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While U.S. Defends The Kurds With Airstrikes, It's Choking Off Needed Oil Revenue

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President Barack Obama speaks about the situation in Iraqi Kurdistan on Aug. 7, 2014. | AP Photo/Charles Dharapak

WASHINGTON -- A leading Democratic voice on foreign affairs called Friday for the White House to drop U.S. opposition to allowing the Kurdistan Regional Government to sell its own oil.

On Thursday night, President Barack Obama declared that the United States would defend the Kurds, who are facing an onslaught from the militant forces of the Islamic State. By Friday morning, that promise had turned into airstrikes on Islamic State positions threatening the Kurdish regional capital, Erbil. But at the same time, the administration is contributing to a problem that undermines the Kurds at their most vulnerable moment: They are running out of cash.

The Iraqi national government is required to share oil revenue with the Kurdistan Regional Government, but the Kurds say it has failed to do so recently. Meanwhile, the Obama administration has moved to block the Kurds' efforts to sell oil on their own. A State Department official told The Washington Post that the U.S. government is warning potential buyers that they face "serious legal risks." And so, even as the Kurds are under siege, a tanker carrying $100 million worth of their oil just sits in the Gulf of Mexico, one of several such stranded tankers.

Rep. Adam Schiff (D-Calif.) said on Friday that "if the Iraqi government does not resume the financial support owed to the Kurds, we should end our resistance to the direct sale of Kurdish oil."

Brett McGurk, U.S. deputy assistant secretary of state for Near Eastern affairs, has said on Twitter that the Iraqi central government and the Kurds must come to an agreement. "[T]he situation demonstrates why it is incumbent on Baghdad and Erbil to find a negotiated resolution," he said.

But politicians in Baghdad have been unable to even form a government or persuade Iraqi Prime Minister Nouri al-Maliki to step aside, much less reach a negotiated resolution with the Kurds.

Apparently ignoring the real-world effects of the U.S. stance, McGurk added, "There is no U.S. ban on the transfer or sale of oil originating from any part of Iraq. Suggestions to the contrary is false."

McGurk didn't reply on Twitter Friday when asked if the administration would now support the Kurds' selling oil, given the U.S. military support underway.

The U.S. has opposed the independent sale of oil over concerns that permitting the Kurds economic independence would be another step toward their long-sought dream of an independent Kurdish state.

"We are trying to help the Kurds meet immediate needs. We don't think the solution to that is to shift toward them acting more like a state in things like oil sales. We still believe that this can be done within the context of a united Iraq," a senior administration official told HuffPost. The U.S. is sending weapons to the Kurds but funneling them through the Iraqi central government, he said.

Asked if the White House was concerned about the Kurdistan Regional Government's cash flow situation, the official said, "The Kurds have, relative to the rest of Iraq frankly, a more successful economy in many ways. So I think we can meet their needs as far as urgent arms and financial resources without beginning to carve out a relationship that separates them from Iraq. We're not dealing with them as an independent entity but rather as a region within Iraq."

The Kurds "haven't been able to pay their soldiers for a few months nor their civil servants," said Peter Galbraith, an American foreign policy expert close to the Kurds. "The U.S. position ought to be either Baghdad pays the 17 percent [of national oil revenue] or allow the Kurds to sell the oil."

Galbraith said the Kurds have borrowed internationally and from companies doing business in Kurdistan, as well as effectively from the population itself, and are running short on options. "It's a tough situation," he said. But, he said, the airstrikes "have had a very big effect on both military and civilian morale," and seasoned Kurdish fighters are flooding in from Turkey, Iran and Syria.

Schiff said he understands that the White House is "walking a fine line" and that any apparent support of Kurdish independence could make formation of a unity government in Iraq more difficult. But, he said, the situation is at crisis levels and requires action. "Certainly the events of the last few days couldn't put it in any sharper relief," Schiff said.

Vice President Joe Biden called Kurdistan Regional President Masoud Barzani on Thursday, the White House said, "and reaffirmed his commitment to take whatever actions necessary to protect Americans in Erbil, including targeted airstrikes."

Biden has been a past supporter of Kurdish statehood, and Senate Majority Leader Harry Reid (D-Nev.) has said that the Kurds should be able to form their own state if they choose. Turkey has long been opposed to an independent Kurdistan on its border, worried that statehood would energize Turkish Kurds who similarly wish to break away. But Turkey's ruling party recently switched its position, declaring its openness to Kurdish independence on its border.

Indeed, it was a deal with Turkey that allowed the Kurdish oil to make it to sea. And in June, Israel purchased some of the Kurds' oil.

Iraqi leaders in Baghdad, meanwhile, are fiddling. "They're still negotiating and want to keep the Kurds economically dependent on Baghdad, and they don't seem to realize the world is falling apart around them," Schiff said.

This article has been updated to include the comments of Peter Galbraith.

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