Kurds quietly angle for independence

"If [Prime Minister Jawad] al-Maliki quickly establishes a powerful government that includes all groups, he will be an asset for the Iraqi people," said Jalal Talabani, the Kurdish president of Iraq, after Iraq's Parliament approved his second term and named Shiite politician Mr. Maliki to replace the embattled Ibrahim al-Jaafari.

The Kurdish desire for independence, however, still runs deep. And with parts of Iraq increasingly unstable and growing more Islamic, experts say the Kurds, who are relatively secular, are working quietly to consolidate and extend the autonomy they have enjoyed since 1991.

The Kurdish Regional Government, which has run the Kurd's autonomous zone in northern Iraq since the early 1990s, recently has signed contracts with foreign oil companies to explore for new oil fields in Kurdish-ruled areas of Iraq. Experts say they hope the revenue generated from these deals could provide greater economic, and thus political, independence from Baghdad.

"The Kurds are offering attractive terms to companies that are willing to take a gamble on the legal situation," says Rafiq Latta, a Middle East editor of the Argus Oil and Gas report in London. "And some small oil companies are prepared to take the bait."

The Norwegian oil firm DNO has been quickest off the mark, followed by Canadian firm Western Oil Sands. DNO began exploration in northern Iraq in 2004. But two weeks ago it announced that it would be able to begin pumping oil from one newly discovered field near the city of Zakho in early 2007.

At present Kurdistan's annual budget comes from its share of Iraq's overall oil revenues, which are distributed according to population. As a result, the Kurds receive 17 percent of Iraq's overall $30 billion annual oil revenues.

Iraq's oil exports, however, are mainly from the Shiite-dominated south - meaning that Iraq's Shiite rulers, theoretically at least, could shut down Kurdish northern Iraq's economy at will.

Kurdish oil aspirations are also challenged by poor security and the Constitution, which states that, unlike oil exploration, contracts to repair existing oil fields must be negotiated by the Oil Ministry in Baghdad.

Last week, Shamkhi Faraj, head of marketing and economics at the Ministry of Oil in Baghdad, estimated that Iraq's oil industry needed $25 billion to repair war damage and replace old equipment and infrastructure.

So far the Shiite-controlled Ministry of Oil has been largely unsuccessful in signing contracts to repair the oil fields. Experts say that foreign companies are wo