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Opinions on Iraqi Federalism: Structural Construction & Resource Sharing

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In June, we asked two experts to discuss the current state of play of Iraqi federalism, in the context of past disputes and the wider region.

Their answers provide an overview of recurrent problems since Iraq became a federal state with the ratification of the 2005 Constitution, which defined Iraq as a federal entity under Section One, Article 1, and in subsequent Articles attempted to delineate the powers of the central government, federal region and provinces. Iraq’s federal constitution also called for laws governing this process and the creation of independent councils and commissions to manage the next stages of Iraq’s journey to implement federal governance.

Prior to this point, the road to Iraq’s federalism was shaped by the atrocities of a highly centralised regime, which experimented with decentralised forms of governance (for example, Governorates Law 159 of 1969 and Autonomy Law No.33 of 1974). These laws either failed or were violently reneged upon.

These failures culminated in the endorsement of a power-sharing mechanism in the Iraqi opposition conferences of the early 1990s and the genesis of a federal Iraq under Article 4 of the Transitional Administrative Law in 2004. Since then, the process of federalism has been contested, often at the expense of both the federal region and central government. Components of Iraq’s federalism sometimes appear to move forward, only to be pulled back by contested issues from years past.

The commentary here reminds us that like democratic governance, federalism is a process, rather than simply a declaration or an election. This requires not only legislation to add detail and clarity to constitutional articles for their effective implementation, but also a degree of ideological commitment to federalism itself. Only then will independent councils and commissions ensure that constitutional articles are implemented fairly.

Iraq Must Explore New Mechanisms for Resource Sharing

Omar Al-Nidawi, Program Director at Enabling Peace in Iraq Center

Iraq’s experiment with asymmetric federalism (in effect dealing with one part of the country as a special case) has not succeeded in creating a stable system in which the interests of both the Kurdistan Region of Iraq (KRI) and the rest of the country are mutually recognized as being equitably served.

A federal union is supposed to make the whole greater than the sum of its parts. Instead, the status quo is a federation/confederation hybrid where neither side is content. Today, 14 years since the adoption of Iraq’s constitution, the union remains beholden to political winds and has given rise to a security dilemma.

Adherence to the tenets of federalism is perceived by both sides to weaken their respective positions. The KRI perceived implementing aspects of federalism concerning foreign affairs, natural resources and defence as a dilution of the autonomy enjoyed from 1992 to 2003. Against the backdrop of KRI discourse and efforts to maximize autonomy, Baghdad perceived sharing power and resources as enabling KRI separatism.

In fact, Baghdad’s dilemma extends further, in that acquiescing to the KRI rights to control oil raised anxiety about the kind of message that sends to other oil-rich provinces. This is particularly relevant in Basra where locals are acutely aware of the discrepancy between their province’s massive natural wealth and the harsh conditions they must endure.

Distrust and security dilemmas resulted in failure to bring about the institutions and mechanisms required to make federalism work: laws to govern the development and sharing of oil, institutions to make and deconflict federal policies (upper chamber and a federal court per the constitution), or territorial disputes resolution (article 140).

In the absence of rules, there has been a history of Erbil and Baghdad making mistakes, often by overreaching. Power politics and party interests shrouded in nationalist rhetoric often overshadowed the higher interests of the state and its people.

When party interests briefly aligned, often during government formation–when the prime ministerial candidate needs Erbil’s support and the latter sees an opportunity to exploit that–ad hoc deals over oil and revenue emerged. Those invariably included the KRI handing over oil to Baghdad in exchange for budget payments. They also invariably collapsed because the absence of rules and arbitration mechanisms meant that small breaches or delays quickly escalated. The latest deal, part of the 2019 budget, is beginning to crumble as Erbil couldn’t keep its end of the bargain under pressure of foreign debt obligations, itself a complication of previous failed deals.

The answer, therefore, is in trying something new. A solution should focus on creating economic interdependence that fosters lasting alignment of policies independent of the whims of individuals. The key is separating oil from the debate over sovereignty and self-determination through new arrangements in the downstream side of the industry.

To render moot the squabbling over who has the right to what, oil should be diverted to jointly owned refineries (built in oil-producing provinces and funded by Baghdad and Erbil, along with Western firms) to maximize revenue for all parties. Host provinces get petrodollars, the governments get shares of refinery operations revenue, and the refined products are monetized via a jointly owned commercial entity in a manner that does not hurt anyone’s prestige.

Success in a pilot project would illuminate alternate paths to nation-wide regional development other than an asymmetric federalism created for a specific purpose.

