In a scene that reflects a deep imbalance in the relationship between Baghdad and the Kurdistan Region, oil smuggling from the region abroad continues at a time when the United States is demanding that the Iraqi government pay $5 billion in compensation for the work of its companies in Kurdistan.
The equation seems clear: the region is smuggling oil secretly and making financial gains, while Baghdad bears the financial and legal burdens. So how long will this economic bleeding continue? Does the region need a political and security awakening to put things back on track?
Kurdistan and oil smuggling: who wins and who loses?
Smuggling is taking place via the Turkish Kurdistan-Ceyhan pipeline, away from Baghdad’s supervision, using intermediary companies that hide the true source of the oil and sell it on international markets.
Beneficiaries of smuggling
The first and last beneficiary is the Kurdistan Regional Government, which receives direct revenues without returning to the Iraqi treasury, followed by foreign oil companies, most of which are American, operating in the region and reaping huge profits despite legal disputes, in addition to countries and smuggling networks that benefit from the difference between the official price and the price on the black market.
Baghdad is the most affected
A- Huge financial losses: Iraq’s losses due to oil smuggling are estimated at billions of dollars annually.
B- Budget deficit: Baghdad is forced to compensate for the lost revenues from oil smuggling .
C- Legal and international pressure: Washington is pressuring the Iraqi government to pay compensation to American companies operating in Kurdistan, even though these companies operate outside the legal framework of the central government.
D- The United States is demanding that Iraq pay $5 billion in compensation to its companies operating in the region.
At the same time, Washington has not exerted any serious pressure on Erbil to stop illegally exporting oil, which raises a legitimate question: Why does Washington support the entrenchment of the oil and economic division between Baghdad and Erbil?
As the Kurdistan Region continues to reap profits from Iraq’s wealth, while Baghdad bears the legal and financial costs, this unfair situation forces the Iraqi government to make decisive decisions to end this crisis. Are we witnessing the end of the era of smuggled oil, or will politics continue to control the economy?
