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ISIS Crisis David L. Phillips Published online: 20 Jan 2015.

Click for updates To cite this article: David L. Phillips (2014) ISIS Crisis, American Foreign Policy Interests: The Journal of the National Committee on American Foreign Policy, 36:6, 351-360, DOI: 10.1080/10803920.2014.993254 To link to this article: http://dx.doi.org/10.1080/10803920.2014.993254

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American Foreign Policy Interests, 36:351–360, 2014 Copyright # 2014 NCAFP ISSN: 1080-3920 print=1533-2128 online DOI: 10.1080/10803920.2014.993254

ISIS Crisis David L. Phillips

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ABSTRACT The Islamic State’s rise has shaped the battlefield in Iraq and Syria, as well as shifting alliances between the United States and countries in the region. Rather than try to placate its adversaries, Washington should cooperate more closely with the Kurds. Kurdish militia in Iraqi Kurdistan and Syria have shown the commitment and capability to confront ISIS. In addition to security assistance—air support and the supply of sophisticated weapons—Kurds deserve diplomatic and political support. Iraqi Kurdistan is emerging as the world’s next newest nation and America’s best friend in the region. KEYWORDS Iraqi Kurdistan; ISIS; Islamic State; peshmerga; Turkey

BACKGROUND

David L. Phillips is director of the Program on Peace-Building and Rights at Columbia University’s Institute for the Study of Human Rights. He served as a senior adviser and foreign affairs expert to the State Department under presidents Clinton, Bush, and Obama. His upcoming book is titled The Kurdish Spring: A New Map for the Middle East.

Kurds have historically had ‘‘no friend but the mountains,’’ suffering betrayal by the Great Powers and enduring chemical weapons attacks by Saddam Hussein. After the Gulf War, the international community established a ‘‘no-fly zone’’ north of the 36th parallel to prevent attacks by Iraqi forces and create conditions for self-rule in Kurdistan. Iraqi Kurds enjoyed de facto independence ever since. Conditions of peace and prosperity changed when the Islamic State in Iraq and Syria (ISIS) overran Mosul on June 10, 2014. With the ISIS terror state stretching from Baghdad’s outskirts through Anbar to Aleppo in Syria, the group’s battlefield victories altered Iraq’s political geography. These victories also required the United States and other members of the international community to reengage in Iraq. President Masoud Barzani of the Kurdistan Regional Government (KRG) made a closed-door address to the Kurdistan Parliament on July 2, 2014,1 outlining plans for self-determination and a referendum. Barzani’s chief of staff and national security adviser, Fuad Hussein, met with Vice President Joe Biden and Deputy Secretary of State Anthony Blinken at the White House that day. Instead of touting independence plans, Hussein briefed members of the press on the KRG’s conditions for participating in the new Iraqi government: ‘‘We are once again going to give a chance to the political process in Baghdad.’’ As a starting point, however, he insisted that Baghdad must ‘‘recognize the border of Kurdistan [and] the independence of our economy.’’ The KRG set a deadline for conducting a referendum: if Prime Minister Heidar al-Abadi cannot govern inclusively, talks with Baghdad would be about ‘‘divorce’’ rather than power-sharing.2 351

Iraq now faces a new reality: Can Iraqis come together and govern inclusively? Will Arab Sunnis become stakeholders in Iraq, contributing to an effective counterterrorism campaign against ISIS? Or is the ISIS security challenge so grave that it will lead to the collapse and fragmentation of Iraq?

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CRISIS In May 2014, the KRG’s intelligence service warned Baghdad and Washington that ISIS was massing on the border, preparing for an assault on Mosul. The warnings were ignored; ISIS subsequently scored a resounding victory, seizing Mosul and racing down the Tigris River Valley to within 25 kilometers of Baghdad. The Iraqi army, which included up to 750,000 men under arms, completely collapsed.3 Nearly 30,000 soldiers deserted in Mosul.4 Governance and security structures disintegrated, as terrified police officers removed their uniforms and tried to blend into the local population. The armed forces showed scant will to resist ISIS fighters or resolve to retake territory by force. Subsequently, a quarter of Iraq’s army brigades were determined to be ‘‘combat ineffective.’’5 ISIS seized sophisticated weapons provided by the United States to the Iraqi armed forces, including artillery, mortars, armored personnel carriers, and humvees. As a result, ISIS was well-equipped with state-of-the-art mate´riel. It was also well-financed: ISIS robbed a branch of Iraq’s Central Bank in Mosul, garnering $425 million and also derived revenue from oil sales. In addition to oil wells in the Syrian cities of Raqqa and Jazira, ISIS seized oil wells in northern Iraq. Its funds were greatly enlarged by selling black market oil to customers in Syria and Turkey for $25 dollars=barrel. Its coffers were also augmented by ransom payments made for European hostages. Every day, ISIS was realizing $4 million from its illicit activities. ISIS has no stake in Iraq other than destroying the country, redrawing colonial borders, and reversing a century of Arab humiliation by foreign powers. Its ranks swelled with foreign fighters and former Baathists. Originally estimated at 10,000, by the end of August, ISIS numbers had risen to 31,500 according to Central Intelligence Agency (CIA) revised estimates. Foreign fighters included at least 500 British citizens, 900 French, and 100 U.S. passport holders, 352

