes toward the Kurds. If the Kurds in the south are considered indispensable allies, than so should be the ones in the north. Arbil was part of Mosul province in the past, with all its ethnic divergence.
Vilayet-i Musul was also part of the National Treaty (Misak-ı Millî) of Turkey’s 1920 Liberation War, a fact neither Ankara nor Baghdad seems to have forgotten.