Exxon in Iraq

“It is the responsibility of the government to defend Iraq’s sovereignty,” Deputy Prime Minister Hussain al-Shahristani said in an interview, warning that if Exxon chooses to operate in disputed territories, “they would be committing a grave mistake.”

The Obama administration did little to discourage the Exxon deals, and it has not taken action to prevent the company from drilling next year, according to several U.S. officials. But American diplomats have mediated between leaders in Baghdad and the Kurdish capital of Irbil. They helped Iraqi army and pesh merga commanders agree on a plan in which all forces would have returned to their pre-crisis positions, but the plan was rejected — by Barzani, or Maliki, or both, according to varying accounts.

The Kurds still rely on Baghdad for the vast majority of their budget, but they have taken steps to create their own oil sector, signing nearly 50 contracts with international companies, increasing the Kurdistan region’s control over its revenue streams. The Kurds could sever their economic dependence on Baghdad if they finalize a deal being negotiated with Turkey for oil exploration and pipelines.
Maliki’s advisers argue that Iraqi Kurdistan has more to lose from a civil war, because foreign companies are attracted by the region’s excellent security, whereas those that invest in southern Iraq anticipate a risk of violence.

“All of their success is built on the assumption that it’s a stable region,” said Askari, the Maliki ally. “Instead, it will be a conflict region.”