Iraq to punish Turkey, Kurds over 'smuggled' oil exports: Minister

BAGHDAD - Reuters

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Iraq will take legal and other measures to punish Turkey and Iraqi Kurdistan, as well as foreign companies, for any involvement in Kurdish exports of “smuggled” oil without Baghdad’s consent, the oil minister said on Jan. 17.

Abdul Kareem Luaibi told reporters the government was preparing legal action against Ankara and would blacklist any companies dealing with oil piped to Turkey from Iraq’s autonomous northern region without permission from Baghdad. The Kurdistan Regional Government said last week that crude had begun to flow through the pipeline, and exports were on track to start at the end of January, inviting bidders to register with the Kurdistan Oil Marketing Organisation.

Luaibi said it was not in Turkey’s interest to jeopardise bilateral trade worth $12 billion a year, saying Baghdad would consider boycotting all Turkish companies and cancelling contracts with Turkish firms if the oil exports went ahead.

Turkey has been saying it sides with a peaceful soluiton to be reached by Baghdad and Arbil, asserting it has no interest in interfering Iraqi governments’ business.

“We will not be engaged in a business violating the [Iraqi] Constitution. We would not [act in violation] of Iraq’s integrity and sovereignty,” Turkish Energy Minister Taner Yıldız said on Jan. 14, a few days after Baghdad’s vocal warning to Ankara and Arbil .

“The Iraqi government holds Turkey legally responsible on this subject and reserves the right to demand resultant losses,” Iraqi Deputy Prime Minister for Energy Hussain al-Shahristani said.

In an interview with Reuters on Jan. 12, Iraqi Prime Minister Nouri al-Maliki threatened to cut the Kurdish region’s 17 percent share of the federal budget if exports via the pipeline went ahead without central government consent.

A draft budget drafted by Baghdad requires the Kurds to export 400,000 barrels per day (bpd), well above the region’s current export capacity, and says Baghdad will deduct any shortfall from the 17 percent share of state revenues to which they are entitled.

Luaibi also said Jan. 17 the Finance Ministry had been told to calculate how much should be deducted from Iraqi Kurdistan’s 17 percent share of the federal budget if the region failed to meet a government-set export target.

Preparations were under way, Luaibi said, “to raise a lawsuit against the Turkish government for allowing Kurdistan to pump oil through the export pipeline without the approval of the Iraqi central government, which represents ... a clear violation of the agreement signed between the two countries ... governing the export of Iraqi oil through Turkey.”