Defiant Kurds shrug off risk of trade war after
independence vote
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[October 18, 2017]
By Michael Georgy
ZAKHO, Iraq (Reuters) - More than three
weeks after Iraq's Kurds voted for independence, it's business as usual
at the bustling Ibrahim Khalil border crossing with Turkey.
Ankara has threatened to impose economic sanctions on Iraq's autonomous
Kurdistan region to deter moves towards independence, but hundreds of
trucks still cross the border each day -- some with supplies for Kurdish
areas, others en route to Baghdad.
Closure of the border would sever a lifeline for the region in northern
Iraq and step up efforts by Turkey, Iran and the Iraqi government to
isolate it.
But the Kurdistan Regional Government (KRG) is gambling that its three
main trade partners will be reluctant to impose a blockade that would
put billions of dollars in trade at risk and could hurt all sides
involved.
"We send about 100 packed trucks a day to Baghdad," said Hani Anas, a
trader standing by rows of steel rods stacked near the border. "Iraq
will suffer as well."
It is a risky gamble for a region that is heavily dependent on food
imports and oil exports, via a pipeline that passes through Turkey. The
undermining of its economy could deal a heavy blow to its chances of
survival as an independent state if it pushes ahead with breakaway
moves.
The outcome of the standoff could also have repercussions far beyond the
immediate region as Iraqi Kurdistan produces about 650,000 barrels of
crude oil per day -- 15 percent of Iraqi output and around 0.7 percent
of global oil production.
The KRG has not taken any formal steps to break away from Iraq since the
Kurds overwhelmingly backed independence in a referendum on Sept. 25,
but has scheduled regional presidential and parliamentary elections for
Nov. 1.
"If Baghdad tries to hurt us it will hurt itself," said Soran Aziz, vice
president of the chamber of commerce and industry in the Kurdish
administrative capital Erbil.
"If borders are closed with neighboring countries it will have a limited
impact on us," he added. "If an economic blockade impacts us by 1
percent, it will impact them by 10 percent."
PRESSURE BUILDS
Baghdad opposes Kurdish independence because it wants to hold Iraq
together. Iran and Turkey fear secession would encourage their own
Kurdish populations to press for a homeland, and Washington worries that
the tensions will damage unity in the fight against Islamic State.
Iraqi Kurdistan is certainly vulnerable over its economy. Apart from
oil, it is largely dependent on agriculture, tourism, and cement and
steel exports to Baghdad and other Iraqi cities.
But some Iraqi officials acknowledge that blocking the main trade route
between Iraqi Kurdistan and other parts of Iraq would hit not just the
Kurds' economy.
Turkish exports to Iraq this year had by the end of August reached $6.4
billion.
"This key trade route is a lifeline for all of us and we will make sure
to keep it operational, no matter what levels of disagreements," said
Waleed Mohammed, an advisor to the Iraqi trade ministry.
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A truck laden with goods from Turkey is seen at the checkpoint of
Ibrahim al-Khalil in Zakho, Iraq October 11, 2017. REUTERS/Ari Jalal
Near the border with Turkey, traders seem confident as they work their cell
phones, dealing with orders. Around them, laborers load crates of powdered milk
and potatoes on to trucks that haul average loads of 27 tonnes to Baghdad and
elsewhere.
"There is no way anyone can close down the border. One truck arrives and then
heads to Baghdad, another one goes the other way," said Samer Rushdi, a trader
who says he is so busy he cannot take time off.
Even so, pressure on the Kurds has mounted since the referendum, especially from
Baghdad, which has imposed an air ban on Iraqi Kurdistan, slapped sanctions on
Kurdish banks and halted foreign currency transfers to the region.
Iraqi government forces have also captured the city of Kirkuk, wresting control
of an area that is rich in oil and a vital source of revenue.
Government forces have also taken control of Kurdish-held areas of Nineveh
province, which includes the city of Mosul, and the Mosul hydro-electric dam is
among the positions recaptured, according to a government statement.
Iran has shut its border crossings with Iraqi Kurdistan and Turkey has said it
could do the same, warning the Kurds they will go hungry if the border is closed
and that their revenues will dry up if it closes the oil tap.
REASONS FOR CAUTION IN IRAN
Iran has vast economic and military influence in Iraq, but also has reason to
tread cautiously.
Iraqi officials say Tehran has gained a big edge in the Iraqi market by flooding
the country with cheap goods such as air conditioners and cars, and cannot
afford prolonged disruptions.
Iran exports goods worth about $20 million dollars to Iraq each day. One third
of the exports -- goods worth about $200 million a month -- go to the KRG, Hamid
Hosseini, head of the Iran-Iraq Chamber of Commerce, was quoted as saying by
Iranian media.
About 2,000 trucks usually bring goods from Iran to Iraq each day -- with 500 to
600 of them delivering items to the KRG.
But since the referendum, Iran has prevented at least 600 trucks, carrying about
13,000 tonnes of fuel, from crossing the border into Iraqi Kurdistan.
At the Haj Omran border post, a poster of Ayatollah Ruhollah Khomeini, leader of
the 1979 Iranian Revolution, stares down at rows trucks lined up to cross the
border.
"Iran can't afford to shut the border," Kurdish truck driver Jalal Rasoul said.
"Besides, it's our right to create an independent state."
(Additional reporting by Ahmed Rasheed in Baghdad, Babak Dehghanpisheh in Beirut
and Nevzat Devranoglu in Ankara, Editing by Timothy Heritage)
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