Speculation about Iraqi Kurds’ oil sales to Israel

Friday 11/09/2015
Formal denials. Taq Taq oil field in Erbil, in Iraq’s Kurdistan region.

London - A report that Israel has been importing up to three-quarters of its oil requirements from semi-autonomous Iraqi Kurdistan in recent months has, inevitably, prompted speculation about the existence of a deeper and murkier strategic relationship.
The Kurdish national move­ment, particularly its Iraqi branch, has had an ambivalent relation­ship with Israel dating to the 1960s when the Jewish state supported Kurdish separatists in an effort to undermine the Ba’athist regime in Baghdad.
The extent of Israeli-Kurdish ties, real or imagined, has been a factor in fuelling suspicion of the Kurds among their Arab neighbours. This time, however, there may be a very mundane explanation for the re­ported oil sales: The Kurdistan Re­gional Government (KRG) desper­ately needs the money as it battles for survival against the encroach­ing Islamic State (ISIS).
Chronic budgetary disputes with the central government in Bagh­dad, coupled with a deteriorating economic situation linked to the war against ISIS and the massive in­flux of refugees it engendered, have spurred a more aggressive oil strat­egy from the KRG.
The economic challenges have been compounded by tumbling crude prices that have hit all pro­ducers. It is not only Israeli buyers who are taking advantage of a sup­plier under pressure to offer crude at substantially below-market pric­es, something the KRG insists it is not doing.
The sharp rise in sales to Israel, reported in August by the Financial Times, highlights the significant in­roads that oil from Iraqi Kurdistan has been making into world mar­kets, including Italy, France and Greece, largely through secretive deals via global oil trading firms.
Israeli companies reportedly im­ported more than 19 million barrels of Kurdish oil, worth an estimated $1 billion, between early May and August 11th.
Predictably, the Financial Times report led Israeli media to suggest that the oil sales might be an indica­tor of strengthening Kurdish-Israeli ties.
Israel has long regarded the Kurds as potential allies, perceiving a shared interest with another re­gional minority that has a history of conflict with Arab neighbours.
The Kurds are usually much more circumspect regarding any public gesture of support from Israel as an embarrassment at best.
The previous flutter over Kurdish oil sales came in 2014, when con­signments of crude shipped via a new pipeline to Turkey’s Mediter­ranean port of Ceyhan were tracked to the Israeli port of Ashkelon. Then, as now, the KRG’s interest was overwhelmingly commer­cial. Once a consignment of crude reaches the market it can change hands several times before reach­ing its final destination.
In July 2014, Israeli Prime Min­ister Binyamin Netanyahu issued a strident call in favour of inde­pendence for Iraqi Kurdistan. His statement, which conflicted with an international consensus on pre­serving Iraq’s unity, was as unwel­come in Washington as it was in the Iraqi Kurdish capital Erbil.
It appeared to be part of a strat­egy by Israel to promote itself as a more reliable ally of the Kurds than even the Americans.
There were echoes of that in July in Debkafile, an Israeli website that boasts inside knowledge of intel­ligence issues. It sought to link Kurdish oil sales to Israel with Net­anyahu’s dispute with US President Barack Obama over the nuclear deal with Iran.
Debkafile maintained that the White House, seeking to ingratiate itself with Iran and Shia-ruled Iraq, tried to block independent Kurd­ish crude exports while Israel had accepted them. It went so far as to credit Netanyahu with acting to fund the KRG when Erbil was under threat from ISIS in mid-2014.
“Washington may have coun­tenanced Mosul’s fall to jihadist forces but Israel was determined to prevent the fall of friendly Erbil,” Debkafile said.
That assertion would be chal­lenged in both Washington and Erbil. US air strikes against ISIS are generally considered to have blunt­ed the jihadist offensive against Erbil, while Kurdish leaders have more than once thanked Iran for be­ing the first to give support. No one outside Israel has suggested that the Israelis provided such backing.
Kurdish officials are generally reticent about addressing claims of close Israel-KRG ties. However, amid the unsolicited 2014 state­ments supporting Kurdish inde­pendence, one official declared: “We’re not coordinating with Is­rael. We’re not responsible for statements made by other govern­ments.”
Bayan Sami Abdul Rahman, the KRG representative to Washington, said: “There was a period, a short period, decades ago when there were relations. But it stopped. In terms of any covert relationship, that does not exist. In terms of a formal relationship with Israel, that does not exist.”
This time around, Kurdish au­thorities again sought to divorce oil sales from any political con­siderations. “We don’t care where the oil goes once we’ve delivered it to the traders,” a senior Kurdish government adviser commented. “Our priority is getting the cash to fund our peshmerga forces against [ISIS] and to pay civil servants’ sala­ries.”