To Foster Trust, Genuine Federal Structures Must be Constructed

Feisal al Istrabadi, Founding Director, Indiana University Center for the Study of the Middle East. Senior Fellow, Iraq Energy Institute

For some observers, the issue of federalism in Iraq distills to one: Article 140 of the Iraqi Constitution and control over the so-called disputed territories, including oil-rich Kirkouk. Yet as Baghdad and Erbil seek to find a modus vivendi after the failed referendum on Kurdish independence, the federalism agenda is much more expansive than a single article in the Constitution. During and after the referendum, one of the lines of Kurdish politicians was that Iraq had failed to engender true federalism, and that it was time to try confederalism. In fact, the opposite is true: thanks to the weakness of successive post-2003 governments in Baghdad, federalism has yet to be tried in Iraq.

Many of the federal structures created by the 2006 Constitution have never become operational, largely due to resistance from the Iraqi Kurdistan Region Government (IKRG). While there is no doubt that the IKR enjoys rights under the Constitution, it also assumed obligations when the Constitution was approved by margins exceeding 90% in the three predominantly Kurdish governorates of Iraq in 2005.

An obvious example is Article 110 (First), which makes formulating foreign policy and diplomatic representation one of the exclusive prerogatives of the Federal Government. Article 121 (Fourth) does allow for regional diplomatic missions, but they are mandated to be a part of the Iraqi embassy in that country, and their remit does not extend beyond “cultural, social, and developmental” affairs. The IKRG has never abided by these provisions. Its representative missions act as independent offices, with no relationship to the Iraqi Government. They do not merely ignore Iraqi foreign policy; they actively undermine that policy. Indeed, during the referendum affair, the IKRG representative missions actively undermined the State of Iraq itself.

One of the most contentious issues between Baghdad and Erbil has been over the oil and gas resources in the IKR. The IKRG has taken the position that, because these are new developments, they are not subject to interference from Baghdad. (The Iraqi Constitution bizarrely creates a distinction between “present [i.e., existing]” and new fields, though this is incoherent from an economic point of view.) Yet the Constitution does not give the IKRG so broad a mandate.

Article 112 (Second) devolves to the Federal Government, in consultation with regional and governorate governments of producing areas, the power to formulate policies to develop oil and gas wealth for the benefit of all Iraqis. The IKRG has refused to accept this provision, refusing, for instance, over a period of years, to account to Baghdad for oil it has exported. There is no doubt that the Constitution impliedly gives the IKRG jurisdiction over newly-developed fields; however, that jurisdiction is, by the express terms of the Constitution, not unlimited and is still subject to overall strategic oversight by the Federal Government. Iraq’s mineral resources are a commodity of decreasing value, and managing it strategically so that all Iraqis (the constitutional owners of those resources) may derive the maximum benefit from them is within the Federal Government’s purview.

There is another basic principle of federalism that the IKRG has sidestepped since May 2006, when the Iraqi Constitution came into effect, one requiring no corresponding token of good faith from Baghdad. Article 120 mandates that all regional governments must operate under a regional constitution in conformity with the Federal Constitution. The leadership of Iraqi Kurdistan has never promulgated such a regional constitution. There was a draft constitution proposed, but that draft violated the Iraqi Constitution, as it did not create de-centralized institutions, instead re-affirming the absolute authority of the regional president. In the event, it was not enacted. Promulgating a regional constitution that recognizes the Iraqi Kurdistan Region as a part of Iraq would go a long way towards creating an environment congenial to resolving issues of the internal borders.

As noted above, Article 140 provides a mechanism for resolving claims of whether Baghdad, Erbil, or local authorities should exercise jurisdiction over so-called disputed territories. Baghdad has taken the position that Erbil and Baghdad should agree on the fate of these territories and subject those agreements to referenda by local populations. Erbil counters that each locality should simply be asked whether it prefers to be under its or Baghdad’s authority. Whatever the relative merits of these positions may be, Article 140 has failed of its essential purpose, to quote from the American law of sales on warranties. Article 140 assumed that the dispute centered on internal boundaries; the 2017 referendum on independence established that the opposite was the case. For at least the largest party in control of the IKRG, the goal is nothing short of independence, and the proposed changes in boundaries are anything but internal.

Before discussions on re-activating Article 140 can be fruitful, there will have to be much confidence-building undertaken. That process must be mutual. Erbil must abide by those provisions of the Constitution that establish genuine federalist structures, including respecting foreign and defence policy, and economic development, including legitimate oversight. By the same token, Baghdad must also respect the rights and prerogatives to autonomy the Constitution grants the IKRG, including the right to develop its oil and gas resources. Once genuine federal structures have arisen linking the region the rest of the country, the matter of internal boundaries can be resolved. That process will take time.

 

The contents of this article are the authorsʼ sole responsibility. They do not necessarily represent the views of the Iraq Energy Institute or any of its members.