with Turks, Tunisians, Afghans, and Chechens also in the mix. Kurdish forces called peshmerga, which means ‘‘those who stand before death,’’ moved quickly to strengthen control of Iraq’s border with Kurdistan. Within days of Mosul’s fall, peshmerga took Kirkuk and consolidated control of Khanaqin,6 seizing an airbase in Kirkuk that had been abandoned by the Iraqi armed forces, as well as the Al-Kasik military base between Mosul and Tal Afar. They took cities in Diyala, consolidating control over disputed internal boundaries and also occupied the Rabia border crossing on the Tigris River.7 Once they had taken TuzKhurmatu, the peshmerga were able to create a security belt from Dohuk south to the Sinjar Mountains and east to Tal Afar. By the end of June, Iraqi Kurdistan included lands from the border with Syria in the west to Iran in the east. Iraq’s prime minister, Nouri al-Maliki, claimed that taking Kirkuk preempted implementation of Article 140 in the constitution, which promised a referendum on Kirkuk’s status. According to Maliki, the landgrab violated an agreement between Baghdad and the KRG. His threatening rhetoric exacerbated tensions between the KRG and Baghdad. In addition to the impasse over Kirkuk, the sides were unable to negotiate a hydrocarbon and revenue-sharing law: Baghdad was supposed to distribute 17 percent of Iraq’s total revenue to the KRG—when the KRG started exporting Kurdish oil, Baghdad suspended payments in January 2014. Masoud Barzani did not want to take sides in Iraq’s civil war between Sunnis and Shiites. An ISIS courier had delivered a message to the KRG: ‘‘If you don’t attack us, we would not attack you.’’8 ISIS offered the Kurds a truce on June 14, 2014,9 but Islamic State fighters stalled outside Samarra and then pivoted to attack Kurds in the Syrian cities of Kobani and Hasakah. On August 3, 2014, ISIS attacked Sinjar in Iraqi Kurdistan. Yazidis, an ethnic and religious minority who follow an ancient religion with links to Zoroastrianism, tried to flee Sinjar, Zumar, and Jawhar Ali Begg. Those who could not escape were taken prisoner, ordered to convert to Islam, pay a huge tax, or face death. ISIS killed Yazidi men, keeping their women for jihadi marriage. About 200,000 Yazidis fled, many heading to Erbil—up to 50,000 climbed Mount Sinjar, seeking sanctuary from Islamic State fighters.10 The American Foreign Policy Interests

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resulting dehydration and heat stroke claimed many lives. Islamic State fighters also captured the Iraqi towns of Zummar and Wana in Nineveh province. On August 7, ISIS took the Mosul Dam on the Tigris River, Iraq’s largest hydroelectric facility. Islamic State fighters seized Makhmour just 30 kilometers from Erbil, the capital of Iraqi Kurdistan on August 9, with Erbil itself threatened. No one had expected Islamic State fighters to sweep across Iraqi Kurdistan and vanquish the vaunted peshmerga. About one million people were displaced in the wake of ISIS advances. The KRG tried to absorb as many displaced persons as possible but, already struggling to assist many Syrian refugees at the Domiz camp in Dohuk, it was overwhelmed.11 The KRG established a cordon 20 kilometers around Erbil to manage the population flow. Single men and those who could not prove they had family in the Kurdistan region of Iraq were turned away. The advance by ISIS on Erbil was blunted by the U.S. air strikes, which began on August 9. Intervention by the Obama administration was initially intended to prevent further gains by ISIS, but ultimately evolved into humanitarian action designed to prevent genocide of Yazidis on Mount Sinjar. It then became an effort to regain territory seized by ISIS. However, air strikes alone could not realize President Obama’s goal of degrading and destroying ISIS. While the United States established a coalition of countries, it refused to deploy ‘‘boots on the ground.’’ Kurdish fighters acted as ground forces. After initial setbacks in Sinjar, peshmerga proved effective in retaking the Mosul Dam and in the Battle of Amerli. The People’s Protection Forces (YPG) of the Democratic Union Party (PYD), a Kurdish party in Syria, and the Kurdistan Workers’ Party (PKK) fighters from Turkey opened a humanitarian corridor from Mount Sinjar through Rojava to the KRGcontrolled towns of Dohuk and Zakho. The battlehardened YPG and battle-tested PKK forces escorted more than 10,000 Yazidis off the mountain. Their extensive experience with guerrilla warfare and solid discipline helped blunt ISIS. The YPG had fought Syria’s armed forces and Sunni extremists in Kobani and Hasakah for more than a year, and the PKK had waged an armed struggle for greater political and cultural rights in Turkey for more than 30 years. Volume 36, Number 6, 2014

