As always, it’s the fear of sanctions that provides the leverage Trump seeks in this cat-and-mouse game with Iran. And this time, the leverage is over Iraq, which would like to see both American and Iranian forces out of the country, for obvious reasons.
There is nothing ISIS would love more than this.
It would also devastate Iraq because the sanctions threatened would include blocking access to Iraq’s U.S.-based account where all the oil revenues are kept. That threat stands if Iraq moves to kick U.S. forces out of the country.
That would mean victory for Iran (temporarily). Kicking out Iranian forces is not nearly as simple because the line between state and non-state actors is blurred, at best.
A few weeks ago, a U.S. drawdown of military forces in Iraq was already expected, but that now seems unlikely because of the implications.
The very military base that Iran attacked following the assassination of General Soleimani was already preparing for a drawdown.
In addition to the threat of sanctions on oil money, a U.S. withdrawal would likely open the door for an ISIS return.
What Iraqis Want
There is no consensus on this question, other than the fact that no one wants Iraq to be the proxy battleground between the United States and Iran.
It’s a fair point, and Iraqis have had a very difficult time enjoying anything close to sovereignty since the fall of Saddam Hussein.
While the Iraqi parliament has voted for U.S. troops to leave, they do not represent a unified voice. The Sunni elements of parliament did not participate in the vote. Neither did the Iraqi Kurds.
Shia factions in Iraq are, of course, pushing for a U.S. withdrawal, but the Sunnis and Kurds see this as a dangerous opportunity for pro-Iranian Shia factions to take even more control of the central government in Baghdad. Related: Russia Risks Gasoline Price Surge
They don’t necessarily want a huge U.S. troop presence, but they are more fearful of a complete withdrawal that would leave them over-exposed to pro-Iranian forces. They also aren’t interested in being very loud about this fear.
In this atmosphere, there is already talk in certain Sunni circles of carving Iraq up to create yet another autonomous region such as that governed by the Kurdistan Regional Government (KRG) in the north of Iraq.
A Sunni-dominated region would include Anbar, Saladin, Nineveh and Diyala provinces, and would leave all of Basra’s oil to pro-Iranian factions.
Already, Sunni leaders are mentioning this as an option, pointing to what they call the “successful” example of the Kurdistan region.
The disintegration of Iraq was already progressing prior to the latest showdown between Iran and the United States. The country has been teetering over the edge of anarchy since 2003, when a single party (the Baath Party) was destroyed and Iraq became “governed” by multiple parties with even more fractious factions and a weak military that pro-Iranian Shia militias found easy to influence.
But this is far from just a sectarian conflict.
The mass protests that were already threatening Iraq’s fragile stability were Shi’ite-versus-Shi’ite. The Sunnis were not involved, nor the Kurds. They were just watching things unfold, warily.
One of the biggest mistakes the casual Western news reader makes is accepting a black-and-white narrative when it comes to Iraq. There is a very distinct group of Shi’ites that has a nationalist bent and is militantly against Iranian influence in an independent Iraq. This was a genuine uprising against highly corrupt and ineffective state institutions.
Then there is a second group of pro-Iranian Shi’ites who have been brutally putting down the popular uprising. This group exists in order to maintain Iran’s influence.
The problem now, for the U.S., is that the confrontation between the U.S. and Iran on Iraqi soil is more likely to bring these two groups together than it is to pull them further apart, which would have been a real threat to Iranian influence in Iraq.
Indeed, both Shia groups are calling for a U.S. withdrawal.
In this territory, you have to pick your evil, and for some time it’s been pro-Iranian forces and pro-U.S. forces against ISIS.
That’s not going to happen anymore, to the great delight of the Islamic State.
In 2011, a U.S. troop withdrawal from Iraq sent an open invitation to ISIS. In 2020, it will do the same.
The Biggest Threat to Iraqi Oil
For oil prices, the only real benefit to the Iran-Iraq conflict at this point is that Iraq is at a bit of a standstill when it comes to developing new projects, though its existing production will not be affected by any evacuation of U.S. oil workers, which has been minimal so far.
Since Iraq is already OPEC’s biggest over-producer, this is a bit of a balm on compliance. Related: The World's Most Expensive Oil Nears $100 Per Barrel
But the biggest threat to Iraqi oil in recent months has been Shia protesters fed up with a corrupt government. No one else is willing to touch the oil.
The biggest immediate threat is not Basra oil--it’s Kirkuk oil.
A U.S. troop withdrawal could easily relaunch a sectarian civil war in Iraq, and Kirkuk would be the first to fall.
Kirkuk is in northern Iraq, but outside the official territory of the Kurdistan Regional Government (KRG).
It’s also one of ISIS’ key stomping grounds, and the only reason they have been kept from taking over this region entirely is the effort of a U.S.-led international anti-ISIS coalition, in which Kurdish Peshmerga forces played an integral role since 2014.
A withdrawal of U.S. troops at this point will ensure a return of ISIS, and a sectarian conflict is exactly what the Islamic State is hoping for.
At an attack on the K-1 base just in northwest Kirkuk in December launched the latest round in the Iran-U.S. proxy war in Iraq.
Prior to that, ISIS had already started escalating attacks on this base, with ISIS seeing a window of opportunity in an American shift to defense against Iran and Hezbollah in Iraq. We’re already seeing the uptick in ISIS attacks--and the focus is definitively Kirkuk.
Coalition forces may have won the Battle of Kirkuk in 2016, but ISIS is still there.
Basra oil is safe, for now. The biggest threat is to Kirkuk’s 9 billion barrels. This is where the next round of this conflict starts, and it will be ISIS that ultimately wins any ‘proxy’ war.
By Editorial Dept for Oilprice.com
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