Relationship in Crisis: Identifying Strategies for Kurdistan and Iraq to Re-establish Cooperation in the Context of Energy Dependency

The strained relationship between Baghdad and Erbil is at the center of the ongoing conflicts in the Iraqi political landscape. In 2005, when the Kurds voluntarily took part in the creation of a new Iraq, this relationship started as a partnership founded on optimism. They believed that the constitution and federalism would secure the rights for which they had long battled and given their lives.

However, over time, these aspirations came into contact with a complicated political reality, the first indications of which were seen in 2007, when the federal oil and gas bill failed to pass. The purpose of this law, which was outlined in Articles 111 and 112 of the Iraqi constitution, was to manage interactions between the national government and the provinces that produce oil, including the Kurdistan region. Since then, oil has changed from being a common resource to a major source of conflict, with interests so complicated that they appear difficult to reconcile, and with politics intertwined with the law.

When the federal government stopped sending the Kurdistan region's portion of the budget after 2014, claiming Erbil had failed to provide oil income to the "SOMO" company, the crisis took a drastic turn. The Kurdistan Region's 2017 independence referendum, which was a sign of desperation over the prospect of a deal with Baghdad, was the most dramatic event of the year. The fast military and political response from the federal government included the recapture of Kirkuk, the total shutdown of the budget, and even actions that had an immediate impact on the populace.

The intense constitutional and political conflict between the federal government and the Kurdistan region of Iraq over the management of natural resources, and previously over the definitions of the federal system in Iraq, is reflected in the crisis surrounding the signing of the new contracts in the gas sector with two US companies by the Kurdistan Regional Government of Iraq. Every prior agreement was brittle and fell apart during the first crisis because there was no comprehensive federal law pertaining to oil and gas, and the construction of the articles of the constitution permitted each party to follow its own interpretation.

The manner in which the Baghdad government has responded to the new contracts, especially the salary cuts for employees in the Kurdistan Region, shows how the state is using its economic resources to further advance its political goals. The Kurdistan Regional Government, on the other hand, is bolstering its negotiation position and legitimizing its actions by leveraging the United States and its international role.

Additionally, Washington's determination to protect its interests without engaging in a direct conflict with Baghdad is reflected in its endorsement of US-based companies and fostering favorable US international relations. Since there lacks a complete political framework to address the underlying causes of the Iraqi issue, the question of whether this intervention will continue to be implemented remains.

Although Iran has formally committed to staying silent, its history of using militant organizations to intervene, such as in the Kormor field, indicates that it may be motivated to indirectly undermine the project due to its interests in the Iraq and Kurdistan gas markets. The Iranian response to any effort to open Kurdistan to Washington, and to find a substitute for its invading exports to Iraq, is maintained by the fact that the lack of an official stance does not imply a lack of future action or planning.

The suspension of payments for employees in the Kurdistan Region is being used by the Baghdad government as a political pressure tactic, but in the end, it is widening the gulf between the Kurdish people and the Iraqi state, endangering the trust amongst its constituents. Additionally, the Kurdistan Region's capacity to make crucial strategic choices, like cutting ties with the federal government in Baghdad, is increased by the growing public ire in the region, disagreement between the two Kurdish parties (the Kurdistan Democratic Party and the Patriotic Union of Kurdistan) over how to handle relations with the Baghdad government, and the unwillingness of foreign sponsors to support escalating measures.

Clear signs of a deteriorating relationship between Iraqi Prime Minister Mohammed Shia al-Sudani and the Kurdistan Democratic Party (KDP) were on the fringes of the discussion. In particular, if current mediation efforts fail or the crises between Erbil and Baghdad worsen, this might open the door for future attempts to undermine him or replace him with a candidate that is more in line with the interests of the Kurdistan Region.

The strained relationship between Baghdad and Erbil is at the center of the ongoing conflicts in the Iraqi political landscape. In 2005, when the Kurds voluntarily took part in the creation of a new Iraq, this relationship started as a partnership founded on optimism. They believed that the constitution and federalism would secure the rights for which they had long battled and given their lives.

However, over time, these aspirations came into contact with a complicated political reality, the first indications of which were seen in 2007, when the federal oil and gas bill failed to pass. The purpose of this law, which was outlined in Articles 111 and 112 of the Iraqi constitution, was to manage interactions between the national government and the provinces that produce oil, including the Kurdistan region. Since then, oil has changed from being a common resource to a major source of conflict, with interests so complicated that they appear difficult to reconcile, and with politics intertwined with the law.

When the federal government stopped sending the Kurdistan region's portion of the budget after 2014, claiming Erbil had failed to provide oil income to the "SOMO" company, the crisis took a drastic turn. The Kurdistan Region's 2017 independence referendum, which was a sign of desperation over the prospect of a deal with Baghdad, was the most dramatic event of the year. The fast military and political response from the federal government included the recapture of Kirkuk, the total shutdown of the budget, and even actions that had an immediate impact on the populace.