POLITICS Iraqis went to the polls on April 30, 2014, in what was basically a referendum on Nouri al-Maliki’s eight years in power. His State of Law Coalition surpassed expectations, winning 92 seats. The second largest block won 33 seats, putting Maliki in strong position to form a government.12 Sunnis were largely disengaged in the political process. Already in control of Fallujah and Ramadi, ISIS had threatened citizens, resulting in a reduced number of polling stations. Candidates withdrew under threat of death. Maliki emphasized a security solution to ISIS, insisting that Iraqis enter into a political dialogue on government formation only after ISIS was defeated. The Iraqi Parliament finally convened to establish a new government on July 2. The Iraqi constitution stipulates that lawmakers have two weeks to name a president and two vice presidents after the speaker is selected; once a president is named, lawmakers have another month to select a prime minister.13 Sunnis were ready to present their candidate for speaker of the Parliament, but only after Shiites offered a candidate for prime minister; Sunni lawmakers declared their support for any Shiite—except Maliki. Acrimonious negotiations followed. The Rule of Law Party was reluctant to remove Maliki, lest his removal be construed as a victory for the terrorists. Negotiations broke down after a half hour and Parliament adjourned in disarray. Ayatollah Ali AlSistani, Iraq’s leading Shiite cleric, called on Iraqis to create a government with ‘‘broad national support.’’14 The Obama administration grew increasingly skeptical that Maliki could deliver a coalition to govern Iraq and engage the Sunnis in a united front against the ISIS. Secretary of State John Kerry declared on June 23: ‘‘The United States would like to see the Iraqi people find leadership that is prepared to represent all the people of Iraq.’’15 But Maliki rejected a government of ‘‘national salvation,’’ proclaiming: ‘‘I will continue to fight.’’16 Although the Dawa Islamic Party, which formed the core of Maliki rule of law coalition, had won the most seats, Maliki refused to step aside.17 With Iraqis at loggerheads, President Fuad Masum—a Kurd—designated Haider al-Abadi, a member of the Dawa Islamist Party, to form a new 353

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government. Maliki rejected the move, claiming that it violated Iraq’s constitution. Amid rising tensions over the possibility of a coup, Maliki shut Baghdad’s airport and deployed elite forces on Baghdad’s streets;18 he also threatened legal proceedings to prevent Abadi from taking office. With Iraq on the brink, the Dawa Islamic Party, the security services, and Maliki’s backers in Iran dropped their support. Sistani also played an influential behind-the-scenes role in convincing Maliki to step down. Government formation was the first hurdle, but Iraqis could not agree on the individuals who should serve as defense and interior ministers. Governing inclusively is an even greater challenge—Arab Sunnis and Kurds must have meaningful roles if they are to become stakeholders in Iraq. The KRG insists that the new government be responsive to its core concerns and demands the right to sell oil, defend itself, and conduct referenda in Kirkuk and other formerly disputed territories. It also demands a mechanism to prevent ‘‘abuses of power by Baghdad.’’19 Sunnis also set the bar high. Sheikh Mohammed al-Bajari, a member of the local council in Fallujah, called Abadi’s designation ‘‘as a simple change of faces.’’ Sunnis demanded the withdrawal of all army divisions from Anbar, the disbanding of militias, the release of thousands of Sunni detainees, and compensation to the ‘‘families of martyrs for their psychological, material, and moral sufferings.’’20 They also sought repeal of the de-Baathification law and Article 4 of the Anti-Terrorism Law as well as a new constitution granting Sunni provinces more autonomy. ‘‘The Awakening,’’ also known as the ‘‘Sons of Iraq,’’ was a movement engaging the Sunni tribes to defeat al Qaeda in Mesopotamia during the surge of 2007. After playing a critical role, however, Sunni Arabs felt betrayed by the Iraqi government: Awakening members were neither paid nor integrated into Iraqi security structures, which were dominated by Maliki’s appointments. Marginalized and shut out by the Iraqi government, the Sons of Iraq developed a deep resentment toward Baghdad and a distrust of the Shia-dominated security and intelligence services. To help reconcile sectarian groups and engage Sunnis in the security service, Abadi created a new National Guard, with members drawn from local tribes, controlled by provincial governors, and tasked with fighting ISIS. The Iraqi government agreed to pay their salaries and pensions. 354

SELF-DETERMINATION Iraq appeared on the verge of collapse when ISIS seized Mosul and Islamic State fighters raced across the desert to the gates of Baghdad. However, Kurdish dreams of independence were shattered when ISIS subsequently attacked Kurdistan.21 While Kurds have not abandoned their goal of independence, events have delayed its realization. The Kurdish economy was severely impacted by the violent conflict. Peshmerga need more time to develop into a more effective military. The KRG still relies on the United States for support and protection. Without U.S. assistance, Erbil would have fallen to the Islamic State and thousands would have died. Traditionally, Kurds and Shiites were in coalition, working together to depose Saddam Hussein. Losing the Kurdish block would destabilize Iraqi politics, thus further polarizing Arab Shiites and Sunnis. In general, Iraqis have little common ground other than their opposition to Kurdish independence. Iraq’s Shiite parties are proxies of Iran, which opposes Kurdish independence. Although Kurds and Sunnis shared frustration over Maliki, Sunnis also oppose Kurdish independence, supporting the concept of Iraqi unity that was propagated under Saddam Hussein. ISIS is also against Kurdish independence—Islamic State fighters targeted the Kurds for being pro-Western, pro-American, and pro-democracy ‘‘apostates.’’ Practical obstacles also impede the national aspirations of Iraqi Kurds. Although Baghdad is obligated to distribute 17 percent of Iraq’s total oil income to the KRG, it suspended payments in January 2014.22 Consequently, the KRG needed to sell its oil and gas to offset the loss of revenue, but faced legal and procedural obstacles to monetizing Iraqi Kurdistan’s energy wealth. Large energy companies, Exxon Mobil and Chevron among them, have positions in Iraqi Kurdistan. But they are hedging their bets pending passage of a hydrocarbons and revenue-sharing law between Baghdad and the KRG.23 Meanwhile, the KRG is at a disadvantage— having oil but lacking delivery and storage capacity. The KRG also lacks the legal and political basis for consistent, large-scale exports. Ongoing violence poses a further problem, with the northern pipeline being a regular target of sabotage.24 Turkey allows the transport of oil from Iraqi Kurdistan to Ceyhan, but does not purchase the oil American Foreign Policy Interests

