Not Committed to Sanctions Against Iran

While the New York Times reported last week that sanctions against Iran were circumvented in Iraq’s Kurdistan and much oil and petroleum products crossed the border into Iran in return for money to Kurdish and Iraqi officials, one Kurdish authority spoke to Rooz about the news report and expressly denied that any illegal exports to Iran were under way. Ashti Hawrami, Iraqi Kurdistan’s provincial oil minister told Rooz that “these exchanges are not taking place illegally, contrary to the claims of the NYT.” He also stressed that “Iraq was not committed to the sanctions against Iran.”

At the same time, at least one Iraqi parliamentarian is on the record to say that any export of oil from Iraqi Kurdistan to Iran is illegal, adding that, “if the revenues from such direct sales do not go to the national oil fund, then the exports completely violate the constitution.”

Oil in Exchange for Electricity

Just a month after the passage of the fourth round of economic sanctions against Iran by the UN Security Council, and following the extensive US sanctions and those of other countries against Iran, the New York Times reported on July 8, 2010 of  “the biggest gaps in the American strategy” in Iraq.

According to the NYT report, more a thousand oil tankers illegally cross Iraqi Kurdistan into Iran every day without the approval of the central government in Baghdad. This is not only against the US sanctions against Iran, according to the report, but it also creates problems over the distribution of Iraqi oil revenues.

But Ashti Hawrami, the minister of oil and energy of Iraq’s Kurdistan province looks at this from a different perspective.  According to him, “the US government has not asked a single Iraqi official to cut its diplomatic or economic ties with Iran or even coordinate them on the basis of sanctions against Iran. On the other hand, Iraq is not committed to sanctions against Iran and does not see any need to comply with them.”

The NYT report quotes Hawrami to have said that this illicit trade is fed by about 70 mini refineries that mostly operate in Karkuk and Nineveh regions and which do not have operating licenses.

Hawrami tells Rooz that “trade with the government of Iran is completely legal and takes place in return for meeting part of the Kurdish electricity needs by Iran.” He adds that, “the fuel that is exported by the regional [Kurdish] government to Iran is what is left beyond local consumption.  We export our surplus oil products to neighboring countries, including Iran and Turkey.”

Responding to the question whether these exports from Kurdistan are coordinated with Baghdad or not, Hawrami says, “These types of exports are generally not the concern of the central Iraqi government because according to the federal government’s laws these activities are relegated to the private sector.  According to these regulations we can directly and independently export our surplus petroleum and other products.”

According to Hawrami, Iraq’s central government’s exports to Iran comprise crude oil, which take place from the country’s southern borders whereas the exports from the Kurdish province are limited to oil products and derivatives, and not crude.

Export of Oil is Illegal

These statements by the Kurdish provincial energy minister come at a time when one Kurdish member of Iraqi National Assembly, who used to be a member of the parliament’s oil committee, stresses that the revenues derived from oil exports must go directly into Iraq’s development fund. Dr Bayazid Hassan told Rooz, “Iraq’s central government has a company called the Coordinating Oil Sales Corporation which operates directly under the Oil Ministry.  All of Iraq’s oil are transported to special ports and is sold directly through this company.  All the revenues of such sales are deposited directly in Iraq’s Development Fund. This fund is protected by Iraq and then the US.  After meeting the needs of Iraq’s budget from this fund, the US has the right to withdrawn whatever amount it wants from it.”

According to article 111 of Iraq’s constitution, oil and gas are the property of the Iraqi nation. This means that before being in the hands of the government or parties, this is the national wealth of Iraqi citizens.  According to article 112, revenues derived from the sale of fuel must be equally distributed among all the provinces and regions of Iraq.

Bayazid believes that this illegal export of oil to Iran by provincial Kurdish authorities weakens the position of Kurds vis-à-vis the central government in Baghdad.

“In addition to the illegal nature of the sale of oil and its products to Iran, this strengthens bureaucratic corruption in Iraqi Kurdistan because the revenue from such oil sales go to the local parties and is not distributed among the residents as is required by the constitution. Two thirds of Iraq’s oil is produced and sold outside the Kurdish areas and all of that income is for all Iraqi people. But the revenues generated from the sale of oil from Kurdistan is not deposited into the national fund,” he says.

In his talk with Rooz, Bayazid stressed that if the NYT articles about the illegal export of oil to Iran and the non deposition of such revenues into the national coffers was true, then these transactions were unconstitutional.

“The Kurds are allies with the US and the regional Kurdish authority must respect the sanctions that exist regarding oil fuel against Iran,” Bayazid told Rooz.

Bayazid also mentioned the attacks that Iran conducted in 2007 against Iraqi Kurdish regions and the shelling that took place then and said, “This should not weaken the sanctions against Iran.”

In another part of his talk, Bayazid stressed that he was not against the export of oil by provinces, but that any such activity had to be fully coordinated with the central government in Baghdad. He stressed that while 17percent of the budget of Iraq went to Kurdistan, it was naturally that the revenues that were derived from the export of the region’s natural resources be deposited into the national treasury.

Hawrami on the other hand asserts that the sales to Iran are not unconstitutional because the provincial Kurdish government declares such sales in the domestic and internal media.  In this regard, the Kurdish government has also issued a formal statement to the effect that it is aware of illegal oil trade on Kurdistan’s international borders.  The statement assets that the provincial government, with the support of the president Mr. Massoud Barezani, shall confront this issue, and that the regional government, with the cooperation of the central government, is determined to uproot the illegal oil trade.

Hawrami is careful not to associate the NYT report with the views or position of the US government and says that, “a newspaper report does not constitute the official view of a country,” and adds that that the report, “is after all the view of a journalist or at best a newspaper, and not the official position of the United States.”