Barzani in Washington: What's Next?

Ruslan Mamedov:
Iraq in the World Dis(Order)

However, there was still room for discussion. Masrour Barzani, the prime minister of the Iraqi Kurdistan Regional Government, has made an effort to end the isolationist trend since assuming office. His latest initiative was a trip to Washington in May 2025, where he signed two investment contracts with US firms Western Zagros and HKN Energy, to develop Kurdistan's gas infrastructure, which would strengthen the entire Iraqi energy system.

The startling contradiction, however, surfaced following his return from the May 21, 2025 trip, when the Iraqi Ministry of Finance declared that salary payments to employees in the region would no longer be made. It appeared to be more of a political than a financial message, and the timing was not accidental. Is it now considered an overstep to invest in local gas? Why is the political game of arm-twisting being played with the salaries of hundreds of thousands of employees?

These enquiries lead to the crux of the issue: how did the Kurds, who were essential collaborators in overthrowing the government prior to 2003, end up being occasionally viewed as enemies after 2005? Why do certain Baghdadi actors insist on using a logic of dominance rather than partnership to manage the relationship?

Citizen Trust in the State

The disputes between Baghdad and Erbil now affect the essence of the Iraqi state itself and are no longer merely a Kurdish issue. Unless they fall under the federal government's exclusive authority, regional laws are given precedence over federal laws in cases of dispute, according to Article 115 of the constitution. Furthermore, Article 112 grants the provinces that produce oil the ability to take part in oil management; hence, any solution must be inclusive and national in scope rather than restricted to the Kurdistan region alone.

In the same way that employees in the Iraqi Kurdistan region frequently lose their constitutionally guaranteed pay money orders, citizens of the region are now paying the price of an unchosen struggle, with their trust being increasingly eroded with each new crisis.

Kurdistan: Legal Battles on Two Fronts

According to commentators, the Iraqi Kurdistan Regional Government is facing two-pronged legal hostilities that reflect both US actions intended to counterbalance any effects from the ban on Iranian oil shipments and the central government's wish to restrict the independence of the semi-autonomous Kurdish territory.

On the first legal front, the Federal Supreme Court of Iraq will rule on a lawsuit brought by Kurdish opposition party New Generation Movement, which demands that Nechirvan Barzani, the president of the Iraqi Kurdistan region, dissolve the parliament in line with the law and the constitution because the legislature has not elected new cabinet members within the constitutionally mandated timeframe. Since the regional elections in October 2024, the Kurdistan Democratic Party (KDP) and the Patriotic Union of Kurdistan (PUK), the two main political parties, have been unable to reach consensus on the selection of a parliamentary speaker or the establishment of a new government.

The second legal front, in which the oil ministry of the Iraqi federal government is suing the Kurdistan region for oil and gas contracts it linked with US companies, has enormous economic implications.

Despite pressure from the US President Donald Trump administration, the court challenge is the most recent barrier to the restart of oil pipeline shipments through Iraq and Turkey, which have stopped since March 2023. Baghdad declared the agreements void, claiming that direct interaction between US companies and the Kurdistan regional government without the involvement of the federal government is against the constitution.

The deals have been defended by the Iraqi Kurdistan region, which claims that they were based on pre-existing contracts. There are connections between this dispute and the US-Iran conflict. Any decline in Iranian oil shipments, which Washington has promised to slash to zero as part of Trump's “maximum pressure” campaign against Tehran, would be somewhat offset by a swift return of exports from Iraq's Kurdistan region. Iraq, a US-Iranian ally, is cautious about being embroiled in Trump's strategy of putting pressure on Tehran.

The Three Potential Scenarios

Fahil Abdulbasit Abdulkareem:
A New Era for the Kurdish Question

With the Kurdistan Regional Government signing new gas contracts with two US companies, there are three possible scenarios for the current situation, given the political complexities and involved international and regional entanglements:

First: US mediation attempts to identify an immediate solution. Similar to earlier interventions in comparable cases, this scenario presupposes that the United States will mediate a temporary settlement between Erbil and Baghdad through its embassy in Baghdad, the State Department in Washington, and possibly other international or regional parties. According to options offered by internal legal organizations, such as the Iraqi Federal Court, this possibility implies that the parties will reach an agreement on temporary remedies, most notably the federal government resuming paying for the salaries of the Kurdistan region employees. This is in return for defusing the Kurdish situation and delaying constitutional conflicts until after the forthcoming parliamentary elections in November 2025.

The phone conversation between Nechirvan Barzani, the president of the Iraqi Kurdistan Region and Marco Rubio, the US Secretary of State after the Iraqi Ministry of Finance announced that funding for the region's employees had been halted increases the likelihood of this scenario. The Shiite ruling forces in Baghdad are also aware of the delicate timing of the crisis and the political landscape's unwillingness to tolerate a Kurdish withdrawal from Baghdad, especially at a time when the Sunni component is trying to bolster its regional position by capitalizing on the ongoing transformations in post-Assad Syria. This underscores the Kurdistan region leadership's hesitancy to make a final decision regarding the rupture, despite the media escalation.