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for domestic consumption. A tanker of Kurdish oil was stranded off the coast of Morocco for days because Iraq threatened a legal challenge against the buyer. The United States also pressured the government of Morocco not to offload the oil.25 Ownership of Kurdish oil in a tanker outside Galveston, Texas, was tied up for months in U.S. courts. A deal to deposit oil revenues in the New York account of Iraq’s Central Bank collapsed when Turkey insisted on placing funds in escrow at state-owned Halkbank.26 The Obama administration discouraged customers because it thinks that sale of oil from Iraqi Kurdistan would accelerate Iraq’s fragmentation. However, ISIS is a greater threat to Iraq than a strong and solvent Iraqi Kurdistan. The KRG had a cash-flow problem stemming from Baghdad’s revenue cut-off and problems selling Kurdish oil. The KRG did not pay salaries to civil servants for months because of its budget crisis. Predictability is critical to trade and investment— when ISIS attacked, Iraqi Kurdistan’s vibrant economy slowed, causing uncertainties about the future of Iraq. Scarce supply of processed fuels, like petrol, led to rationing and long lines at the pump.27 Kurds will not be easily deterred from their national aspirations. They are virtually unanimous in their support for independence as the best way to ensure their security and political and cultural rights. Kurdish culture has always been under threat from Iraq’s Arab majority, which historically treated them like second-class citizens. Iraqi Kurdistan may be landlocked, but Kurds have overcome isolation through the Internet. About 70 percent of Iraqi Kurds are under the age of 25— they are increasingly connected to the global community via social media.28 Access to information is an antidote: Kurds feel kinship with the West; Turkey represented a portal to Europe, European culture, and an eventual customs union between the KRG and the European Union. Independence is based on several assumptions. First, the KRG would be able to defend its territory and citizens. Second, the KRG can sell its oil and gas on international markets. Third, revenue from energy sales would be adequate to support KRG operations. Fourth, Turkey is an ally and friend. History and recent events cast serious doubt on these assumptions, affecting the possibilities by which Iraqi Kurdistan would or could achieve independence. Volume 36, Number 6, 2014

Turkey is most problematic. Its lack of response to ISIS aggression has raised serious questions about its reliability. Concern was exacerbated by Turkey’s reluctance to sign the Jeddah declaration on September 10, as well as its reluctance to join Obama’s coalition of countries opposing ISIS. Turkey agreed to let U.S. warplanes operate from Incirlik Air Force base in southeast Turkey. It also promised to set up a base to train moderate Syrian opposition. As of this writing, Turkey has failed to fulfill its promises. Moreover, rumors swirled about Turkey’s assistance to ISIS, including financial and logistical support for jihadis transiting from Turkey to Syria. According to Thomas L. Friedman, ‘‘Erdogan stands for authoritarianism, press intimidation, crony capitalism, and quiet support for Islamists including ISIS.’’ He asked, ‘‘What’s in his soul?’’29

THE PATH TO INDEPENDENCE Unilateral Declaration of Independence (UDI) The KRG is seeking a genuine partnership with the Iraqi government. It maintains, however, that such partnership should be rooted in principles of equality and justice: the Iraqi government must uphold the constitution, especially power-sharing through a federal system of governance; the unique characteristics of Kurds should be protected and preserved; measures marginalizing the Kurds or any group are unacceptable; government institutions, such as the council of ministers and the security structures, should be inclusive and professionalized. Simply put, Iraqi Kurds demand a say in their future. A UDI is unlikely. Kurds have always maintained that they will not be blamed for Iraq’s breakup. The KRG will not move precipitously unless the crisis grows more urgent or it has international support. To succeed, a UDI in Iraqi Kurdistan requires recognition by the international community; however, the Obama administration has made clear its opposition to Kurdistan’s independence under current circumstances.

Coordinated Declaration of Independence (CDI) All diplomatic efforts must be exhausted prior to a CDI, which requires a country or countries to take 355

