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A military operation against the Islamic State by Kurdish peshmerga west of the oil-rich city of Kirkuk, Iraq, Sept. 30, 2015 (AP photo).

Iraqi Kurdistan’s Economic Crisis Could Inflame Political Tensions

Thursday, Sept. 1, 2016

During a visit to Washington in April, Qubad Talabani, the deputy prime minister of Iraq’s semiautonomous Kurdistan Regional Government, or KRG, declared that “the real existential threat facing Kurdistan today is the state of [its] economy.” The KRG’s monthly deficit had risen above $100 million, adding more strains on an already-teetering economy.

Four months later, the KRG continues to face a financial crisis as oil production slows amid attacks from the Islamic State, refineries fall offline, and export quality drops. Kurdish leaders consider their region’s oil fields to be the foundation for an envisaged state. But falling oil revenue leaves them with few economic options. The current mess also exacerbates widening political divisions between the KRG’s main political parties. If left unaddressed, these interrelated issues threaten to unmoor Kurdish unity and destroy Irbil’s national project. ...

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