Oil Deal Provides Much-Needed Revenue In Iraq

Transcript

MELISSA BLOCK, HOST:

Now, a deal that's being hailed as a sign of real progress in Iraq, and we haven't seen much of that lately. It's a deal on oil. The Iraqi government has reached agreement with Kurdish authorities in the semi-autonomous, oil-rich region in the north. It would provide much-needed revenue to both governments at a time when oil prices are falling and funds are desperately needed to counter the threat posed by the group known as the Islamic State, or ISIS. I asked Ben Lando, editor-in-chief of the Iraq Oil Report, to explain what this means for Iraq and its fight against the extremists.

BEN LANDO: Well, the biggest news is there'll be billions of dollars going to Kurdistan that have been cut off since January and created this financial crisis for the Kurds. And there'll be increased oil exports in 2015 for all of Iraq at a time when it needs it most. Security costs are increasing and the price of oil has dropped by, you know, about 40 percent in the past year.

BLOCK: And this is a dispute that's been going on between the governments in Baghdad and Kurdistan for some time. What are the implications for what this means for the unification of the country overall going forward?

LANDO: Sure, it's a dispute that's been going on for almost a decade, actually. And it provides a great opportunity - a new opportunity - some have said almost the last opportunity for the two sides to come together and get to a resolution on the key issues over the rights of the local governments to produce oil, to sell oil. What are the rights of the central government? You know, the very basics of what federalism in the new Iraq means, and how the oil money, which is the sole income for the state, can be redistributed fairly and without dispute every single year.

So it provides this opportunity for them. Nothing has been signed, so to speak. None of these details have been enshrined in a law, like a budget law. And that's the big test, is what happens over the next month when the political leaders sit down and actually get into some of the details.

BLOCK: This is a deal that's been worked out under Iraq's new prime minister, Haider al-Abadi. Is this something that shows a real sign that the past practice under Nouri al-Maliki is history and that the country is headed in a totally different direction?

LANDO: Almost right away, Prime Minister Abadi tried to prove himself to be different - a kind of a quiet governance that went to the root of some of the issues, reaching out to the Kurds, reaching out to Sunnis, addressing the issues of corruption in the state and in the security forces and this goes along with that.

The Kurds fear that they're going to be duped into a deal, made promises that they won't be followed through in the end and that this is just another one of those. But it appears that this is - because they've gone into so much detail and because they are at a point that it's so necessary that an agreement is reached, it appears that the stage has been set at least for them to sit down and come to some, maybe, some trust building measures as well.

BLOCK: I mentioned the implications for this deal on the fight against the Islamic State, or ISIS. How will that play out? How does this help specifically?

LANDO: Well, it creates some cohesion. I mean, there's no real direct implication from this. Tomorrow, there won't be a better bombing of ISIS. Both sides view the Islamic State as a common enemy. But, you know, down the road we could see more revenue coming in, which helps to fund the fight. We see part of this deal was $1 billion going from the Ministry of Defense in Baghdad to the Kurdish military called the Peshmerga. So we'll see it, you know, down the road in small ways. But to have a political leadership that is on the same page and isn't arguing as much, that's got to help in strategizing at least.

BLOCK: OK. Ben Lando - he's editor-in-chief of the Iraq Oil Report. Ben, thanks so much.

LANDO: Thank you. Transcript provided by NPR, Copyright NPR.