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the lead in close coordination with the KRG. Iraqi Kurdistan’s CDI would require the participation of Turkey and concurrence by the United States. Ankara was silent when peshmerga seized Kirkuk, but it opposed Masoud Barzani’s plan for a referendum on self-determination.30 Beginning in 2012, Turkey and Iraqi Kurdistan forged a strategic partnership based on common commercial interests—in 2013, $15 billion in Turkish goods were sold in Iraqi Kurdistan. Turkish construction companies signed lucrative contracts to build skyscrapers, airports, and highways, while a new oil pipeline with the capacity to transport about 200,000 barrels=day was opened to Ceyhan on May 2, 2014. By 2015, up to one million barrels=day can be delivered. More is potentially on the way; Iraqi Kurdistan has 45 billion barrels of oil reserves.31 KRG Prime Minister Nechirvan Barzani championed the strategic partnership between Ankara and Erbil, maintaining that Kurds could count on Turkey’s protection. Nonetheless, the KRG grew wary of Turkey’s golden handcuff, not wanting to gain independence from Iraq and then become dependent on Turkey. Kurds were deeply disappointed in Turkey’s complicity and neglect as the ISIS crisis escalated in August 2014. The KRG sought Turkey’s assistance. But Ankara demurred, using the upcoming presidential elections as an excuse to remain uninvolved. Later, Ankara would also use the fact that ISIS held Turkish hostages to justify resisting Kurdish entreaties.32 Despite Erdogan’s strong electoral mandate, he refused to allow greater political and cultural rights for Kurds in Turkey. He sought constitutional reforms establishing an executive presidency, but rejected Kurdish demands for decentralization and greater powers for local government. Although the PKK maintained its cease-fire and withdrew forces from Turkey, Erdogan continued to characterize the PKK as a terrorist organization. The Turkish government rejected amnesty for PKK commanders and refused to release Kurdish political prisoners,33 while regressive legislation, such as Article 8 of the Anti-Terror Act and Article 301 of the Penal Code, remained in force.34 Other regional powers, such as Saudi Arabia, also oppose an independent Kurdistan. Riyadh fears that independence would result in the fragmentation of Iraq into Shiite and Kurdish regions. The emergence of ‘‘Shiastan’’ in Iraq’s southeast could inspire 356

a rebellion by Shiites in the kingdom, resulting in instability and potential fragmentation. The United States is unlikely to oppose Ankara and Riyadh by participating in a CDI for Iraqi Kurdistan.

Mutual Agreement Negotiations between Baghdad and the KRG could result in a mutual agreement to disassociate. However, breaking up states through mutual agreement is a rarity and a civilized divorce is unlikely. Although the Czechs and Slovaks negotiated their disassociation in 1993 and Norway held a referendum on independence from Sweden in 1905, disassociation is usually the result of conflict rather than cool-headed negotiation.35 More than political will, separation will require agreement on a number of technical and financial issues. The two sides must demarcate the boundaries of Iraqi Kurdistan, and a security pact would be required. Negotiations must also address the division of assets and liabilities, revenues, and resources, including water supply as both the Tigris and Euphrates rivers flow through Iraqi Kurdistan to the Mesopotamian plains. A customs union would be needed to manage comingled economic interests—both Iraq and Iraqi Kurdistan would benefit from access to expanded markets and from trade with each other. Iraqi Kurdistan needs revenue to be viable, requiring $1.2 billion each month to pay salaries and expenses.36 Oil is king in Kurdistan. To date, however, the Iraqi government has obstructed oil exploration, production, and transport. Once pumped out of the ground, Kurdish oil must have a means of gaining access to the sea. The current pipeline runs through Turkey to Ceyhan. Although Turkey refuses to buy Kurdish oil. The KRG and Iran have historically enjoyed good relations. However, Iran’s abusive approach toward Iranian Kurds threatens all Kurds. The Party of Free Life for Kurdistan (PJAK), an armed movement of Kurds in Iran, uses Iraqi Kurdistan as a base for its political and military operations. The Iranian government is deeply concerned about PJAK, with the plight of Iranian Kurds and PJAK’s status requiring flexibility in the context of Tehran’s regional and international relations. Relations between the KRG and Syrian Kurds have improved. Masoud Barzani was a vocal supporter American Foreign Policy Interests

of foreign intervention when Kobani was attacked by ISIS.37 Kurds largely overcame their differences and fought side-by-side against ISIS in Shengal. Kurdish oil could now flow from Iraqi Kurdistan through Rojava toward the Mediterranean. However, Rojava has no access to the sea. About 30 kilometers separate Rojava’s boundary and a port. These 30 kilometers comprise Latakia and Alawite lands controlled by the Syrian government.

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State Formation In any scenario, the KRG must act like a state rather than a region or militia and it needs strong institutions. As Iraq falls down, Iraqi Kurdistan would rise up, gaining greater credibility, respect, and international recognition for that nascent nation. State formation requires the KRG to adopt a more modern macro-economic policy. Oil is owned and traded by the KRG, leaving little room for a diversified private sector and foreign direct investment outside the energy sector. To function like a normal economy, the KRG would require a system to assess and collect taxes on oil revenues, which would be of major help in supporting a national budget. A sovereign wealth fund could be established—fashioned, perhaps, after the Norwegian model. Iraqi Kurdistan also needs a more diversified economy. Construction is the second-greatest contributor to GDP, but construction has created a potential real estate bubble.38 Electricity sales are also a source of revenue; Iraqi Kurdistan produces more electricity than it uses and sells the excess in Iraq. Communications, cement, and agro-industries are other noteworthy economic engines. Smuggling beer and cigarettes into Iran is also big business.39 Iraqi Kurdistan has virtually no banking system. Since most of the KRG’s income comes from oil, which is traded in dollars, the KRG could dollarize the Kurdish economy. Converting all of its currency into dollars would outsource central banking functions to the U.S. Federal Reserve; such action would strengthen ties with the United States and help develop liquidity arrangements with central banks around the world, thus assuring the international exchange of funds.40 The World Bank and International Monetary Fund (IMF), which has expertise in advising on fiscal policy, can become more engaged with the KRG. Volume 36, Number 6, 2014