Second: Kurdish political withdrawal from the federal government. The Kurdish parties, the Kurdistan Democratic and Kurdistan National Union, may withdraw from the Sudanese government in response to mounting pressure from the Kurdish street if tensions continue to rise and as the salary crisis persists for more than ten years without drastic measures. This scenario is reminiscent of the July 2014 withdrawal of Kurdish ministers from Nuri al-Maliki's government, which led to a wide-scale security collapse and the growth of the Islamic State (ISIS), among other factors that prevented Maliki from gaining the third term, even though it had been shipped in that year's parliamentary elections.

Given the Sadrist movement's ongoing boycott of the political process, a Kurdish withdraw from the Iraqi government today might lead to a serious political crisis in Baghdad. This might have an impact on whenever or in what manner the next elections were held. The two differing perspectives of the Kurdish parties on their relationship with Baghdad and their overlapping partisan and financial interests in the capital make this option seem improbable and fraught with difficulties. Both parties continue to have close business ties with Baghdad's political and governmental figures. A major obstacle is also presented by the upcoming, unpredictable parliamentary elections. Furthermore, considering the dangers to Iraq's unity at a time when the effects of the Syrian crisis are still looming large over the country, there is a dearth of regional and international support for such a move.

Third: The decline of trust between al-Sudani's government and Erbil. Even though an interim financial solution could be reached, it is possible that Prime Minister Mohammed Shia al-Sudani will lose faith in Erbil, especially from the Kurdistan Democratic Party (KDP). The party is dissatisfied with al-Sudani's performance and his hesitancy to face pressure from the Shiite groups in the Coordination Framework that back him, especially when it comes to the Kurdish issue. Leaks indicating that the KDP leadership now considers al-Sudani to be "no longer desirable" and has already started looking for potential successors to lead the next government (post-election) support this scenario.

In this sense, Basra Governor Asaad al-Eidani's visit to Erbil and the cordial welcome he received from Prime Minister Masrour Barzani of the Kurdistan Regional Government are political cues that indicate a potential determination to back a different candidate who can be trusted by Kurds. If the current crisis worsens or its political fallout continues, this would make al-Sudani's position weaker in the future.

Conclusion

Fahil Abdulbasit Abdulkareem:
Iran's Plan B: The Rise of a Shiite Federal Entity in Iraq

The intense constitutional and political conflict between the federal government and the Kurdistan region of Iraq over the management of natural resources, and previously over the definitions of the federal system in Iraq, is reflected in the crisis surrounding the signing of the new contracts in the gas sector with two US companies by the Kurdistan Regional Government of Iraq. Every prior agreement was brittle and fell apart during the first crisis because there was no comprehensive federal law pertaining to oil and gas, and the construction of the articles of the constitution permitted each party to follow its own interpretation.

The manner in which the Baghdad government has responded to the new contracts, especially the salary cuts for employees in the Kurdistan Region, shows how the state is using its economic resources to further advance its political goals. The Kurdistan Regional Government, on the other hand, is bolstering its negotiation position and legitimizing its actions by leveraging the United States and its international role.

Additionally, Washington's determination to protect its interests without engaging in a direct conflict with Baghdad is reflected in its endorsement of US-based companies and fostering favorable US international relations. Since there lacks a complete political framework to address the underlying causes of the Iraqi issue, the question of whether this intervention will continue to be implemented remains.

Although Iran has formally committed to staying silent, its history of using militant organizations to intervene, such as in the Kormor field, indicates that it may be motivated to indirectly undermine the project due to its interests in the Iraq and Kurdistan gas markets. The Iranian response to any effort to open Kurdistan to Washington, and to find a substitute for its invading exports to Iraq, is maintained by the fact that the lack of an official stance does not imply a lack of future action or planning.

The suspension of payments for employees in the Kurdistan Region is being used by the Baghdad government as a political pressure tactic, but in the end, it is widening the gulf between the Kurdish people and the Iraqi state, endangering the trust amongst its constituents. Additionally, the Kurdistan Region's capacity to make crucial strategic choices, like cutting ties with the federal government in Baghdad, is increased by the growing public ire in the region, disagreement between the two Kurdish parties (the Kurdistan Democratic Party and the Patriotic Union of Kurdistan) over how to handle relations with the Baghdad government, and the unwillingness of foreign sponsors to support escalating measures.

Clear signs of a deteriorating relationship between Iraqi Prime Minister Mohammed Shia al-Sudani and the Kurdistan Democratic Party (KDP) were on the fringes of the discussion. In particular, if current mediation efforts fail or the crises between Erbil and Baghdad worsen, this might open the door for future attempts to undermine him or replace him with a candidate that is more in line with the interests of the Kurdistan Region.