Why is oil-rich Kirkuk so poor? - Panorama Insurance Brokers

Why is oil-rich Kirkuk so poor?

Kirkuk, Iraq – On the way from Erbil to Kirkuk, it starts smelling of oil even before one gets near the oil-rich Iraqi city. Smoke can be seen rising from the white chimneys of small oil refineries on each side of the highway, while heavy oil trucks line up at checkpoints separating Kirkuk province from the Kurdish semi-autonomous region.

Petrol stations and small shops selling petrol in plastic containers dot the road, alternating with small vegetable stands.

Kirkuk’s complicated politics become clear at the entrance to the city, where a large statue of a Peshmerga fighter in traditional Kurdish dress waves an Iraqi flag.

When it was unveiled in early 2017, the statue held the KRG flag: red, white, green and a sun in the middle. Two and a half years earlier the KRG – which claims the ethnically mixed Kirkuk as historically Kurdish territory – took control of the city after dispatching its Peshmerga forces to prevent Islamic State of Iraq and the Levant (ISIL, also known as ISIS) from capturing it.

In October 2017, after Erbil held an independence referendum that angered Baghdad and its foreign allies, Iraqi counterterrorism forces and Shia Popular Mobilisation Units (PMUs) took over the city and replaced the statue’s flag with an Iraqi one.

Today, Kirkuk and its oil continue to be at the centre of a major dispute between Baghdad, the KRG, and local political forces, which has paralysed the provincial administration, shaken the local economy, and angered residents.

No power in oil-rich Kirkuk

A year after the takeover of Kirkuk, ordinary people seem to have borne the brunt of the punitive measures Baghdad undertook in response to the Kurdish independence referendum. They have worsened pre-existing grievances of resource mismanagement.

Although Kirkuk sits on Iraq’s third-biggest oil reserves estimated at 13.5 billion barrels, its residents complain they have not seen much of that oil wealth spent on improving city infrastructure, services and the local economy.

“We haven’t had electricity since the morning,” says 73-year-old Fahima Abu Bakir on an October afternoon, sitting in her small grocery shop in Kirkuk. The city has always had a problem with electricity, but recently its gotten more frequent.

“I also haven’t been able to stock my shop with goods to sell. Prices went up so much because of the checkpoints,” she says.

After Baghdad’s takeover of the city, its forces established checkpoints on the highways to Erbil and Sulaymaniyah, the KRG’s second biggest city, collecting arbitrary dues on goods entering Kirkuk province. The two highways have been the lifeline of Kirkuk and its main transport arteries for imported goods.

Down the road from Abu Bakir’s shop, Alan Nejmeddin Abdulla, 27, also complains of the same troubles.

“We had to spend the hot summer with less than 10 hours of electricity per day,” he says, adding other basic services such as rubbish collection have deteriorated.

But Abdulla, who is an ethnic Kurd, was not happy about the situation in the city even when it was governed by the KRG. Former Kurdish governor and Patriotic Union of Kurdistan (PUK) member Najmiddin Karim was replaced by an Arab, Rakan al-Jabouri, appointed by Baghdad.

“High positions in the administration were filled by people who were not from the city. The previous Kurdish governor is from Kirkuk but he hadn’t lived in the city for a long time when he took the post. He was living in the US,” he says. “I want a governor who lives here, knows the suffering of the people, and would serve all groups – Kurds, Turkoman and Arabs.”

Kurdish journalist Zaniyar Jumaa also says Kurdish parties – which held the majority of seats in the provincial council and key positions of council head and governor until October 2017 – didn’t do much to improve the lot of Kirkuk’s residents.

“The political parties here are all running after their own interests and trying to steal the money and oil of the city,” says Jumaa.

Yet he also rejects what he sees as “military rule” in the city. Although the appointed governor of the province is a civilian, Jumaa says the counterterrorism forces still deployed in the city are very much in charge. His brother Adham, an independent activist, was arrested earlier in October for calling a protest against military interference in civilian affairs.

“They came to arrest him at 1:30am from our house. There were problems during Karim’s time too. I also was summoned to the police station, but it was always done according to Iraqi law. Now the military has all the power and they do whatever they want in public,” Jumaa explains.

When Kurds, Turkoman and Arabs can’t agree

A year after the takeover of Kirkuk, relations between Baghdad and the KRG continue to be strained. The Iraqi government has so far resisted calls to withdraw its forces from the province and allow for a local security arrangement to be established.

Negotiations for the resumption of oil production and export through the Iraq’s semi-autonomous Kurdish region’s pipeline have also stalled, despite continuous efforts by Kurdish officials to conclude a deal. Baghdad stopped oil extraction in Kirkuk’s fields almost completely in October last year, accusing the KRG of illegally exporting oil through its pipeline to Turkey. Earlier this year, the Iraqi parliament also launched an investigation into Kurdish exports of Kirkuk oil. For its part, the KRG has said this has cost the Iraqi state some $5bn in lost revenue.

The political chaos in Kirkuk has also been fed by the continuing inability of the main political players in the city to agree on how to proceed with its administration.

Turkoman and Arab parties in the province have rejected full Kurdish control over the city, while the two major Kurdish parties – PUK and the Kurdistan Democratic Party (KDP) – have been engaged in a squabble for power.

The PUK sees Kirkuk as its territory but it stands accused by the KDP of “giving up” the city to Baghdad by unilaterally withdrawing the Peshmerga in October last year.

“This is an empty accusation. There were a lot of warnings by international players against the referendum, but the KDP proceeded with it. This is what caused the Iraqi forces to take over the city,” said Ahmed al-Askari, a PUK member of the Kirkuk provincial council.

According to Askari, the provincial council has been unable to convene and deliberate on the appointment of a new governor to replace Jabouri – who won a seat in the Iraqi parliament in May’s national elections – because the KDP has prevented its members from returning to the city.

Responding to that accusation, Ahmed Mayi, a KDP press secretary, said the city is “occupied” and for that reason KDP council members cannot go back.

But even if the local council convenes, it might not be able to elect a new governor. The other two forces – the Turkoman and Arabs – do not agree with the current political set-up.

Ali Mahdy, a council member from the Iraqi Turkmen Front, told Al Jazeera the Turkoman insist on sharing administrative positions equally between the three main ethnic groups in the city. Currently, the provincial council has 26 seats held by the Kurds – divided equally between PUK and KDP – nine by the Turkoman, and six by the Arabs.

The Arabs, on the other hand, are asking for new council elections – a move the rest are reluctant to undertake. Unlike other provinces that hold provincial elections every four years, Kirkuk has not had one since 2005. This is because key provisions of the 2004 Iraqi constitution covering disputed areas, such as Kirkuk, have not been implemented.

Kurdish parties still insist on holding a referendum, but the Turkoman and Arabs reject the idea.

Iraqi Kurds have claimed Kirkuk as historically Kurdish and so have the Turkoman. Each side has accused the other of trying to engineer demographic change in the region.

The only hope for a resolution to the political deadlock seems to be the upcoming formation of governments in Baghdad and Erbil. Inter-party negotiations at the national and regional levels are likely to include Kirkuk.

Mayi told Al Jazeera he expects some kind of a resolution after the announcement of both cabinets.

Until then, Kirkuk’s residents will continue to suffer the consequences of the political and administrative chaos in the oil-rich province.

About Iraq Oil Report

We believe that reliable information, presented in the right way, can empower stakeholders to make smart decisions. Our large, on-the-ground network synthesizes solid facts and unbiased insight into high-impact analysis. Iraq Oil Report's mission is to deliver this information to enable this empowerment.