Although membership in international financial institutions is not presently possible, the KRG can encourage the World Bank=IMF to set up working groups on Iraqi Kurdistan. Working groups would include a point person to interact with a KRG counterpart and liaison offices in Erbil. In parallel, the KRG could establish a core team of international economic advisers working with World Bank=IMF representatives on the KRG’s central banking, treasury operations, trade relationships, and the energy sector. Creating the team would be a big step toward functioning like a country, while just the fact of announcing the team would send a signal of seriousness to the international community. Greater consensus among Iraqi Kurds is the foundation of Kurdish unity, especially as rivalry between Kurdish political parties has been a serious impediment to progress. The 1995 Kurdish civil war resulted in the establishment of parallel statelets rather than genuine power-sharing. Therein lies a conundrum. Power-sharing is critical to Iraqi Kurdistan’s democratic development, however, Iraqi Kurdistan needs a strong state to address the challenges it will certainly encounter on the path to independence. A national vision would help transcend party and tribal loyalties and would also counteract nepotism, which lies at the root of corruption and has a corrosive effect on governance. To be sure, nepotism and corruption are widespread throughout the Middle East; they are also prevalent in Kurdish society— where kinship ideology and tribal loyalties run deep.41 Cash contributes to corruption and the abuse of power—both of which are impediments to independence. The windfall from construction and consumer goods has created a cash-based economy. Corruption was sustained by Baghdad’s 17 percent payout, with government decisions based on a web of personal relationships. A resurgent opposition party, the Patriotic Union of Kurdistan (PUK), and the rise of Gorran Movement (‘‘Change’’) have improved transparency and held the government led by the Kurdistan Democratic Party (KDP) accountable. However, the Gorran organization is now a part of the system, which has affected its reputation for independence and undermined popular support. While the KDP has demonstrated the capacity for effective governance, it tends toward monolithic, rather than inclusive, rule. 357

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The KRG needs a more competitive hiring process and fundamental reforms, including taking steps to shrink government and reduce the public debt.42 About 70 percent of the workforce in Iraqi Kurdistan is employed by the KRG, with underemployment widespread among Kurdish youth (persons under 20 years old are about half the total population). A culture of materialism and conspicuous consumption has become widespread.43 Unity is critical, especially during times of crisis. Differences between Masoud Barzani and the PYD’s Salih Moslem Mohamed are superficial, not substantive. To help foster unity, the PYD should not resist Barzani’s leadership or undermine the Syrian branch of the KDP. Nor should Iraqi Kurds disparage or resist cooperation with Salih Moslem. Barzani sent peshmerga to assist the PYD’s People’s Protection Units. The Islamic State has succeeded in bringing Kurds together in common cause against terrorism.

The Way Forward Iraqis would best serve their interests by coming together. In the best of circumstances, Abadi may succeed in fostering national reconciliation and the Iraqi army would regroup and reclaim territories seized by ISIS. But stabilizing Iraq will take time. A clear victory against the Islamic State may be out of reach, while ending Syria’s grinding civil war is a distant goal. Coalitions of the willing are basically symbolic. Eradicating Islamic extremism through education and economic development is a generational endeavor. The KRG has set a deadline for Baghdad to address its core concerns. Should Abadi fail to achieve consensus and satisfy the Kurds, Washington will have to concede that Iraq is simply not viable as a coherent and sovereign state. The Obama administration is committed to saving Iraq, but if it becomes apparent that such effort cannot succeed, the United States will need a fallback plan that involves organizing other countries to support Iraqi Kurdistan’s independence. Meanwhile, the Obama administration should stop blocking the sale of oil from Iraqi Kurdistan so that Kurds can have access to revenue to invest in statebuilding. To enhance its train-and-equip program, Washington should seek a Status of Forces Agreement with the KRG. Special Forces to assist the 358

campaign against ISIS should focus their efforts on cooperation with the KRG, who have proven more effective that Iraq’s armed forces. Even a small U.S. force in Iraqi Kurdistan would help defend Kurds from the Islamic State and show Tehran that the United States is still relevant in the region. The United States should focus its efforts in the region on the Kurds. This will require a steely-eyed appraisal of Turkey’s reliability as an ally. Regardless of Turkey’s actions, the State Department should remove the PKK from the list of Foreign Terrorist Organizations (FTO). The PKK has held to its cease-fire obligations and to its commitment to withdraw forces. It has become a force for good in the region, effectively opposing ISIS, saving Yazidis in Sinjar and Kurds in Kobane. If Ankara is talking to Abdullah Ocalan, head of the PKK, there is no reason for the U.S. government to keep the PKK on the FTO list. The EU and other states should also delist the PKK; such delisting would recognize the PKK’s positive contributions, galvanize peace talks, and put a deal within reach. Progress on the PKK would allow further progress with the PYD. Likewise, better relations with the PYD would affect relations between Western countries and the PKK. Salih Moslem should be given a visa to enter the United States for official meetings, including discussions at the Pentagon.44 If the Peoples Protection Forces oppose the Islamic State, the United States should expand its assistance. Air dropping weapons to Kobani’s defenders was critical to fending off ISIS. Even if Turkey objects, Washington should embrace the PYD for opposing Assad and battling Sunni extremists. The so-called moderate Syrian opposition is a myth—friends of the West are few and far between in Syria. The Kurdish neighborhood would be a space for expanding cross-border trade and cultural affinities as the foundation of a greater, virtual Kurdistan. Like letting steam out of the kettle, practical cooperation in the Kurdish neighborhood would diminish threats to territorial integrity rather than exacerbate differences between states where Kurds reside. Democratic development of Iraqi Kurdistan would serve as an inspiration to Kurds in the region as well as be a model for other states. America’s best and only friends in Iraq are the Kurds. Washington must initiate reality-based contingency planning and get ahead of events. Instead of American Foreign Policy Interests

trying to placate its enemies, the United States should support its friends. The Kurds used to have ‘‘no friend but the mountains.’’ In Iraq and Syria today, the United States has no friend but the Kurds.

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Notes 1. ‘‘Kurdistan Region-Iraq News in Brief,’’ Kurdnet, July 2, 2014, http://www.ekurd.net/mismas/articles/misc2014/7/kurdlocal 1655.htm. 2. Michael R. Gordon and Alissa J. Rubin, ‘‘Kurdish Officials Seek More Autonomy in Any Deal with a New Government,’’ New York Times, July 3, 2014, http://www.nytimes.com/ 2014/07/04/world/middleeast/kurdish-officials-doubtful-of-anew-iraqi-government-still-seek-autonomy.html?_r=0. 3. ‘‘Why the Iraqi Army Can’t Defeat ISIS,’’ Vox, June 20, 2014, http://www.vox.com/2014/6/20/5824480/why-the-iraqi-armycant-defeat-isis. 4. Ibid. 5. Gordon Lubold, with Nathaniel Sobel, ‘‘FP’s Situation Report: Kerry Arrives in Iraq; Nat-sec Luminaries Pop Popcorn for New Afghanistan Combat Film; Bergdahl Becomes an ‘OutPatient’; Sinclair Gets Dropped to a Light Colonel; Kirby Zorches; and a Bit More,’’ Foreign Policy, June 23, 2014, http:// www.foreignpolicy.com/articles/2014/06/23/fps_situation_ report_kerry_arrives_in_iraq_nat_sec_luminaries_pop_popcorn_ for_ne. 6. ‘‘Kurdish Forces Take Kirkuk as ISIS Militants Push towards Baghdad,’’ DW, June 12, 2014, http://www.dw.de/kurdishforces-take-kirkuk-as-isis-militants-push-towards-baghdad/ a-17702254. 7. Andrew Slater, ‘‘Kurdish Forces Are Pushing Back against ISIS, Gaining Ground around Mosul,’’ The Daily Beast, June 30, 2014, 1. 8. ‘‘ISIS Proposes Truce to Kurdish Peshmerga South of Kirkuk,’’ Rudaw, June 16, 2014, http://rudaw.net/english/kurdistan/ 150620143. 9. Ibid. 10. Tim Lister, ‘‘Dehydration or Massacre: Thousands Caught in ISIS Chokehold,’’ CNN, August 12, 2014, http://www.cnn. com/2014/08/10/world/meast/iraq-isis-sinjar/. 11. ‘‘Iraq Refugees International,’’ Iraq Refugees International, December 5, 2012, http://refugeesinternational.org/policy/ field-report/syrian-refugees-reliance-camps-creates-few-goodoptions. 12. Michael Knights, ‘‘Analysis: Maliki Bolsters Iraq Re-Election Chances,’’ BBC News Middle East, November 8, 2013, http://www.bbc.com/news/world-middle-east-24870745. 13. ‘‘Full Text of Iraqi Constitution,’’ Washington Post, October 12, 2005, http://www.washingtonpost.com/wp-dyn/content/ article/2005/10/12/AR2005101201450.html. 14. Liz Sly, ‘‘Embattled Iraqi Prime Minister Nouri Al-Maliki ‘Will Not Go Quietly,’ Foes and Friends Say,’’ Washington Post, June 21, 2014, http://www.washingtonpost.com/world/ islamic-militants-bear-down-on-iraqi-forces-seize-chemicalweapons-facility/2014/06/20/b69df9c2-8301-461a-9258bb1fa1c470eb_story.htm. 15. Alissa J. Rubin, ‘‘Militants Take Major Border Post; Kerry Hints U.S. Is Open to a New Premier,’’ New York Times, June 23, 2014, A9. Volume 36, Number 6, 2014

16. Ryan Lucas and Qassim Abdul-Zahra, ‘‘Iraq’s PM Al-Maliki Refuses to Step Down: ‘I Will Continue to Fight,‘’’ Christian Science Monitor, July 4, 2014, http://www.csmonitor. com/World/Latest-News-Wires/2014/0704/Iraq-s-PM-al-Malikirefuses-to-step-down-I-will-continue-to-fight. 17. Sinan Salaheddin and Sameer N. Yacoub, ‘‘Iraqi PM’s Bloc Wins Most Parliamentary Seats,’’ The Big Story, May 19, 2014, http://bigstory.ap.org/article/iraq-pms-group-takeslead-national-elections. 18. ‘‘Iraq’s Maliki Rejects Nomination of New PM,’’ Middle East Eye, August 11, 2014, http://www.middleeasteye.net/news/ iraqs-maliki-vows-stay-despite-international-backing-rival1597125558#sthash.RTsKlROj.dpuf. 19. Helene Cooper and Michael R. Gordon, ‘‘Iraqi Kurds Expand Autonomy as ISIS Reorders the Landscape,’’ New York Times, August 29, 2014. 20. Omar al-Jaffal, ‘‘Sunnis Do Not Believe Abadi Is a Solution to Iraq’s Crises,’’ August 21, 2014, http://www.al-monitor. com/pulse/originals/2014/08/sunnis-solution-abadi-malikiproblems.html#. 21. ‘‘Saturday 9 August 2014,’’ Support Kurds in Syria, August 10, 2014, http://supportkurds.org/news/saturday-9-august2014/. 22. ‘‘Iraq: Select Issues,’’ IMF Country Report 13.218, July 2013, http://www.imf.org/external/pubs/ft/scr/2013/cr13218.pdf. 23. Michael Knights, ‘‘Resetting the U.S.-Kurdish-Baghdad Relationship,’’ Washington Institute for Near East Policy, September 15, 2014, http://www.washingtoninstitute.org/ policy-analysis/view/resetting-the-u.s.-kurdish-baghdadrelationship. 24. Summer Said and Sarah Kent, ‘‘BP Still Assisting Iraqi Oil Company at Kirkuk Field,’’ The Wall Street Journal, November 10, 2014, 1, http://www.wsj.com/articles/bp-still-assistingiraqs-north-oil-company-at-kirkuk-field-1415645600?tesla=y. 25. ‘‘Iraqi Kurdistan’s Oil Tanker Leaves Moroccan Port without Unloading,’’ Kurdnet, June 6, 2014, http://www.ekurd.net/ mismas/articles/misc2014/6/state8058.htm. 26. J. Millard Burr, ‘‘Kurdistan Oil Export: A Game Changer,’’ American Center for Democracy, June 7, 2014, http:// acdemocracy.org/kurdistan-oil-export-a-game-changer/. 27. Tim Arango and Clifford Krauss, ‘‘Poised to Gain in Iraq Crisis, Kurds Face New Barriers to Autonomy,’’ New York Times, July 4, 2014. 28. ABC News, ‘‘Afghanistan and Iraq Polls—‘Where Things Stand,‘’’ January 11, 2010, http://abcnews.go.com/Polling Unit/afghanistan-iraq-polls-things-stand/story?id=6627152. 29. Thomas L. Friedman, ‘‘ISIS Crisis,’’ New York Times, September 24, 2014. 30. ‘‘Kurds Push for Independence Vote Amid Iraq Chaos,’’ The Guardian, July 3, 2014, http://www.theguardian.com/world/ 2014/jul/03/kurds-independence-referendum-iraq-massoudbarzani. 31. Kevin Ameirehsani, ‘‘ISIL in Iraq Series: Iraq-Turkey Economic Ties Survive ISIL, ‘Global Risk Insights,‘’’ June 25, 2014, http://globalriskinsights.com/2014/06/isil-in-iraq-series-iraqturkey-economic-ties-survive-isil/. 32. Joshua Keating, ‘‘Turkey Just Got Forty-Six Hostages Back from ISIS. How Did That Happen?,’’ Slate, September 22, 2014, http://www.slate.com/blogs/the_world_/2014/09/22/ isis_hostages_turkey_just_got_46_hostages_back_from_the_ terror_group_how.html.

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38. Mohammed A. Salih-Rudaw, ‘‘Iraqi Kurdistan’s Real Estate Market: A Bubble About to Burst?,’’ Kurdnet, September 28, 2014, http://www.ekurd.net/mismas/articles/misc2012/ 9/state6521.htm. 39. Interview with Shwan Taha by the author, Istanbul, August 7, 2014. 40. Graeme Wearden, ‘‘US Rivals ‘Plotting to End Oil Trading in Dollars,‘’’ theguardian.com, October 6, 2009, http://www. theguardian.com/business/2009/oct/06/oil-us-dollar-threatto-america. 41. Kamal Said Qadir, ‘‘Iraqi Kurdistan’s Downward Spiral,’’ Middle East Quarterly 14, no. 3 (Summer 2007), http:// www.meforum.org/1703/iraqi-kurdistans-downward-spiral. 42. Ibid. 43. Interview with Shwan Taha, August 7, 2014. 44. Amberin Zaman, ‘‘Five Reasons US Should Change Policies toward Syria’s Kurds,’’ Al-Monitor, October 31, 2013, http:// www.al-monitor.com/pulse/originals/2013/10/us-changepolicy-syria-kurds.html.

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33. Suzan Fraser, ‘‘PKK Rebels Start Withdrawal from Turkey, Officials Say,’’ The World Post, May 8, 2013, http://www. huffingtonpost.com/2013/05/08/pkk-starts-withdrawal-turkey_ n_3237178.html. 34. Katrin Bennhold, ‘‘From Kurdistan to Texas, Scots Spur Separatists,’’ The New York Times, September 10, 2014. 35. Katrin Bennhold, ‘‘From Kurdistan to Texas, Scots Spur Separatists,’’ New York Times, September 10, 2014, http:// www.nytimes.com/2014/09/11/world/europe/separatistsaround-the-world-draw-inspiration-from-scotland.html?_ r=0. 36. Khalid Al-Ansary and Nayla Razzouk, ‘‘Iraq’s Kurds Vow to Keep Kirkuk Oil Fields Until Referendum,‘‘ Bloomberg.com, July 1, 2014, http://www.bloomberg.com/news/2014-06-30/ iraq-s-kurds-vow-to-keep-kirkuk-amid-referendum-plans. html. 37. Reuters, ‘‘Kurdish Forces Fight Off ISIS Attack on Kobani,’’ The World Post, September 25, 2014, http://www. huffingtonpost.com/2014/09/25/kobani-isis_n_5879964. html.

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